General Motors Company (GM) Earnings Call Transcript & Summary

Okay. Good morning, everybody. I think we're ready to kick off. I'm Itay Michaeli, Citi's U.S. Auto Analyst, and I'm delighted to kick off day 2 of our conference with General Motors for a fireside chat. From GM this morning, we're very pleased to have Paul Jacobson, Executive Vice President and CFO, as well as in the audience, Ashish Kohli, VP of Investor Relations. We'll do this as a fireside chat. If you do have any questions throughout, please raise your hand. We'll get a microphone over to you, and we'll go from there. So Paul, first, great to see you. Thanks so much for being here. Good morning.

Well, thanks for having us, Itay, and thanks, everybody, for coming. I know this is a busy season. A lot of opportunities out there, but it's great to be out on the road and talk about the success of GM.

Absolutely. So maybe just to kick it off, the usual kind of first question. We're about halfway through Q1. Just any interesting industry observations? Kind of how things are going thus far in the quarter versus expectations?

Yes, it's a great question, Itay. And I would say that 6 weeks into the year, we're pretty much on schedule where we thought. And I think when we came out at earnings, I guess we're pretty bullish against where the sentiment is. And if you look at the backdrop of each of the last couple of years, we've gone into the year with expectations of pricing corrections, of normalization, I think people call it mostly. And we've significantly outperformed. So we tried to take the same approach as we set our expectations for the year. We put in a planning assumption, and I'll explain what I mean by that, of pricing down 2% to 2.5% for the year. And much like the last couple of years, that's not a statement of expectations. That's an assumption on pricing coming back off the peaks a little bit. But each of the last 2 years, it hasn't. And if, again, it doesn't, we expect actually the numbers that we put out there, we could outperform. So I would say, it's much to the last couple of years. This year has gone right in line with our expectations. And it doesn't mean that there won't be pressures or unexpected things that come up. I think we've gotten pretty good at being nimble and responding to those things, and the team understands the importance of hitting the numbers. So far so good, but it's only been 6 weeks.

Yes. That's still early. But maybe on the strong outlook, Paul, I think you guided well above consensus for 2024, I think in line with our numbers, but well above consensus. There's always the feedback pushback, but how do we know these earnings are sustainable? So maybe talk about that, what would you say to the pushback of, "Hey, Paul, can you sustain these earnings going forward?"

Well, honestly, Itay, I think you've hit on one of the big seminal issues, right? Every time -- I've only been here for 3 years, but every time that we've posted good numbers, it's always been against the backdrop of future expectations coming in lower. And it surprised me a little bit, not necessarily the first time or maybe even the second, but as it continues to repeat, at some point, the only thing we can do is continue to perform. But when you're constantly performing and that result comes in through the rearview mirror and up ahead, everybody's projecting storms, it's difficult to build the momentum behind the equity story. So I think what you've seen us do is lean pretty hard into capital allocation as a means to try to increase the tangible value of forward expectations by returning cash to shareholders. And I think we've gotten some momentum since the ASR, we hope to continue that and keep driving it. But what I tell the team internally is the same thing I'd say to you, the best way to address this is to just execute. And every year for the last 3, it's been something different that has kind of reared its head, whether it was inflation or chip shortage, et cetera, logistics challenges, and we've overcome that and hit the numbers. So I feel good heading into the year, and we'll figure it out.

Absolutely. You've dealt a lot of challenges very well. We've argued in our research that -- you could argue that in certain parts of the business, you're still actually underearning, whether it's the EV losses or even some of the nontruck operations. I'm just curious, Paul, as you evaluate GM's earnings power internally, how do you do it? How do you kind of think about the different puts and takes over the next 2 or 3 years, just in terms of what GM could potentially do and kind of where that power is?

