General Motors Company (GM) Earnings Call Transcript & Summary

All right. Well, thanks, everybody, for joining us again. Next up, we have General Motors. I think you guys are all fairly familiar with the company. We're very happy to have Paul Jacobson, Executive Vice President and CFO. This follows up our electric vehicle launch, right? This is a great segue because GM is a company that we think has recognized this core future transition a long, long time ago, probably more than a decade ago, formulating in sort of a cost-cutting initiative that generated the profits and cash flow to fund everything that's going on at the company right now, and obviously, a truck business that's helped along the way. Obviously, some high line things that I think everybody is familiar with Cruise and Ultium, global operating leverage that the company brings to the table that will help fund initiatives like that and much more, like BrightDrop. So there's a lot going on at the company. The 2030 targets that you guys put out at the Analyst Day were very impressive, not appreciated by the market when you look at the stock price. So I think over time, there'll be better appreciation for them. But we're very happy to have Paul today. So thank you so much for joining us. We really appreciate the time. And you're doing this in person, right? It means a lot to us. So thank you so much.

Well, it feels great to be here, John. And this is my first in person, one of these that I've done in 3 years, I think. So it's great to be in New York. It's great to see some of these smiling faces, and I'm glad for being here. I also want to take the opportunity to also introduce Ashish Kohli, who is our newest member of the team, who just recently joined us from Chipotle; and Mike Heifler, who's the IR team as well. And I think all of you know Mike and Ashish. I want to acknowledge that they're here, and really grateful for the opportunity to be here. There's obviously a lot going on. And as I've shared with Mary recently, I've passed a little over a year and change being here, and she assured me that this was a more stable industry than the one I left. I'm not sure I believe her based on the last 1.5 years. But certainly, we've done a lot of great things, and many, many more great things in store.

Well, maybe if we could start sort of backward forward and just talk about Cruise. I mean more recently, you repurchased a big stake from SoftBank. Puts you, I think, around 80%, we can -- maybe you can clarify that, stake in the business. And just really what that means and really what the state of Cruise is, because I think we see a lot of cool videos and a lot of stuff that's going on there. And I think everybody is just kind of waiting, waiting, waiting for that -- the revenue to start building and really see the business model take off. So maybe you can talk about the motivation for buying in the stake and then really the -- where Cruise is in its, hopefully, maturation curve over time.

Yes, sure. So I mean going all the way back to Investor Day, John, obviously, Cruise is a huge, huge part of what we think the future of GM is, both in terms of ride share but also personal autonomy and the entire EV/AV movement that's going on. And the work that Kyle and the team have been doing here is pretty astounding. They're out there giving rides to the general public. Now you can see many of those videos out there. And the technology is really strong. And it's continuing to improve, as we know, with a lot of AI platforms, right? It's -- the more you use it, the better it gets. And there's no substitute for getting an early start, getting it out there and getting that experience out on the road, and really, really pleased with that progress. So when the opportunity was presented to us to provide some liquidity for our partner in SoftBank, it was one that, ultimately, we saw as a really good transaction. I think it was mutually beneficial. We feel very, very good about acquiring that stake for what we did. And I know that the team at SoftBank was happy with it. I don't want to speak for them as to why or what their thoughts were, but just that it was a good transaction that was mutually beneficial for us. It does take us up to about 80% ownership stake, and we have announced the equity program for employees, the regular liquidity option that they're going to have, in which we'll actually serve as the backstop for those shares as well. So we expect our ownership to go up a little bit from here, depending on how employees tender going forward. But what it does for us is, I think, it simplifies the capital structure a bit. But most importantly, nothing has changed operationally. We remain absolutely focused on leading the way, getting this converted to revenue generation. We're just a permit away from that, as we know. But they keep expanding the operational area, and we hope to be essentially covering the city 24/7 by the end of the year. So we're optimistic on the progress that we're making and continuing to execute on it.

And the operational permit to start collecting revenue, even though you're allowed to give rides to people for free, I guess that's kind of very California, right? But I mean, is -- when is that going -- I mean, what's kind of like the hurdle there? I mean what's going on? I mean they got to think your vehicle is safe. If people can get in and drive, I mean why can't you collect revenue for it? What's the last catch here?

