General Motors Company (GM) Earnings Call Transcript & Summary

Please welcome GM Vice President of Investor Relations, Ashish Kohli.

Wow. Good afternoon, everyone. What a great turnout. For those of you that have joined us here in person, thank you. As you know, safety is one of our top priorities at GM, so please take a moment to look around and locate the nearest exit, just in case there's an emergency. Wow, that sounded like an ad to be a flight attendant. Don't worry, Paul. I'm actually not looking to change careers. Continuing on, we're also broadcasting live via the webcast, so thank you to everyone that's joining us remotely. The presentation materials, that will be posted on our website after the event is over. Today, management is going to make forward-looking statements about our expectations. These statements are subject to risks and uncertainties that could cause our actual results to differ materially. These risks and uncertainties include the factors identified in our filings with the SEC, so please review the safe harbor statement on the first page of our presentation as the content of today's event will be governed by this language. In addition, please see our disclosure on the vehicles and technologies that you will see today and our statement on non-GAAP financial measurements. We are very excited to be here today to share the progress we've been making. Hopefully, for those of you that are here in person, you enjoyed the experiential piece this morning. And now we're going to go through a series of presentations, after which we've left plenty of time for your questions, which I know is really critical to you. Also, one last thing. During Mark's presentation, we will be sharing sensitive images. I'd like to remind those that are in the room to please refrain from taking any photography. So without any further ado, I'd like to begin GM's 2024 Investor Meeting.

Please welcome GM Chair and CEO, Mary Barra.

Well, good afternoon, everyone. How many people have had a chance to drive a vehicle? Show of hands. Thank you so much. How about a tour of the battery plant? Great. And the assembly plant? All right. Well, that is why we wanted you to come to Spring Hill. We really wanted you to see and experience our battery expertise, our manufacturing flexibility, our scale, and especially an opportunity to drive our vehicles. The vehicles we brought are the result of strategic investments that we've made to drive profitability, and they are creating a strong financial story for GM. We have gained retail market share in North America with above-average pricing and below-average incentives. We're growing in our traditional strongholds like full-size pickups, where we've led the industry for 4 going on 5 years as well as SUVs. We've earned consistently strong results in J.D. Power's Initial Quality Study and top honors in S&P's global customer loyalty study. We increased EV sales in North America sequentially every quarter this year, and we are now growing faster than the market. Not only did our third quarter EV delivery set another GM record, we have outsold Ford calendar year-to-date, and we moved into the #2 sales position by outselling Hyundai and its brands. Through the first half of 2024, we earned $8.3 billion in EBIT adjusted, and we generated $6.4 billion in adjusted automotive free cash flow. And we accomplished this while also investing in autonomy and returning significant cash to shareholders. From 2022 through the end of 2024, we have returned about $20 billion to shareholders through dividends and share repurchases, and you'll see when we report our third quarter results in a few weeks, we continue to execute well with consistently strong share, pricing and incentive performance in North America. We remain on track to produce and wholesale approximately 200,000 GM-branded EVs in the region this year, and we continue to expect our EV portfolio to reach positive variable profit this quarter based on our current trajectory. This inflection point in EV profitability is arriving much faster than many people thought, but it's driven by the strategy we began executing in 2018. We engineered a dedicated EV platform, which is far more efficient and scalable than adapting existing ICE vehicles. As you saw today, we invested in U.S. battery manufacturing through joint ventures to reduce our capital commitment and to get costs down through vertical integration and scale. Steadily declining cell prices driven by the scale, the quality and the efficiency of these plants are key factors driving EV profitability for us, and we're adding EV assembly capacity in a capital-efficient way as well. For example, we saved more than $1 billion in capital at Spring Hill alone by adding EVs to our existing capacity instead of building a greenfield