Yes, we kind of look at the business in really kind of 4 strategic pillars as we're moving forward. One, and the first one, and obviously the largest scale is ICE, right? We've got to continue to execute on the ICE portfolio. So while we have set the strategic imperative of getting to all EVs and light-duty vehicles by 2035, ICE is and will remain a very important piece of that franchise. In fact, it's funding everything else. So we've got to keep investing in it. We've got to keep the vehicles fresh. And I think when you look at what we've done with the full-size SUVs, the midsized trucks, full-size trucks, and now with the Trax, the Envista, and some of the crossover vehicles, not only are we improving them for customers, we're also improving the profitability of them and driving, as we've said, up to 5 points of margin improvement in some of those new crossover launches, and we're executing really well on that. So ICE is absolutely core to what we need to do, and it's an incredible cash engine for the company. Second is EVs. And I think one of the pitfalls, I think, when you look at the investor thesis of GM is, I think people are focused on comparing GM's EVs to Tesla. And I don't think that's the right comparison. I think you've got to go back into time of when Tesla was starting its journey and you look at maybe year 3 or year 4, and you compare where GM is today to where that is because there's a lot of start-up capital. The good news is we have invested a lot. We've built joint venture battery plants. We're probably best positioned more than anybody else to take advantage of the producer tax credits for sells. We have built manufacturing capacity and assembly capacity. And now our job is to grow into it. So as we said last fall, we expect about 60 points of margin improvement this year and getting to mid-single-digit profitability by next year in the EV portfolio. There's a really important stair step this year of getting to variable profit positive. And a lot of that is just sort of growing into our skin of what we've built. We've got to be careful not to blindly play the volume game, and we're carefully looking at what adoption looks like, but also what the demand for our vehicles are. And I think we bring something different than what the market has been seeing for the last couple of years because we have platform-based EVs that are purpose-built as EVs. And as a result of that, the capabilities, the performance, the comfort, all, everything that you need in that vehicle, I think, is going to be superior to many of the non-Tesla EVs that have come to market where they were essentially rushed a little bit to try to jump into that. So we feel good when you look at the LYRIQ, when you look at the Silverado, the HUMMER and everything else that we have coming out. We feel good about that demand path. And we don't need to -- we don't need to grow significantly in the market to get 200,000 to 300,000 vehicles out there this year, and we think we can do it with stable pricing. So that's the EV pillar. The third pillar is the software and services. I think we're a little bit behind on that, but we've made a bunch of changes on the team there with Mike Abbott, and he's brought in people from Apple, from Alphabet, from Meta. And we're taking a very, very different perspective. So rather than looking at software as an auto solution, it's looking at software as a customer-centric solution to build that platform out, to achieve the ultimate revenue goals that we said back at Investor Day a couple of years ago. And then the fourth pillar is the AV. As we have talked about pretty significantly, going back to the earnings call and other appearances, we have completed the investigative review. We've completed the review of the technology. We feel good about the intellectual property. We didn't execute on the communication and the regulatory side the way we should have, and we fix that, and we're focused on making sure that we're repairing those. But then also now, we're undertaking the strategic review of what does Cruise look like going forward because I don't think the broad-based expansion plans that we had before October 3 are in play right now. We've got to prove it out on a much narrower scope. So we've taken the expense down, taken the cash burn down pretty considerably. And then we're thinking about what the strategic alternatives are for that. All 4 of those pillars have to deliver against the foundation of financial targets and making sure that we're doing what we need to do. So I kind of feel good about the way things are laying out right now. We've got a couple of big tests this year in terms of EV volume, EV pricing and margins. But so far, like I said, 6 weeks into the year, feeling good about it.

Yes, absolutely. No, very well put on the 4 pillars, Paul. I appreciate that. Maybe we can double-click into each of those a little bit, starting with ICE. And going back, one of the big debates is the pricing assumptions and what will happen. And I think the 5 points of gross margin you mentioned in the refreshed SUVs, I think by now you've shown most, if not all of them. I'd love to understand how you get to those 5 points, maybe what the volume we're talking about for those refreshed SUVs looks like this year? Maybe a carryover into next year? Because it does seem -- with the full-size truck programs, they are still doing really well relative to the market and your refresh that there's a good shot for you to outperform kind of industry pricing again this year.