I mean, obviously, there's a lot of public interest and a lot of folks that get to comment on it, so I won't go into the specifics on exactly what needs to be done across the board. But it's obviously a big decision for a city to put that into motion. And I think while we're not in a position where we're generating revenue right now, the business is moving forward rapidly because when you think about autonomous ride share, there's an adoption curve, right? And you've got to make sure that #1, people are comfortable, people get used to seeing the vehicles out on the road and interacting with them and so on. And building up that comfort level is really, really strong. So as we get the reviews and as the Cruise team gets the feedback from the people that are riding it, the members of the general public, they've been generally a lot more bullish on it than even the employees who can see some of the things. It's like moving into a new house and you notice the flaws that nobody else would ever notice. But the general public is extraordinarily happy and excited about it. You just see that in the customer videos. And we just can't wait to be able to roll that out into San Francisco, generating revenue and even beyond. So much excitement with that.

And by '23, I think that the number was $50 billion is the revenue. So I mean, how many -- I mean, I don't know if you really talked about it. So how many cities would that be at that point?

Yes. So that was really a top-down kind of approach when you're looking at the total addressable market of where ride share is, et cetera. So I think the path to get there is going to be one that -- and I'm a big believer, and the technology is obviously critically important. But the other side of it is you got to have a business that scales because once the technology is there, this becomes an operational endeavor. And my good friend from Delta, Gil West, who's running the operational side, remember, Gil's job was to create customer satisfaction for 200 million customers a year across a global network. So being able to set up the operating parameters, the customer service parameters and really doing that is going to be a big part of how we scale that. And there's a lot more to come on that coming in the future.

Got you. Okay. That's really, really, really exciting stuff. Another thing, and we kind of mentioned this just before we got on stages, we've talked a lot about used vehicle pricing. We're kind of bouncing around here. But used vehicle pricing is incredibly strong. It's been a big support for the core business, right? But you're actually layering in the future with CarBravo there. So I'm just curious if you could talk about what's going on in CarBravo as we think about all these, Cruise, CarBravo, all the things that are kind of these incubators that are -- or products that are being created. What is it, right? How is it going to work? Is it really a tool to just help your dealer sell more used vehicles? Or is this a more holistic circular reference to understand that you want to support resids and then that supports the new vehicle business, and it becomes a very circular or symbiotic circular references that's very positive for the business?

Yes. Well, I mean, ultimately, when you distill it down, it's just yet another way for us to serve our customers going forward. So when you think about the used vehicle market across the dealership model, it's highly fragmented, right? And you've seen that with Carvana, with CarMax and with others being able to bring scale into that business and see what it's been able to do. And that's what we can do. We can be a uniting presence with technology with GM with the presence of GM Financial and the vehicle inventory that we have there and create a used network scale model that the dealers could never really compete with from that standpoint. So this is a benefit for the dealers and a way that they get to plug into that network. It's a benefit for us because it gives us yet another touch point and yet another platform with the customers, which, as we go into the future with the software model with OnStar Insurance and things like that, the more touch points we have with the customer, the more revenue opportunities we have to generate to serve them going forward. And then, ultimately, the ability to utilize the inventory that's at GM Financial, many of which either trickles back into the fragmented dealer network or goes to auction where these competitors are actually selling those vehicles, anyone. So we expect that it will give us a little bit of a higher yield on that as well. But overall, it's just a -- it's a great platform for us to be able to serve the used car market.

I mean -- and it does seem like it's the beginning -- or I mean, OnStar is really at the beginning, but I mean being more connected with the vehicle over a lifetime of a vehicle, right? I mean is that sort of the start of potentially getting to the second, third and fourth owner of the vehicle? I know you guys were talking about subscriptions in the connected car, and it seems like there's this opportunity to stay connected to the asset for a longer period of time. And it seems like you're putting some of these pieces together. But I mean, is that a start of the tether or -- of getting to that second and third and fourth owner? Or is it really just an aggregation tool for the dealers and then supporting used vehicles?