plant. We now have the flexibility to further scale the Cadillac LYRIQ and to add new models like the 3-row Cadillac VISTIQ. All of this clearly separates us from competitors who haven't launched dedicated EV platform or built their own cell plants. So now let's talk about 2025. We will share formal guidance for the calendar year in January, but I can tell you today that we expect our financial performance will be in a similar range to 2024. The drivers are tailwinds that are within our control. First, we are in the process of launching 8 new or redesigned ICE SUVs in North America, including high-margin products like the Cadillac Escalade and high-volume products like the Chevrolet Equinox that are more profitable than the outgoing models. Second, we believe our EV losses peak this year, and we're focused on significantly improving profitability next year. Third, we will exit 2024 with a fixed cost structure that is $2 billion lower net of D&A than 2 years ago. And fourth, GM and our partner SAIC for SGM are taking bold steps to make sure our joint venture in China is profitable and sustainable. In China, you'll begin to see evidence of a turnaround yet this year, with a significant reduction in dealer inventory and modest improvements in sales and share. The combination of these factors will allow us to continue to generate and return significant cash to shareholders after we reinvest in the business. As I've said, we expect to reduce our common shares outstanding to less than 1 billion by early next year. That's down about 600 million shares from our peak. Looking beyond 2025, we believe at our core that EVs and software will enhance our customer experience and transform the way people move. EVs are fun to drive. The total cost of ownership is lower than it is for ICE vehicles, and we're helping to make charging EVs outside the home easier and more convenient. This will make EVs a better choice for even more people. At the same time, software will improve every part of the ownership experience, including performance, quality, infotainment, navigation, charging and more. In addition to our platform, software and cell plant investments, we're working with strategic partners and suppliers to become even more capital efficient, drive down costs and move even faster. We're also investing in upskilling our workforce to meet the requirements of the future, and we're partnering with our dealers to make selling vehicles less costly and more profitable for everyone. At Cruise, Marc Whitten, an experienced leader at companies like Sonos, Amazon, Unity and Microsoft, recently joined Cruise as CEO. In recent weeks, Cruise has begun supervised driving in Phoenix, Dallas and Houston and recently commenced driverless testing in Houston, always gated by safety. We will continue to be disciplined with our investments in Cruise and we'll provide more updates as we move forward, including updates on our ongoing discussions with potential partners. We have come a long way in a relatively short amount of time. Of course, a transformation as significant as this never happens in a straight line. We never thought it would. We've learned a lot along the way, and we've made adjustments, and we will continue to be agile and flexible as we move forward. Our goal today is to show you how we will continue to build on our growing EV strength and our ICE leadership. Mark Reuss and JP Clausen will discuss the product and manufacturing strategies we're executing to maintain pricing power and offset cost pressures, and we're excited to have Kurt Kelty here to walk you through the evolution of our battery cell strategy, which is designed to deliver the performance and range customers want with steadily declining costs. Dave Richardson is here to talk about the new software organization we've built to deliver innovative, high-quality in-car experiences. And after a break, we'll close our prepared remarks with a financial update from Paul and then move into Q&A. So before I hand it over to Mark Reuss, I want to say how honored I am to lead such a tremendously capable team. We have savvy industry veterans and several new leaders with expertise in key areas. Together, we will build and expand on the competitive strengths of General Motors, which includes our commitment to product excellence, it all starts there; scale; capital efficiency; and cost discipline. These will differentiate us from others in our industry and frankly, from our own past performance. And I believe before the day is done, that you'll agree that GM has plenty of upside relative to the consensus view that the auto industry has reached peak earnings. I hope you see our true long-term potential, and again, I want to thank you for making the trip and coming here. [Presentation]

Please welcome GM President, Mark Reuss.