I mean, that's certainly our goal. I mean, we have been we've been blessed with a portfolio that consumers have really rallied behind. And I think the presumption for the last couple of years was that industry supply imbalance because of chips, logistics, et cetera, what was driving all the pricing. But I think what we leaned heavily into is our relative performance on incentives and average transaction price, and we've outperformed pretty considerably over the last couple of years. And we talked about that relative move on incentives from a 50 basis point surplus to industry average to 100 basis points below. It's worth almost $4 billion a year in incremental EBIT just because we're pricing to demand for our vehicles. And that's been great. I mean, ultimately, you don't get to do that if you don't produce quality vehicles that customers want. And that's been an incredible piece for us. So as you think about what that next [indiscernible], like one of the great success stories is the Chevy Trax. So this is at the low price end of what we do in our entire portfolio, and customers can't get them fast enough. So not only were we able to sort of improve the customer content and the demand for that vehicle, we're also able to reengineer it to make it more efficient to build. So we're at the top end of that 5 points of margin improvement from the legacy model to the refresh model. And when you think across the Trax and the Envista, and you multiply that by about 300,000 vehicles a year, you start to see where it adds up and you start to get some of that incremental profitability. So there's more to come on that. The Traverse, the Blazer, things like that. We had some holdups on quality holds on those launches. We've got to work through, but the team is focused on that. But I think the market is going to receive those both very well.

Absolutely. Now that's great to hear. So something you talked about, the second pillar on EV. Obviously, a lot of focus here. First, maybe an update to us to how the launches are going right now. I know there are a couple of some of the delays? Just maybe an update on how those are going.

Yes. So we've had a couple of unfortunate delays in the programs, and we're making sure that we work out the final bugs because the most important thing, especially when you're coming with a new platform like the EVs is you've got to deliver them with quality to the customers. And you can make the mistake of going too fast to hit volume targets before they're ready. We don't want to do that. So we're focused on executing some of the final touches in getting those vehicles to market. And that's going to be really important, not only for the reputation of Ultium, but also just for our scaling into what we're talking about. So I think there's good work going on there. Nothing to report now about when we think that will get lifted, but the team is working very, very hard at it. The other piece on the EV side is making sure that we are driving towards what consumers expect. And one of those areas that's really important is the $7,500 tax credit. So as we said at earnings, we produced a few vehicles, I think it was limited to do about 25,000 that didn't comply based on the late notice and some of the late machinations of the regulations. We said that we were going to hold firm and we upped our incentives on some of those vehicles to avoid customer confusion, but I'm pleased to report that today, all of the Cadillac LYRIQs that we're producing are now compliant. So it's an example of how we can be nimble within our supply chain and within our allocations to make sure that we're maximizing the benefit. So I think it's a great, great example for the team in terms of the types of things they're done because being able to close that gap in just 6 weeks was a pretty impressive effort by the team.

Yes, almost unheard of, you would be able to make a supply chain switch that quite quickly. In a market where everyone's -- it seems like they've turned more negative on EV. You put up a 200,000 to 300,000 volume target for Ultium. Talk to us on how you came up with that particular target. If you hit it, I think you should have quite usually a double-digit share of the EV market in the U.S. this year. How are you thinking about that target? And how much demand visibility do you generally have?