No, I would say that it also serves as another touch point with the customers and the subsequent customers. And I said this at Investor Day, and it's of the things that I think is -- what I would say is the single most exciting thing about the next generation of auto manufacturing is, historically, 95%, 99% of our revenue came at the point of sale of the vehicle, full stop. And then OnStar came out. You've got the spare parts market, et cetera. But largely, all that profitability was focused right there and it was onetime. And then the business has started to come up. When you think about the business of the future, the upfront profitability is going to be a lower percentage of the overall profit of that vehicle over its life because we can touch it over its life. We can bring services to the customer in ways that we never could before. We've got the insurance platform. We've got GM Financial still, but then we've got the software interaction. So you see that, and you see that across not just the first owner but the second owner and the third owner, the fourth owner. And one of the great assets that GM has is we lead the industry in loyalty. So being able to take that loyalty and extrapolate it across another universe of buyers really is the platform for where we see a lot of growth in the business coming down. That's what we talked about at Investor Day.

Yes. I mean -- and when you look at this, I mean, this idea of being a platform innovator, I mean -- and using OnStar, I mean, it just -- the 130 -- I think the target for '23 is $230 billion. Was that the revenue target?

It was more than that. It was about $280 billion in total.

$280 billion was the total. I'm sorry, it was double from roughly $140 billion, $280 billion. So I mean, as we look at this, there's going to be the $140 billion roughly underneath the surface. It's not -- it's on the surface that's basically going to go EV to ICE, and then $140 billion that's above that that's going to be the delayering of GM Defense, Cruise, OnStar subscriptions, maybe some incremental stuff of CarBravo. I mean how much of that is going to be reliant on this continued connection with the consumer? Or I mean, could pull GM Defense out of it, maybe that's sort of a somewhat separate business. But I mean how...

Different consumer.

Different consumer. Yes, different consumer. It's a customer. Yes. I mean -- but like I mean, how do you think about that being sort of just the extension of the ownership -- I mean, of the sort of the connection with the consumer versus something that is truly all new? I mean, I guess, maybe you can pull Cruise out of that.

Yes. So Cruise was $50 billion of that growth. We also had a significant growth in total vehicle sales, too. So it wasn't just $140 billion same static. Because we do see an opportunity through the EV transition to grow share. So as we know, we've been somewhat lower share in the West Coast or in high EV markets, where we think the product suite that we're going to bring is actually going to help us to allow share while we maintain the share of the core going forward. And then ultimately, as people convert into EVs, we should end up with a bigger pool just based on the breadth of vehicles that we have and the markets that we're serving, which we've stated that we intend to serve the broadest market of any EV provider that has talked about that. And that's what we can do with the Ultium platform. So that serves as the foundation for it. We've got $20 billion to $25 billion in connected services. So the way we came about that was that was a very much a bottoms-up approach based on: number one, our experience with OnStar; and number two, the survey data that we've had with the 45 applications that we've already developed, taking them in front of customers. And one of the things that I share, because we gave all this data at Investor Day, but what I love about that survey is it was a cumulative effect. So it wasn't just a case of a customer sitting there and saying, I like this. I like that, I buy this. They saw a cumulative total of what they were purchasing, whether it was upfront or whether it was a subscription or it was a monthly fee. And the cumulative effect of all that was what they were able to weigh when they were selecting it. So what that gives you is a good idea of what customers, at least today, are willing to spend on the features that will satisfy them or customize their vehicle in a way that we haven't been able to do historically. So we feel pretty good about that model. But we've got to make sure that we've got the right customer interactions and touch points. You don't want to err on the side of being so aggressive that you're just pushing stuff on the customer, and the customer ultimately pulls away because here, she says, stop bothering me, right? I'll buy what I want to buy, when I want to buy it. But at the same time, introducing them to the ways that they can personalize and enhance their vehicle going forward. So I think we're still in the infancy of this. There's no way we're stopping at just 45 applications going forward. So I think the future in this space is really bright. And I've said it before, I think the way that we interact with our vehicles is going to be very different than the way we all grew up doing that.