Hello, everybody, and thank you for joining us today. The theme of my remarks today is pretty simple. It's how we're going to accomplish what Mary discussed, sustain our momentum and grow our earnings in 2025 and beyond. And it all starts with our products. And hopefully, you had a great chance to drive those in both days and see our manufacturing facilities here, which are particularly impressive as well. So we're actually creating a strategically-targeted portfolio of compelling and appealing vehicles that are more profitable, including our most affordable entries, and I'll talk about that in a minute. We plan to build the right vehicles in the right segments more effectively than ever. We are entering an era of unprecedented efficiency in product development and manufacturing, which is already paying off for us, and we're also focused on the other ingredients to success: improved profitability and efficiency in our ICE vehicles; improved margins in EVs; and continued progress in battery cost; high-quality software that delights our customers; flexibility to meet market demand and the agility to do so quickly and efficiently; the right partnerships, where appropriate and beneficial; an innovative approach to sales; and more targeted, yet less expensive marketing; and doing all of that while producing beautifully designed vehicles both in ICE and electric that people really want to buy, and leading to strong pricing and increased market share because of that, which leads to increased scale, which leads to even more efficiency and profitability. That is the winning formula. So let me talk briefly about our profitability efforts with a phrase I'm sure you've heard us mention before, and that's winning with simplicity. It's about making our customers' lives easier while also taking cost out of the system. It goes hand-in-hand with our retail innovations, because as we reduce the complexity of building a vehicle, you also reduce the complexity of buying a vehicle. We optimize trim and option packages across all of the brands. We save on engineering, tooling, manufacturing and logistics costs. It affects everything from processes to plant space, as you saw today. This has become a real focus over the last 18 months and has already provided huge benefits. We have eliminated about 2,700 unique part numbers, including expensive items like seat assemblies, fascias, wiring harnesses and much more. The parts reductions cover both ICE and electric vehicles. On average, we are seeing about a 10% reduction in total part numbers per vehicle, with a strong focus on delivering the right content to the customer. All of our programs now in development had this increased focus on efficiency and simplicity right from the start, laying the groundwork for even greater benefits moving forward. For example, if you take the 2025 Cadillac LYRIQ versus the 2024 model, we've reduced the part count by 24%. That's a long list of parts we no longer have to design engineer, source, warehouse and install and validate. And we're not stopping there. The next generation of simplicity will build on these efforts and focus on controlling total build combinations, further reducing parts and helping our plants run even more efficiently. For example, our next-generation full-size trucks and SUVs, which I'll talk about more in a few minutes, have reduced trends by about 35%, selectable options by 60% and buildable combinations by about 80%. Those are huge numbers. Overall, we reduced the part count by more than 1,000 parts. This will prove to be the rule, not the exception. Even today, we're seeing the results of efficiency improvements that we have already made. We're taking out costs of programs, improving profitability and creating vehicles that customers love, like the new Chevy Trax and the Buick Envista. Trax and Envista have helped raise our share of the U.S. small SUV market to its highest level since 2007. We now lead the segment. The new Trax is widely popular, and the calendar year-to-date sales are up 130%, and it's much more profitable than the model it replaced. We have seen the vehicle EBIT improve for the Trax by about 20 percentage points versus the previous model driven by reductions in structural costs and the decision to simplify our offerings. We've moved to one engine choice, for instance, and a front-wheel drive only. Moving away from multiple engine transmission and drivetrain configurations is a huge savings for us, yet the vehicles still command higher pricing because of their design, packaging, performance, safety and innovation. That same profitability story applies to the move from the previous Buick Encore to the new Encore GX for Buick and the Envista, resulting in a 14 percentage point improvement in vehicle EBIT. Also very proud of that. I'm also proud to say that we're now profitable in the entry-level segments or what I like to call the first-time GM customer segments. Some of our competitors have simply abandoned them because they can't make a business case for being in these segments. We can, and we're happy to have those customers on board. The story repeats with the gorgeous new Equinox ICE version. You probably drove the EV version today. And from the previous Equinox and Terrain to the new models in the ICE portfolio, we expect almost a 4 percentage point of vehicle EBIT improvement. It's getting us into the mid-single digits, and that is the industry's most popular segment. And Equinox is a high-volume play for us, so that improved margin means a healthy increase in market share and profits. We'll also see about a 10% point vehicle EBIT improvement from the prior generation of the Traverse, Acadia, Enclave to the all-new models. These are gorgeous. This is another growth segment in which we're doing very well and will do even better when we get the volume, which is happening as we speak and go to dealers. We are thrilled to increase sales in these 3 segments because once we earn new customers, we