Well, I think we've got pretty decent demand visibility when you look at some of the vehicles that we had on order flow or a reservation, [indiscernible] with LYRIQ and the HUMMER, et cetera, and filling those holes. We've been much slower to produce those volumes than we initially wanted to when we rolled it out. But we feel good at how that's gone out. Some of the statistics around the initial orders for the LYRIQ coming from customers that were new to GM, I think there's an opportunity, especially when you look at our portfolio and you look at the Escalade IQ and things. There are consumers out there that would love to have had an SUV, but don't want to have the environmental impact. And they've never had the option to have a full-size SUV in a battery electric version. And that's the type of customer that we think is growth. So much of the thesis, I think, over the last couple of years from the bears in the sector have been that EV is going to come at the expense of ICE. And all that is going to do is lead to margin compression. Well, I think what we've seen over the last couple of years is we've grown ICE share at the same time that we're growing EV revenues. And that's what we think, at least in the near term, we can continue to do as we refresh the ICE portfolio and come out with the new products going forward. There's -- there's new EV adopters. And while that may have slowed down, it's still growing. There are EV adopters that bought a Tesla 5 or 6 years ago that maybe are looking for something fresh and different because, yes, Tesla does a great job with software, et cetera, but sometimes people want new cars, and they want new style, they want new form factors, et cetera. So we think that there are customers that we can get there. And then we think that there are customers that have been longing for an EV solution in the types of vehicles that GM produces. So you look at a pickup truck, you shouldn't have to sacrifice capabilities and performance because you switch from an ICE to an EV. And when you look at the Silverado with over 400 miles of range, towing capabilities, et cetera, we think we can bring something to market that is going to win.

Absolutely. And maybe on that line, I think in the past also you talked about how your share in the coast are relatively under-indexed relative to the middle part of the country. I think it's like 9% or so roughly in California, which could also be an opportunity. I'm curious if you're starting to see some of those -- when you look at your order trends, maybe come in. And maybe just more broadly, do you view the kind of slowering EV adoption in the U.S. as an opportunity or threat?

So the last part first, I think the slowing demand is an opportunity for us in the sense that it allows us to catch up. And we've built a lot of scale and we can grow into that scale without chasing so much. The difficulty of it is it maybe requires a little bit more work to sell the marginal unit going forward if you're trying to drive demand. But I think a lot of the opportunities that are out there for us, as you mentioned, on the coast, et cetera. the Chevy Volt did really well in California. And while we've taken a pause before we refresh that in an LFP configuration on an Ultium platform, there are other products out there, the LYRIQ, and I think some of the crossovers, the Blazers, et cetera, are going to do well in markets that traditionally they've underperformed. So we're going to continue to watch that. The early indications are that it's going to skew in our favor. But we've got to go work at it. And again, we've got to produce quality vehicles that meet customer expectations. And I think we've got the platform to do it.

Absolutely. And again, raise hand if you have questions, we'll have to call on you. The -- go back, let me just -- tying in earnings power and EV. Obviously, EV is a significant contributor to the kind of 2025 GM earnings story. How do we think about your ability to manage through different EV demand scenarios? Are there scenarios where EV adoption is slower, but you can still deliver year-over-year EBIT improvement in EV? And what's a breaking point, where maybe in a downside scenario, EV EBIT doesn't improve next year? How do you kind of think about the wiggle room you have to still make improvements next year?

Well, I mean, there's so many variables at play there. It's difficult to isolate it to just sort of one breakeven point. It depends what pricing looks, obviously, on demand, et cetera. But I think we've said this year, low 200,000 gets us to that variable profit positive, which is the #1 thing that we're laser-focused on right now, not because it's the end goal, but because it's the most obvious data point that we can convey to investors that we are on track to get to where we say we're going to be next year. So we're just kind of taking it sort of one week, one day, one month at a time, and making sure that we execute and do what we need -- we know we need to do. We haven't quantified our losses, mainly because I just don't want that to become the talking point in the story because it takes away from the overall performance of the consolidated entity, which has been really strong. And as you mentioned, we gave good guidance, too. But as you think about that margin improvement in EVs as we scale up, the earnings power of the company actually becomes pretty significantly magnified because we've got this outsized performance with the EVs underperforming. That's probably, I think, the single biggest lever that we have. And it's meaningful, and that's what we want to make sure that we're focused on executing.

Absolutely. Paul, common question comes up at the industry discussions is the flexibility you have over the next several years with different propulsion systems, just given the regulatory environment. I know it's still evolving. But any -- any updated thoughts on how you're thinking about that kind of planning process, just given demand, regulations and just how much flexibility you actually have?