Yes. I mean I think the thing that I'm trying to get is, I mean, and this is probably different than a lot of people are thinking, is that the potential lifetime revenue stream off a vehicle in a traditional sense may be 2x sort of what you traditionally have looked at, right? And you guys are kind of almost talking about 2x, but you're layering all of these other incremental businesses, meaning that I think you ultimately like leveraging Altify or OnStar, it's a simple connection. It's an advanced connection but simple connection. There may actually be even greater opportunity because you're starting to go after all these things in the secondary market where CarBravo is like you've got all these other people eating your lunch on -- not eating your lunch, but you create the asset, they're eating a meal on the used car and all of these other services over time that are sort of more simple, right? Like meaning that there may be a whole other layer on top of this as you've got this connected vehicle and working with the dealers and creating stuff like CarBravo and other services that like it might be much larger than what you're talking about. I think that's kind of where I'm trying to point in that direction a little bit because I think there's a real opportunity that we think you have in front of you that you guys are working on. I just...

No, that's exactly right. And I think Altify becomes the platform for that. But if you think about it in the truest sense, it's the connected nature of the vehicle that allows us to get into businesses that historically would have been capital constrained or too difficult to get in. So it simplified the ability for the data to be monetized and done in a way that enhances the customer experience and provides additional benefit with the data that we've been able to capture. That's what's really fundamentally different about the generation that we're going in. And as we've talked about VIP 2.0 and Altify, it's going to be on the ICE vehicles as well in the short run. So that's an important factor as well because it gives us a broader platform to be able to go up and grow this faster than maybe some other carriers or companies who might just be EV, who have to wait for the slope of EV adoption. Now we do think that's accelerating. You've seen that in our statements. We've essentially now doubled our targets in 2025 to 1 million vehicles in North America, and the production capacity, the battery plants, all of that is ramping up even faster than we thought it was a year ago.

So thinking about Ultium as a platform, I guess 2 questions. Does that greatly increase the business' capital efficiency over time? Because I think at Investor Day, you talked about 12% to 14% EBIT margins, but there wasn't a discussion of the denominator on our return on invested cap calculation. So I guess that's the first thing. And then the second thing on Ultium, and we just heard this kind of on the prior panel, is, I mean on battery technology and EV technology, differentiation is hard. It's going to be hard like it is on ICE vehicles. You do a good job on ICE vehicles, you'll do probably a good job on EVs, but it seems like it's kind of that holistic solution of not just the battery, but it's the entire platform. So if you're doing 7 million, 8 million units off of that platform, that will allow you to innovate a lot more if you could leverage a lot more than just sort of the battery and that platform. So I mean can you get more capital efficient? And can this create flexibility in your vehicle architectures that can allow you to outcompete the Teslas, the Rivians, the Lucids over time in a way that people just are not understanding at the moment?

Yes, I think the short answer is both. And I am a believer that, over the long term, battery technology is going to converge to a couple of solutions, right? And that's just the way R&D is going to take shape, right? There will be superior models that will evolve over time. But I think where we are with Ultium, it gives us the platform to be able to offer the efficiency and the breadth of product offering unlike anybody else can do in the short run. So the ability for us to go everything from the Hummer EV, to the Equinox, to the affordable EV that we've talked about is all on that same platform. So of course, there are synergies. And that's why we say that we feel pretty confident that our battery costs are going to get to about 60% less than what they are in the Chevy Bolt as we get to Ultium and then the next generations of Ultium going forward. So we're not going to stop there. Some of that comes with production scale. Some of that comes with chemistry. Some of that comes with engineering. But overall, we feel very good about where we are. And the fact that we've put that into a platform gives us efficiencies in terms of building the other vehicle models, where you've got essentially a few chassis and you can put the top hat on top of them much, much more efficiently than going in and saying, "I want this vehicle. Now I got to design a battery enclosure that will fit into that vehicle, et cetera." So it's -- I think it's taken a little bit longer in the short run. We've been working on this longer than others have. But as you see us getting into in 2022 and into 2023, you're already starting to see that ramp up really fast. We're ramping up Hummer production. We just started LYRIQ production. We're back on track with Bolt production again after taking a pause to serve our customers through the recall. And we feel very good about where we are. So as we get into the Silverado and the Equinox in 2023, you're going to start to see EV production really, really take off exponentially for us to hit that 1 million vehicle target by 2025 in North America.