tend to keep them. In fact, GM has led the industry in owner loyalty for 9 consecutive years, according to S&P Global Mobility. Together, these segments represent more than 1 million units of annual volume, so it is a big profit tailwind. The new Traverse specifically is more profitable. Its share has increased almost 2 percentage points since launch, reaching 7% of the mid-SUV segment in its second month. Its turn rate is down to just 10 days compared to 32 days for the model it replaced. Big change. And its ATP or average transaction price is $46,700, which is $5,000 higher than the segment average. So we got a good hit in our hands here. Now as far as our overall product plan goes, none of this is just good luck. Two years ago, I told you we're going to strategically refresh some of our best-selling and most profitable ICE products, even as we continue to invest heavily in our EV programs. Because we made that important decision, our lineup now includes new or refreshed ICE vehicles, many in the hottest segments in the market just when we need them the most. So let's talk about trucks and SUVs. We are the market leader in the highly profitable full-size light-duty and heavy-duty truck segment and have been for the last 4 years going on 5. We have seen steady growth in our share of the higher priced, higher volume, higher margin retail truck market. In fact, since 2019, we have grown our retail share 1 to 2 points per year on average, and we're now at 44% of the segment with the highest customer loyalty rate. In large SUVs, our leadership of more than 50 years translates into our calendar year retail market share of 64%. On the large luxury SUV side, we've just refreshed the Escalade with the new technology and fresh exterior and interior, including a beautiful pillar-to-pillar screen that you see right here. Big improvements for Escalade. And Escalade has been the best-selling luxury full-size SUV since 2014 with more than 1 million units sold globally, and we expect the new one to pick up right where the previous model stopped. And so this is a big year for the new Escalade. We also expect similar sales and profit performance with the refreshes of the Suburban, Tahoe and Yukon in the near term, and the same goes for our full-size pickup trucks whose next generation will raise the bar even higher. So I'd like to point out that as we refresh these trucks, we continue to make strong improvements in our ICE efficiency and performance. Our next-generation full-sized V8 trucks coming soon will see a 4% to 6% efficiency improvement at launch over the mid-cycle enhancement of 2022, and this is 10% to 12% better efficiency-wise over the previous generation, which debuted in 2019. So these are big efficiency improvements. The bottom line is our continued investments in the pickup and SUV franchise are paying off and will drive profits to help fund our growth and our future. Speaking of growth, let's talk about EVs. As Mary said, we're on track to achieve positive variable profit in Q4. To get there, we are driving strong execution, accelerated material cost reductions on top of that and realizing our operational efficiencies as we come online in volume. We expect to produce approximately 200,000 EVs in North America this year, which we think is the right level because the market continues to grow slowly but surely, and we are scaling to meet demand where it's at. So in Q3, EVs grew to 8.2% of the total U.S. vehicle sales. Our share of that market grew to 9.8%, almost 10%. So we're probably driving some of that EV growth as we ramp up, just as we did, if you remember, in the midsized truck segment way back when, when people said, you shouldn't get into that segment, it's done. You can't make money in it. We got into it, we grew it, and it's been fantastic since then for us. Our Q3 EV sales were up 46% over Q2 and up 60% year-over-year, and as you've heard, we are now #2 in U.S. EV sales in the quarter. Here we come. As we add volume, margins improve, but we're guided by the customer, and we will not overproduce. Our discipline, I think you've seen in ICE vehicles as well as EVs, is impressive. We have more EVs on the way, including what will be our most profitable EV yet, the Escalade IQ, you see it over here. This is an unbelievable -- it is a work of art. In fact, we're driving our captured test leads right now. This is an unbelievable vehicle that's going to come to market here very quickly. Then after the IQ, we'll see the expanded Cadillac EV roster with the OPTIQ, the VISTIQ and the top of the line CELESTIQ all joining our LYRIQ. At the other end of the market, late next year, we will launch the next-gen Bolt. The 2026 Bolt will offer the same value as the original Bolt and much more, and it will be a moneymaker for us. Think about that. It's too early to get into the performance details, but it will have the latest technology and faster charging. So this is pretty cool. It's a direct result of the investment in the next-gen EV platform, and we don't need to create a skunk works to create affordable electric vehicles. We know how to do this. The price isn't final yet, but it will be only slightly higher than the 2023 Bolt, which started at $28,795. And it will just be one member of a family on the Bolt, including an even lower cost option. Again, very exciting. I love stuff like this because it's -- so many people will get to experience it, so I'm very, very excited. We have a loyal and enthusiastic customer base who loves the Bolt, and we're excited to deliver a new generation to them. And as we predicted, EVs are proving to be, for us, a growth market. Our conquest rates are much higher with our EVs than our ICE vehicles. All of our brands are showing 60% to 67% non-GM trade-ins for our EV sales, and that's compared to 43% to 46% on our ICE vehicles. Also, our new EV customers are trending younger, with higher levels of education and household income, and importantly, they tend to live on