Yes. Look, the only knowns are the portfolio we're producing today and the target of getting to 100% light-duty EVs by 2035. There are infinite paths between here and there. And I think that's the important thing. You probably heard me say before that every time I've asked somebody to draw out or sketch out an adoption curve, people draw slope line, they'll draw a logarithmic curve, they'll draw a straight line, but they're always straight. And my answer to them is the one thing I know is that it's not going to be straight, it's going to be choppy. And there's going to be periods of rapid adoption. There's going to be periods of slow adoption. But overall, it should be skewing higher. And that's what we're seeing. So I think the sentiment in the fall, I think, was pretty significantly overstated in terms of people don't want EVs. EV market is still growing. It's just not growing as fast as it was going forward. So I think there are opportunities for us to turn the dials to manage within that changing demand state. So you look at a plant like Spring Hill, we can actually produce more ICE or more EV, and we can continue to dial that in. And we've got make sure we maintain balance and discipline with the supply chain. But overall, we've got the flexibility. We've got the modular manufacturing in Factory ZERO, where we can add lines pretty easily, et cetera, to adopt. So I think we've got a lot of flexibility in the system, and that goes back to what I said about the ICE pillar, is there are some people that we talk to that say, why are you still investing in ICE? You want to invest in ZERO? Well, we're investing in ICE because we're refreshing the products, we're growing our share off really strong platforms because of the investment that we're making in it. And that's a really important piece of the puzzle. And as we face uncertainty of EV adoption, having a fresh ICE portfolio is probably the biggest asset that you can have when people are unsure what they're going to do as long as I can continue to flip into EVs and scale up. And when you look at the battery assembly, the vertical integration that we've done, the plant flexibility, I think we're going to very, very good position to play that optionality over time.

Absolutely. This kind of brings into maybe a CapEx question, a 2-part question. Firstly, just to go back to 2023, and talk about the factors that led you to kind of come in a bit under the original target for CapEx and kind of that discipline. And how should we think broadly about capital spending in the next few years? Probably to your point that ICE is strong, EVs are growing? I imagine, in a few years it might be a full-size truck refractory redesign coming. How do you kind of manage the CapEx, just given that both of those sides are still performing pretty well?

Well, I think embedded in your question is the one key word that I would say is the most important, which is discipline. I come from a sort of fundamental viewpoint of capital that there's really 2 hurdles that you have to get over. One is, can you afford it? And the reality is, we could afford a lot more CapEx. I mean, when you look at the type of cash flow we're generating, we could invest more. The second fundamental pillar is can you deploy it effectively? And the short answer to that question is, I don't think we can deploy more capital effectively without growing the fixed cost base. I need more engineers. I need more facilities. I need more assets, I need more strategists, et cetera. I don't want to increase the fixed cost base of the business when we are racing to be as lean as we can to remain competitive with all the global threats that are out there. So I think the team has done a really good job of embracing that discipline around capital and really looking at projects, projects that might have a good return but have risk attached to them or otherwise, have some fixed costs attached to them and saying, okay, there will be an opportunity to do that in the future. It's not one that goes away, and maintaining the discipline of focusing on current cash flow performance and return on invested capital and being able to deploy a few things right rather than trying to do everything average. So we've been tweaking that. I'm really pleased that we've come in lower than what we've said at the last couple of Investor Days, mainly as we look at where the environment is. I'd rather be in a world where we have pent-up ideas and pent-up demand for capital than we've invested in every idea out there, and suddenly, I've got to stop and I've got to start pulling it back. So I'll preface that by saying I never want to work for a company that doesn't have any ideas on how to invest because you've got to have that creative juice flowing, especially in a product-centered company. But we've got a lot of ideas. And the team is just really focused on managing that as aggressively as we can.