The Hummer EV, I just remember when -- at the ride or driving, was called watts to 100 or watts to?

Watts to freedom.

Watts to freedom. Yes.

WTF.

Yes. I mean that was an insane -- I mean, yes, if you see a big truck actually throw you back in your seat and almost make you feel like you're on a roller coaster is absolutely amazing. It's absolutely amazing. Watts to freedom was crazy.

I'm a big believer, too. Not having grown up in this industry, but I'm a big believer that at the end of the day, EV adoption is going to hit an inflection for that very reason, right? We know the capability of these vehicles. We know what they can do. And as more and more people see it, as my neighbor gets one, it's a really cool vehicle, I want one. And the good old-fashioned peer pressure is going to take hold as people get more and more accustomed to the capabilities and the functionality of these vehicles, which is what we want to be ready for, which is why you see us aggressively investing in plants, cell capacity, supply chain contracts to build that battery capacity going forward.

May I jump in with a quick question, John. 1 million units is an ambitious target, and I'm sure you guys can hit it. Is the capacity in place right now to do that? Or does there need to be any near-term investment levering the cash on the balance sheet or potential debt financing to get the capacity there? Or are you kind of there now?

We feel pretty good about where we are right now, Doug, in terms of the cash flow. The business has been enough to support what we're trying to do. And we're obviously always watching where the future environment is against what our capital needs and our ability to invest in. So we're laying out the long-term plan now. So we talked about this last year in the spring. Now we do the long-term plan. We take our 10-year outlook. We noticed how much it's changed from the year prior, for better or for worse, et cetera. And we take those macro factors into account. So right now, I feel very good about where we are on the cash flow being able to fund that journey even as we've leaned into it. And I think if you recall what we said last fall, as we're going through second quarter earnings, I think the proudest moment I've had in my time at GM is watching the team lean in and accelerate the EV investment in the face of what we saw was near the peak of the semiconductor. It shows where the priorities are, but it also shows how the work that the team has done on the balance sheet, on the fixed cost side enables us to accelerate that investment, even when we see a little bit of choppiness. And so far, we're performing well in a challenging environment now, too. But should we need to do that, the balance sheet is there. But what we don't want to do is sacrifice the long-term health of the company and overleverage to do that. But right now, I feel like we've got a really good balance, even allowing the team to lean in a little bit more than we have.

So if we think about the margins for 2030, I think the range is now 12 to 14, up from 8 to 10. And actually, I have my notes here, you guys talked about $140 billion to $300 billion. So you -- of course, you're right. You're the CFO. You know better than I do. The -- that kind of expansion in margins is great. But when you're looking at the profile of the businesses that help -- essentially help you double or a little bit more than double the revenue base, it seems like those margins could be significantly higher when you run the mix. I mean is there anything that's going degrading in the core business or something that we might be missing in the future business to where the margins might be significantly lower? I mean, I think people are looking at the software and saying, oh, that's 70%, the whole rest of the business should be 70%. But that's obviously not the case. I mean we look at stuff like Cruise and we talk to the Board about this way. At one point, it's just like if you go city by city, I mean, there's a potential, like we've modeled it out here in New York, where you could do $1 billion in EBIT in major cities, in EBIT consistently, not cyclical crazy stuff like we did like right with the rest of the business. So I mean, some of the stuff that you're talking about with these margins seems like it's very conservative, particularly $50 billion in Cruise. I mean, that would, to me, be almost 10 cities. That would be $5 billion in EBIT. It's my rough numbers. So it just seems like it's very conservative. Is there something else going on in the margin profile of the core business or any future business we're just not understanding? Or is this, hey, listen, I'm planning to hit -- to run a business. Leave me alone. There might be upside over time. And like I've got to run the business and allocate capital, I need adequate returns, and if there's upside, there's upside? I mean...