the East and West Coast. In fact, 60% of our EV buyers live on either coast compared with 40% of our ICE buyers. And the LYRIQ, as you might expect, is helping drive our coastal growth. It's our top-selling Cadillac in the West region, ahead of Escalade. And also, California is the #1 state for LYRIQ sales. Los Angeles is the #1 city and New York City is #2 for LYRIQ. And finally, the LYRIQ is outselling all luxury EVs from the European luxury brands of BMW, Mercedes-Benz and Audi nationwide. Big statement. Really big statement. So let's switch gears a little bit here. We've covered improving profitability and efficiency in a winning portfolio, now let's talk cost reduction. We said at the outset of last year that we would achieve net $2 billion in fixed cost reduction. We hit $1 billion in 2023, and we're on track to hit another $1 billion by the end of this year. As always, there is more work to do, and finding further efficiency is now ingrained in our culture and our machine. We're saving money through our approach to sales and marketing, retail innovation, and you may recall a couple of years ago, I talked to you about some new retail strategies, there was some doubt in the room, I got to say, such as our digital retail platform, that, all told, would eventually save us about $2,000 per vehicle in total go-to-market costs. We have really attacked the cost of selling a car from end to end, and we continue to make huge progress towards that $2,000 figure. We're well on our way. In fact, we're doing -- I'm very proud of the team. We have significantly reduced our marketing spend without compromising reach. We're getting more eyes on our products, and more of the right eyes in targeted and measurable fashion. We booked a 20% reduction in marketing spend per vehicle in 2023, while growing retail share. So this is actually working, and it's extremely exciting for the team and extremely exciting for our customers. So overall, we have taken a measured, disciplined approach to pricing. We have strong competitive advantages in our products, as you saw today, our dealer network, our service and distribution, our quality and our customer loyalty. Because of this, we can keep incentives down. Great products and rightsized inventory are what have enabled us to consistently lower incentive spend compared to the industry. This translated into just over $1 billion of savings in 2024. Our incentive spend as a percentage of ATP is among the lowest of all major OEMs at 4.5% for quarter 3. That's 2.4 points lower than the industry average, which is material and substantial. Our ATPs this year have remained around $50,000, about $5,000 more than the industry average. In fact, we have 18 vehicles that have ATPs above averages in their segments. At the same time, we have captured 0.5 point of retail market share versus 2023 thus far. Huge discipline and success driving the market, driving our share with our product that are coming to market. The last thing I want to address is the role of plug-in hybrids in our strategy. As you know, we're going to bring the technology to North America in 2027. The timing makes a lot of sense because we know ICE vehicles will continue to be popular, and emissions regulations are only going to toughen. We're not missing anything right now without PHEVs or mild hybrids in our lineup, to be clear. PHEVs represent just 2% of the total U.S. sales, and we believe the breadth, depth and excellence of our EV and ICE portfolio offers more choices and better choices than the PHEVs and mild hybrids out there. Let me give you a couple of examples of that. The Silverado and GMC Sierra pickups equipped with our 3-liter diesel are more affordable than the F-150 hybrid and get better fuel economy at 27 to 30 miles per gallon highway while running on less expensive fuel. And by the way, we've sold more diesel pickups this year than Ford has sold hybrid pickups. Another example, our Equinox EV, which you drove today, which has more than 315 miles of range, so 315-plus, costs less than most popular competing hybrids after the IRA credit. And that popular Chevy track I mentioned has great fuel economy, and the base price is thousands of dollars beneath the Toyota RAV4. It even costs less than the Toyota Corolla hybrid or any hybrid out there. So make no mistake, as EV choice range and affordability continue to improve and the public charge infrastructure grows, EVs are going to become the right choice for more and more customers. And we are going to have a fully stocked portfolio of amazing EVs ready for them, as you see as we continue to roll it out. So I can't say it enough, this product portfolio, our agility and flexibility, our discipline and our drive is why I'm so confident looking ahead to 2025 and beyond. We are making the best vehicles we have ever made, ones that people see value in and will pay for. And that's not talked about enough. We, as a company, have produced solid financials for a long time and through some pretty tough conditions every year, frankly. I am proud of this company. I am thankful for the people who work hard every day, and you saw a lot of them today, to make it happen and make it the best it can -- the very best it can possibly be. We are at the apex of the curve, ready to accelerate and show the world exactly what we can do and how good our products and people really are. Our people, our quality and our manufacturing, our design, our engineering, anyone and everyone working together in this company together to be the very best. Yes, we're making cost cuts, but as has been said time and again, you can't cut your way to growth, no way. You have to make things that people want, that people must have. We are doing both, and we are set up for success over the long haul. So thank you very much for being here, your time. And now I'd like to take it over -- turn it over to one of the leaders who are going to help us do that, starting with Kurt Kelty and our battery story.