Absolutely. And speaking of ideas and long-term growth, if we go back to the 2021 Investor Day, what are some of the growth initiatives that you're still excited about that you still think are kind of out there for you in the next few to several years?

So I think if you go back to the 2021 Investor Day, it was really about getting people to think about GM differently than an old, mature, cyclical industrial, because one of the things I've shared, I came from an industry that managed to transform itself and transform a company within a mature industry. This is not only a company transformation, it's also an industrial transformation. When you think about what vehicles are going to do, the revenue opportunities that are out there, I'm still excited about a number of those initiatives. We've scaled some of them back in terms of being focused, and that's really about executing on the big value drivers like EVs and software and AV. We've scaled back some of the growth and innovation businesses, et cetera. But I actually still feel good about all those pillars. I think software has probably gotten out of the gate a little bit slower than we wanted, but we still see a ton of potential for that. And I think bringing in the consumer-oriented coders and designers from great consumer platforms, I think, is a really, really good sign of not only their belief in our mission and what they can accomplish, but also the potential of what it means to get a fully software-defined vehicle. And ultimately, what that will be able to do in terms of driving revenue. AV, Cruise, we still have very ambitious plans for Cruise. The rollout is obviously different, when you think about the standard of safety that people expect, it's not just, I think, anymore that it's safer than a human driver. We have a lot of data that indicates that it's safer than a human driver. But you've got to go through that perception where most people think they're better than the average human driver. And statistically, it's just not possible. I know I'm in the top half and above average, but everybody here, so I'm sure some people would say, "Oh, I'm not." But the reality is, against the public perception of autonomy, you got to go view through the lens of the person who is always believing that he or she is an above average driver and saying, "would I have done that?" And that's a difficult, difficult standard. And so it's really caused us to rethink how that public perception is. So we're taking the narrower focus of proving that out of creating the momentum to try to get back to where we were. But I think as you've seen with other companies out on the road, with Waymo, et cetera, the public around autonomous right now and around tech is a little bit soured. So we think we can win. It's probably a different trajectory than where we were a couple of years ago. But we're going to still continue to focus on it and make sure that that's a technology that accrues value to GM and GM shareholders for a long time to come.

Absolutely, Paul. And maybe just to stick on Cruise, just with the more deliberate kind of go-to-market strategy that you have, and of course, you're cutting the losses this year. How do we -- the high level, sort of think about a path to profitability? Because it used to be that you needed just a lot of scaling to sort of cover the fixed cost to get there, if you're going to be a bit more deliberate. How do we kind of think about maybe the next few years and how that path might look like?

Well, I think, first of all, we've cut expenses pretty significantly, but we've cut them in areas that still preserve our investment in the IP. And that's what's really important. So when you think about the reductions across the board, they've largely been administrative, operational, properties and facilities where we were gearing for a broad expansion across multiple cities. We're still heavily focusing on investment in the tech and making sure that we're running the simulations and improving the IP there. But that's how we were able to save $1 billion year-over-year in '24 versus '23 on what we're projecting. So I think we can get to the point where it doesn't look materially different. It might be kicked out a couple of years, but that's the work we're doing right now and iterating around what's the right trade-offs of growth versus capital, of breakeven versus breadth and strategic launch, et cetera. So more of that is to come. But as we work through that, we'll obviously bring more of that information out to our shareholders.

Absolutely. And I think you alluded to it a little bit before, but I just want to make sure. But since the reviews began, I guess, have now concluded, has your view of Cruise's technology or competitive position changed at all? Or is it just really mostly the business plan, obviously, the events of last year, but your view on tech and competition at all change of their competitive position?

I don't think so. I mean, I think we still have a lot of confidence in the technology, and we did have a third-party group come in and review the technology, and they agreed. And that's really important. You've got to get that validation for our own comfort as well. I think the public perception challenge is one that's a little bit different than where it is. Going back to what I said about making sure that we're driving to the right standard because I think it's probably elevated in the short to medium term, in terms of what we've got to do. And we'll continue to execute on that. But we do staunchly believe in the tech, but we've got to have that trade-off because it is rideshare in particular, it's a capital-intensive business, and we've got to think about what the right balance is between expansion, capital demands, partners, investors, et cetera, thinking about what the right way is to take it into the next phase.