Yes, I would say, John, the way I'd answer that question is -- and you touched on it in your opening remarks, which is we gave great guidance over a 10-year period, or indications over a 10-year period, but you said the market doesn't actually necessarily believe it yet, which is understandable, right? So what we wanted to do is we wanted to strike a balance between, number one, putting out 10-year targets. I mean that was a big step for the company. It was a big step for the industry and where we are, and we stand behind those. We feel good about where that is. But at the same time, as ambitious and crazy as it sounded at the time about the ability to double revenues going forward, you've seen many other OEMs come out and say very similar things, which I think gives a little bit more credibility to it, even though we've got Cruise and we've got other things that other competitors don't. So going forward. So I think there's certainly a view, and we're not going to stop once we double, and we're not going to stop if we expand margins to 12 to 14 points. I think there's a lot of potential out there. But I think to the extent that we went out and said we're going to double margins, we're going to double revenues, we're going to do all this, the believability starts to come down even further, right? So what we wanted to do is make sure that we're credible. These are the goals that we're holding ourselves accountable to. And you see that through executive compensation. You see that through our targeting. You see that through the guidance. And that's what we're going to do. And certainly, there isn't a member of the team that isn't going out trying to exceed that in any way that they can going forward. So I would just put it in the category of making sure that there's a reasonableness test there that I would love for everybody in this room to think that that's an incredibly conservative goal going forward, because that makes the stock really, really cheap from that standpoint. That's certainly the way we're thinking about it. But when you put it out there for 10 years, you want to make sure that you're committing to something that you have pretty good visibility to hitting.

In the past, GM has been an unbelievable incubator and businesses have been spun, and that's what's driven the stock in the past where it goes -- GMH Delphi used. There's been a few events historically way back. I mean as you look at sort of the lineup of businesses that you're developing, and I know Cruise is staying core, so we're not going to go there. But I mean, on the other businesses, like BrightDrop, GM Defense, OnStar, are there opportunities to separate them from the business where they might not be as core? Do you feel like they're as core as Cruise? And I actually completely agree with you on the Cruise technology being core to the entire company. So I think that's a little bit overblown. And you've raised some capital in Cruise, right? So I mean, you made some pretty low-cost capital raises there that people don't give you credit for. But I mean, are these other businesses potentially separable from the business -- from the core business?

Well, yes. I think first and foremost, Mary said it time and time again, we're focused on long-term value creation for the shareholder. And I think that the -- what we see right now is, obviously, there's a lot coming together in a very short period of time, right? And each of those steps leverages off another piece of the business going forward. So as Mary has talked about, we're going to continue to evaluate Cruise and other businesses over time as well as we continue to grow those. I think the market, I think, did a really decent job of picking up the sum of the parts story last year. I think that's somewhat fallen apart. I'm not sure I exactly understand why. I know some of the catalyst events out there that the market has kind of attributed it to. But the reality is the same value that was in the business a year ago is there today, if not more, when you look at how we've accelerated into EVs, when you look at what Cruise is doing going forward from that standpoint. So what I would say is we're always looking at everything and keeping a close view on that. But the one thing that I've been very adamant about is I'm not a believer in doing financial engineering for financial engineering's sake. Meaning I'm going to get short-term value long-term sacrifice. To the extent that we see long-term opportunities in the business that are synergistic that allow us to be able to capitalize on that, that works really, really well. So for example, we've talked about -- the company talked about, before I even started in November of '20, about the interrelationship between EV and ICE. And it's not so simple because 70% to 75% of the vehicle is the same, right? The engineering of the brake systems, of the interiors, of the door, of the top hat in general. So we're always going to look at opportunities like that, but we're going to keep in mind strategic long-term value creation.