Thanks, Mark. Good afternoon. My name is Kurt Kelty. I'm the new VP of battery cell and pack. I want to talk to you today about 3 things. First is my impression of GM's opportunity in EV battery technology. Secondly, an update on cell production. And thirdly, a new battery road map that will give us the flexibility to meet customer expectations and improve profitability for the long term. As Mary mentioned, I'm the first of 3 new faces you're going to see today. Believe me, though, when I tell you we're not new to each other. Each of us have decades of experience working in highly disruptive Silicon Valley environments. Since we arrived, JP, Dave and I, as well as Baris, Dave's partner in software and services, along with tenured GM leaders like Josh Tavel, Ken Morris and others, are all working together to drive GM's transformation. Battery technology, software and services and global manufacturing are 3 foundational elements in our strategy to build a winning portfolio of vehicles with innovative, high-quality experiences for consumers and commercial customers. You might ask yourself, what brings us to GM? We saw an incredible opportunity to create positive societal, environmental and economic impact at a truly iconic American company at scale. We found a leadership team with a vision of an all-electric future and eager to embrace new thinking, to have tough conversations and to make hard decisions in order to do what's right. A team with the skills, abilities and drive to create a pathway to success and help prepare the company to win in a new era of transportation. And we believe that we're standing at pivotal moment in history where the experience we bring could be catalysts for change on a scale no other company can match. For me, I'm here because I believe GM can leverage its product lineup and strength to sell massive quantities of EVs, and I believe GM has the opportunity to become a leader in EV battery performance and cost. Let me explain. First, I believe the conditions are now in place for North America to seize EV battery leadership from China. NiCad, nickel-metal hydride and the lithium-ion technology, including nickel manganese cobalt and lithium iron phosphate, were all invented in North America. Asian companies successfully commercialized these technologies thanks to low labor costs, comprehensive public sector subsidies, local material supply and, critically, local market demand for the product. It's a simple and pragmatic reality: the development of any new technology benefits greatly from proximity to customers. Today, the U.S. has the customer base. We have many favorable public policies. We've got an ecosystem of suppliers and talent, both in manufacturing and development, that will rapidly accelerate local battery innovation and production. GM is poised to leverage these macroeconomic conditions. Now when I first arrived at GM, I was impressed by the foundation that was already established. The company has built a competitive advantage, investing the capital, negotiating strategic partnerships, vertically integrating battery cell development and localizing production. The investments in facilities gives us the ability to do some of the development work ourselves, increasing supplier optionality, strengthening in-house expertise and ultimately leading to more competitive cell costs. The battery engineers and the core infrastructure available to my team, which will allow us to build GM's future EV leadership, is already in place. We have a team that's already industrializing and delivering battery technology at scale. We're prototyping and developing next-generation materials and cells that will transition to production over the next few years. We're securing raw material supply chain to flexibly support our growth over the next decade and localize it in key markets globally. We've created mechanisms to identify and invest in emerging technologies through GM Ventures or to develop it in-house. We're leveraging our battery cell facilities to research, test and prototype future battery technologies. Our facilities allow us to bridge the gap between making a few kilowatt hours of coin or small pouch cells in R&D to making tens of gigawatt hours of cells at a full-scale production plant. For comparison, on an annual basis, the gap between R&D and production is about 1 million in terms of annual output. To narrow the volume and learning gap between R&D and production, earlier this year, GM began prototyping cells at our Wallace Battery Cell Innovation Center, helping define and implement new product and process technologies in cell plants. This center gives us the ability to build full-sized prototype cells, 100 amp-hour, 200 amp-hours or bigger, in pouch, prismatic or cylindrical cell formats, all in-house. This is a capability many OEMs can only dream of. Building coin cells or small pouch cells of a few amp-hours is typical, but building 200 amp-hour prismatic cells, that's a different level. Because we can build our own cells, we have the potential to integrate new cell technology into full-sized cells without relying on outside suppliers to do so. This enables us to chart our own course to future battery technology, allowing us to make and test sample cells more economically, iterate and ultimately bring new technology to the market faster. Doing this also allows us to further bring down costs and increase performance. And while we can do our own independent research and development, we can also use our labs to support the R&D that our best cell partners are doing for us. This makes us the best OEM to partner with. All this combined makes GM a more intelligent and informed customer battery cells to ensure we're paying a competitive price and getting the highest performance. And as impressive as this