Absolutely. And then maybe tying Cruise back into GM and software. I think in the past, there was a plan for Cruise to play a future role in GM sort of personal AVs, maybe at some point, mid to late decade. But do you still -- should we think about Cruise as being part of your kind of GM personal AV solution? Or will Cruise be kind of 100% focused now on the robotaxi and delivery verticals?

I've always thought that at the end of the day, robotaxi was a really creative paid form of R&D and development to get the cost down to ultimately create personal autonomy options. And that's certainly where we think the long-term future is. And I think we've got a decent lead in that in terms of the OEM space, et cetera. So I think it's something that we're going to continue to invest in. We found ways to actually increase the sharing between GM and Cruise, and Mike Abbott and his team have done a really good job of building those bridges, and [indiscernible] on the Cruise side has done a really good job of working with the company to figure out what those synergies are and to harness it, both for the benefit of GM and for Cruise. So more to come on that. But like I said, it's in a good spot. We just got to figure out the right commercial deployment.

Absolutely. And Paul, you mentioned software in kind of Mike Abbott's team. What are some of the goals? How do we think about the objectives in software this year for the company?

Well, number one, it's about execution, right? We've got to get the vehicles that are out there on that platform. They're continuing to generate to develop the next iteration or the next defined vehicle or SDV, as we call it, software-defined vehicle iteration, down the road, which will be a really, really good sort of foundational platform for what we need to do going forward. But right now, it's just all about execution and making sure that we get the vehicles out. And the team is really focused on it, and they've done really tremendous works about improving our validation processes and testing procedures to make sure that when we ship a vehicle out its quality.

And then one more on software. What happened with Ultra Cruise? I know it was a lot in the headlines recently. And what's the game plan for Super Cruise? It seems like it's very well reviewed and successful for you. What's the game plan there for the next few years in terms of product and volume rollout?

So we're continuing to invest heavily in Super Cruise, and that's our Level 2 plus system that's currently in vehicles. We've recently doubled the number of miles that are out there available to it. I think we lost a little bit of momentum there with the chip shortage, some of the chips that are required for Super Cruise were some of the most heavily impacted during the chip crisis over the last kind of 1.5 years ago. And we lost some momentum. But we're back to expanding that. We're bringing it out to more vehicles. And ultimately, that's a good sort of foundational package to continue to drive sort of that software revenue piece. But customers love it, and we think it's going to have a lot of momentum as we keep expanding its base. So we're going to continue to work on improving that. Remember, it's 2 approaches to the same problem, right, which is ultimate driver technology. So you've got Cruise on the Level 4 side. We're focusing on maximizing technology and then minimizing cost. And you've got Super Cruise, which is going from an affordable cost base to increasing its capabilities. And we think, ultimately, those converging a solution that creates true Level 4 for a retail platform, but we've got to get the cost of the tech stack and the sensors at Cruise are not in a sort of retail price point right now. And that's where rideshare can come in and help scale that as you develop better sensor and more efficient technology. So we think those converge, ultimately, and we're working hard to make sure that we can bring that to customers in the future.

Interesting. Very clear. Is there a question in the...

Talk a little bit that we learned with the OnStar Insurance program as it relates to [indiscernible] services.

So the question for the webcast talked about OnStar Insurance and what we've learned. That's still a program that's working. So we moved the ownership of that business into our GM Financial unit. So they've got a much better platform and experience for selling financial products and deep customer links going forward. So they've been working hard on the sort of regulatory environment and getting approval. And we've seen some good sort of early indications. It's still really small scale, but it's something that we're going to build out. Insurance is probably one of the harder ones of the sort of software businesses because it requires some active selling. At the same time, you've got a software platform. And I think items like Super Cruise, as we just talked about, which gives you a conduit into the software capabilities of the vehicle and a direct link to the customer is the foundation where you're going to be able to build more features and functionality into over-the-year updates, similar to what other competitors have done. So I think it's out of the gate a little bit slower, as I mentioned, but still something that we feel has got really, really good potential for billions of dollars of higher margin revenue coming in, in the future.