I mean that can -- could you conceive of potentially spinning off ICE assets over time, kind of like a Delphi type of form where it becomes -- they become a supplier to the core company and you become a pure EV/AV company, right, that would create -- potentially create a lot of shareholder value, potentially be part of an industry consolidation on ICE assets where then you might be able to get the same product at lower cost and you might get that from other -- I mean other companies may contribute to that?

Yes. I think in the short run, ICE still has a very, very good, strong profitable future from that standpoint. I think the challenge with the ICE franchise outside of the -- of what we're doing with EVs becomes the CAFE, GHG compliance, right? So being able to find a buyer for that, that ultimately can absorb all of those GHG without having the growing ICE portfolio in the face of more stringency all going towards the common end goal of getting to the EVs and doing it quickly, I think, limits the potential on those things. But for now, as we've talked about, the ICE franchise is providing us the capital flow that is helping us to drive the investment that Doug asked about going forward.

But I wouldn't necessarily mean the ICE vehicles, I would mean sort of like literally the powertrain assets. Is that -- I mean that might be slightly different or no? Or you...

No, I think that could be something that could be different. And I think you've seen private equity come in and make moves across the suppliers. So it's going back into that lens of long-term value creation and making sure that we're stewarding the assets the right way.

Got it. We've got 8 minutes left. Is there any questions in the room? I've got a few that I want to get through, but if we have any questions in the room? Got one over here.

Yes. Just going back to funding growth, we saw Ford last year do a green bond that was very well received by the market. Would that be ever something you guys would think about green bond, sustainability-linked bonds, something like that?

Yes. Short answer is, absolutely. In the short run, we haven't actually needed to access the capital markets. So the -- but we look at applications for that, for sure. And I think if you find ourselves in a position where we're either thinking about a refi or we're thinking about new capital -- new debt capital into a project, we can do that. One of the other things that our GM Financial team has been looking at it as well in terms of whether you can do securitizations around EVs and lots of different applications. But I'm sure, at the right time, that, that will be something that we'll definitely put in our quiver.

Okay. Well, I've got a set of maybe somewhat short-term questions, but like -- but not on financials in the near term. So lessons learned from the sort of the mess that we're all going through in supply chain. One of the big things is how do you deal with inventory management, whether it be finished goods to the raw mats, right, all the way all the way through the channel. And there's been this great discussion of localization of production to try to help deal with this stuff, which might cost a little bit more money for everybody in the value chain and then also building buffer stocks. So maybe if you could comment on both of those, if there's an opportunity for greater localization to force your -- push and partner with your supply chain to do that. And where you would build these excess inventories, if you will, these buffer stocks? Because, last year, we started with 3 million units of inventory in the U.S., and we finished with 1 million. So you could argue, those finished goods were interesting buffer stocks, right, not the worst thing to have around at this point. But now going back to -- we want to keep inventory lean, but we want to build some buffer stock somewhere. So how do you kind of foot that also and understanding where you want to fix these issues in the supply chain's perspective?

No, I think it's a great question, John. And I think when you look at all the uncertainty, whether it's geopolitical, economics, supply chain, logistics, you name it, I think you're starting to see the beginning of a trend back towards localization for a lot of key stuff. The sort of poster child for that is really semiconductors and chips and what's going on. Many OEMs have talked about that in terms of bringing stuff onshore in chips just to get more capacity, get more stable, especially for the auto industry as a whole. And I think you're going to continue to see some of those trends coming forward. I think secondly, on sort of the finished goods inventory side of the business, the reality is, I think the dealer network and ourselves have gotten much, much more efficient about getting vehicles to market faster. And that's enhanced dealer profitability, and it's also enhanced profitability for us as well. So as we said now, probably about a year ago, it was one of the first proclamations that I made that made me sound really brilliant, which is the right amount of inventory is less than we had before, but more than we have today. I'm going to go ahead and stick with that guidance from that standpoint. But it's learning to get those efficiency of ordering the vehicles that are in the highest demand, using the data that we have through our dealer management systems, helping the dealers understand that their business can run more efficiently. But the reality is we still have to have some vehicles out there on lots, in showrooms for customers to see and to be able to experience. And that's what's been really slow to pick up. And even today, with the inflation that we've seen, we still see a lot of demand where we just don't have a lot of vehicles out on the lot. So we want to continue to drive that. We want to continue to absorb the pent-up demand that's out there, and ultimately, get to stability. But as we said on the first quarter call, we don't expect a material increase in inventories this year.