is, there's still a learning gap between building a dozen full-size cells per day on a prototype line and 300,000 cells a day at one of our joint venture production plants. That's why we're excited to announce today that we'll be building a battery cell development center at our Global Tech Center in Warren, Michigan. This capability really sets GM apart from our competitors. As you scale battery prototyping during development of production, you have to scale up by multiple orders of magnitude, but some jumps are more significant than others. By adding production capability during battery cell development, we can take more manageable steps and more quickly streamline processes, understand costs and identify potential issues that may come up in production. This increased capability can help us close the learning gap between cell development and mass production while reducing development times by up to a year from concept to launch of new battery technology. We plan to make our first cells in this facility in early 2027. The battery cell development center will enable us to prove out new GM concepts, which can then be shared with our manufacturing partners to accelerate their ability to provide production cells to us. The output from the battery cell development center will allow us to refine processes before mass production starts and will enable us to make enough cells for early vehicle prototype testing and validation. All this places GM in an incredible position. We've built the right facilities, the right team with the right partners to lead in EV batteries efficiently and cost effectively, not only in terms of performance, but also in commercialization. But I'm sure what you're all here to know is how are we positioned to meet production demand for the rest of this year and into 2025? Well, I can confidently tell you that the manufacturing problems we faced at the end of last year are behind us. While the challenges led to disappointing performance in 2023, it taught us lessons that have positioned GM for significantly higher performance in 2024. We increased battery module production 10 times over the last year, and we're continuing to ramp. The Ultium cells factory, our JV with LGES in Ohio, is on track to produce over 100 million cells by the end of this year. And thanks to the learnings we've been able to apply from Ohio, the Ultium cells Tennessee cell plant, which went into production earlier this year and you toured earlier this morning, is ramping up more efficiently and at an increased rate. In fact, we're months ahead of our yield targets. Cell production at the joint venture facilities have achieved unrivaled yield rates in the industry, as high as any of the top Asian producers, and the cost savings from these improved yields should exceed tens of millions of dollars this year alone. Overall equipment effectiveness or OEE values are significantly exceeding our targets. Our investments to vertically integrate battery development starting years ago are now materializing. We now have the capacity to meet incredible customer demand for best-in-category products like the Cadillac LYRIQ, the Chevrolet Equinox EV and the Chevrolet Silverado EV. So what's next? Working with our teams, we aligned our new battery road map around 4 key goals. The first, we need to continue to enhance the safety of our packs. The second is to build on our cell cost leadership in North America. The third is to expand local battery production. And finally, we need to continue to make performance improvements in fast charge and energy density. To achieve these goals, we can't be satisfied with the status quo, we have to search for innovation and improvement across every aspect of the development cycle. Some of this innovation improvement can be achieved by leveraging the learnings from my prior experiences. At Panasonic, I learned firsthand the benefits of economies of scale, making a massive amount of the same item. At Tesla, I learned the importance of going deep with one supplier to achieve optimal performance and cost. That's what we did at GM when we created our purpose-built EV architecture. We went deep with LGES on cell manufacturing, and we designed 1 common module. This strategy gave us flexibility in a common module used in everything from the Equinox EV to the Escalade IQ. Without this common building block, we couldn't have launched the wide range of all new EV models that we have to date. Having established a strong presence in the EV market across categories and prices, we can now take the next step on our journey. With sufficient volume in key segments, it now makes business sense to transition from one-size-fits-all to new program-specific batteries. As we do so, we will also sunset the brand name Ultium for our EV batteries and technologies. Ultium will continue to be used in reference to our joint venture manufacturing sites and other facilities, but as we enter the next phase of our journey, the time is right to begin this transition. Our commitment to delivering the right technology that will propel us into the electric future remains steadfast. And now with even more cell form factors and chemistries to choose from, we can create even greater value for our customers. It's in these areas that GM is focusing on our innovation to achieve our battery strategy goals. Chemistry is a key driver for cost and also impacts form factor, range, safety and energy density. As a result, the future GM battery road map will include high-nickel, mid-nickel and LFP cathodes. We use mid-nickel and high-nickel cathodes for our premium high-performance and longest range options. We will expand the use of LFP in our portfolio, including in North America, in models where we can achieve outstanding range at a lower cost. For example, today, we