A question back there?

Paul, if this was covered before I came in, we could skip it. But I wanted to know your thoughts on how the administration's potential pushback or change in the EV targets for 2030 impact how you're approaching your own shift capital spend, focus on the EV space?

Yes. So the regulatory environment is obviously a very important consideration as we think about what the portfolio looks like going forward. And I think, when you look at the combination of the IRA against the CAFE standards, environmental standards, you've got to make sure that you don't get into a position where we're forcing adoption on people. I think EV adoption is going to come, and it's going to come much faster when people are swayed by capabilities and performance and comfort of the vehicle. And a lot of the way that vehicles are sold today is my neighbor got one, it's really cool, and I want one, too. I think that's going to run its course. I think the more we focus on trying to use the regulatory environment to drive adoption, I think that can get a bit dangerous because that's ultimately what leads to overproduction, having to incent to push those vehicles out and really hindering profitability. So I think, as we look at the adoption curves and we look at our own form of compliance, we've obviously got to keep that intact. So I think slowing that adoption down and still achieving the goals, working proactively with administrations to make sure that we're looking at it from the consumer data as well as well as trying to drive adoption is the ultimate compromise, but it's something that we've got to obviously work to. So anything that gives us more flexibility to help drive that adoption against our goals is ultimately going to be beneficial to our investors.

Just a follow-up on the EV adoption slowdown. So just curious, you mentioned in the fall that you thought it was overdone. In terms of the priorities for you, what do you think is really driving the slowdown? Is it more price point? Is it more charging infrastructure or more potentially, and this is what I'm most curious about, is the dealer network and their willingness to really push the product or education? If you kind of prioritize what you think is causing the slowdown, what's the majority of the problem?

Well, I mean, I think it's a combination of factors. One, I would say that our dealers are excited about the EVs that we're bringing to market. And we've got to make sure that we execute well. And like I said, we've had some quality hold challenges that we've got to be focused on resolving. But as far as the portfolio goes, I think they feel good about that. I still think the consumer is EV adoption. And it's not -- I've got 2 cars or 3 cars, and I want to put an EV in my garage. A lot of those customers who've already bought EVs because I've got a full-size ICE vehicle or whatever for vacations, road trips, et cetera. I think for the consumer that needs to drive their vehicle every single day to and from work or they need a road trip and they only have one vehicle, there's a lot of uncertainty about what it means to have an EV. And I think some of that is charging anxiety. Some of it is range anxiety. Some of it is what people read in the papers, et cetera, and the cold snap, and different issues aren't helping that in a period where there's uncertainty. I also think that -- and again, set Tesla aside here, I think many of the vehicles that have come to market, because they were trying to rush into the market to play that volume game, have underperformed what expectations are in terms of the capabilities and so on. So bringing that platform vehicle that was purpose-built to be an EV, which is in our portfolio like we've seen with the HUMMER, we've seen with LYRIQ, we're seeing in the early stages of the Silverado, is something that we think can actually exceed customer expectations where we can help maybe rekindle some of that going forward. Price is always going to be a factor. But I think the other piece of it is the one thing that you know when you drive an EV is your ownership cost on a monthly basis are considerably lower when you're not going to the gas station once or twice a week and oil changes and so on and so forth. So a lot of that is just going to come with experience and broader adoption. So I think you're going to see periods where it slows down, it speeds up and slows down, but I think it's a long trajectory of stepping up and getting people comfortable with it.

Great. I think -- I think we are out of time. So please join me in thanking Paul, the entire GM team. Great discussion. We've learned a lot. Really appreciate your time. Thanks so much.

Thank you.