So if we think about the profitability of your dealerships, they're at record levels, a lot of that has to do with very high GPUs. Those GPUs theoretically are part of pricing to the consumer, which theoretically means you may be underpricing your vehicles. But I don't want to get short-term financials. But I mean, just if you think about pricing strategy sort of mid- to long-term, it does seem if you're running the strategy, leaner inventory, more efficient inventory management, getting the consumer used to sort of almost build to order, almost, right? We're kind of almost there. How much of an opportunity is there on pricing? I mean, because basically, I mean, you've got dealers making $5,000, $6,000 grosses when they -- 3 years ago, or making 1 or 2, right? So I mean, it's almost like a 10% pricing -- almost like something in the magnitude of 10% pricing opportunity for you in current state, right? I mean it might not be the case 2 or 3 years out. But I mean is there an opportunity to take more price over time?

Well, I think that's the big caveat, right? I think we've got to stop short of making any long-term decisions in this environment that we're in right now, where clearly supply is constrained. I think everybody would probably say, I'd make more vehicles today if I could, right? So understanding that dynamic and understanding where we are going forward, it's tough to go and make a long-term decision based on the environment that we see right now because I think one of the things that we have to continue to watch is the consumer has been really strong. right? The consumer got us through the inflation and the production challenges of last year. And that's why we were able to deliver the results that we did. And we alluded to that strength in our guidance for the full year going forward. So we want to make sure that we're monitoring that pretty closely. I mean inflation continues to run. We see rising interest rates. We don't want to take for granted that this pricing environment is going to stay forever. So staying nimble with our strategies, both production, inventory and pricing, is the best way to continue to do this. And as we've said for the last several quarters, kind of managing this production and supply chain on a week-to-week, maybe a couple week basis going forward and making sure that we're covering all of our tracks. And that's a strategy that's worked really, really well for us right up and extend it into the commercial decisions that we're making with incentives and pricing, et cetera. So we want to make sure that we stay very responsive to what the environment is around there. But as you said, the efficiencies in the dealer, knowing what they can do in terms of building in-demand vehicles and ordering the right vehicles, and what we've been able to do in this new environment has given us a lot of lessons to learn. And I think some of those are going to stick for the long term.

Lastly, just real quick. Well, we've got one question. If we can -- well, I've got one question right there. We'll let you...

It's good customer service.

We're here for you.

Just to follow up on that last comment you said. I was just kind of curious, for you and also the industry, like your sense of the industry, how many vehicles could you make versus how many vehicles are you making?

Well, yes, I mean, the short run is we're making everything that we can make. I mean it's the supply chain challenges, and those have been highly published. I won't get into all of those. We talked about ramping up our production to getting to a run rate in North America, I think the number was about 800,000 vehicles a quarter that we were talking about getting up to the end of the year. So we're certainly in a position where if we had a normalized supply chain, we've got the capacity to make more. And I think that's one of the advantages that we have. Not to segue into a different topic, but when you look at the manufacturing footprint transformation that has to happen to go from all ICE to all EV, we have an advantage. And that's demonstrated at Spring Hill, where we're able to create the Cadillac LYRIQ assembly lines. At the same time, we're still making the XT5s, XT6s and other vehicles as well. So that speaks to some of that flexibility and one of the things that I think is important for us.

If I can sneak in, we're out of time, but...

I'll do it real fast.

On dividend. Obviously, you got a lot of cash, stock is inexpensive, too. So I mean -- but I mean, any thoughts around the dividend that have changed? Or is it more of the same? You've got a lot of opportunities in front of you, your stock is cheap, you have other better places to put capital.

It's almost exactly what we said 6 weeks ago. So we just said, not now.

There we go. We'll wrap up. Paul, thank you very much for joining us in person. We really appreciate it. Thank you so much.

Thank you. Great.