use high-nickel chemistry in our electric truck platform, offering more than 490 miles of range, more than any other EV truck on the market. With LFP, we have an opportunity nobody else has. We have enough space in our truck platform that with clever engineering, we can use low-cost LFP to get range of over 350 miles. And our team is actively working to localize supply of LFP, with more to come. After chemistry next comes form factor. Form factor impacts your safety, your pack integration, your energy density, supplier optionality and durability. We'll continue to use pouch cells, which have served our portfolio well over the last 10 years and are being manufactured efficiently with quality at the Ultium cell plant that are currently in operation, but we also intend to expand our technology portfolio with prismatic cells as a means to lower pack costs while increasing energy density. As you can see in the video behind me, our plan is to enable fewer, larger modules in future battery packs, reducing the number of modules by up to 75% per pack while still achieving our performance objectives. In fact, we're building battery packs in prismatic cells in global markets today as GM said it would during EV Week in 2020. The use of prismatic cells will help us simplify battery pack manufacturing, improve supply redundancy and competitive pricing. Cylindrical cells will make up a small portion of the portfolio for high-performance models and perhaps for some PHEVs. In addition to the work being done in-house, we have brought together a robust set of technology partners that will serve us to help us diversify our supply chain and adapt and scale battery production to meet changing market dynamics. Until now, we focused on building sales in our joint venture plants with LGES. Our relationship with LGES remains as strong as ever. In addition, last month, we provided an update on our joint venture with Samsung SDI, including the announcement that the JV will bring prismatic cell production to Indiana. And we're working on other partnerships that we hope to announce soon. We're going to continue to enhance our partner strategy, bringing in the right companies with the right cells for the right vehicles to help us achieve our performance and cost goals. And in collaboration with our supplier partners, we're securing battery raw materials to support our growth over the next decade, localizing key markets globally. So how does this all translate into cost improvements? Well, at the cell level, when you take the economies of scale at our battery manufacturing joint venture, significant volume with our yield and OEE achievements, competitive agreements with suppliers and IRA benefits, we're confident that our cell costs are and will remain as low or lower than any other OEM in North America. Our combined cell and battery pack costs continue to get lower year-over-year. We saw a $60 per kilowatt hour reduction on average from 2023 to 2024, and we expect another $30 per kilowatt hour reduction in 2025. And we're going to take those costs even lower by expanding our use of LFP. When we introduce our Gen 2 battery packs with LFP, we expect to save another $6,000 per vehicle. In summary, GM is evolving to a multifaceted approach. This should only help GM strengthen our position of producing more EV models than any other automaker. With the ability to leverage LFP and mid-nickel chemistries alongside high-nickel, we improve our flexibility to meet customer demands and improve EV profitability. By expanding the use of prismatic cells, we can simplify battery pack manufacturing and increase supply opportunities. By introducing more partners like Samsung SDI and others alongside LGES, we can improve our ability to adapt to changes in the market. By expanding our battery strategy with a common set of technologies that can be used within our existing battery pack and vehicle electrical architecture, we can continue to improve safety and achieve the flexibility and agility to meet our battery goals, providing optionality without increasing complexity and matching price and performance to meet customer expectations while maximizing EV profitability. Thank you. And now I'd like to bring up the Senior Vice President of Software and Services Engineering, Dave Richardson.

Thank you, Kurt, and good afternoon, everyone. I'm Dave, and I'm excited to talk to you all about the critical role that software and services play in this transformation. But before I do that, I want you to know a bit about me. Like Mary and Mark, I'm an engineer, and I'm a lifelong learner. My passion for software and technology led me to academia, where I earned my PhD in computer science. That experience trained me to tackle tough complex problems and never give up. I learned to break down challenges, persist through failures and adapt when things didn't work out. Instead of seeing setbacks as defeats, I learned to view them as steps toward a solution. I took this mindset of resilience and problem-solving with me when I served as a founder and chief scientist of a cloud computing startup. There's really nothing like the nonstop rollercoaster ride of a tech start-up to teach you the value of teamwork, grit and decisiveness. Next came my 12 years at Apple where I helped drive innovation and efficiency in software services infrastructure, including iCloud, FaceTime and Messages. Apple is also the place where I had an opportunity to lead some of the largest engineering teams, building many of the most popular, widely used and beloved consumer and hardware products in the market today. And then GM called, and while I loved working at Apple, GM offered me a once-in-a-lifetime opportunity to tackle some of the most challenging and exciting engineering problems in the world and be part of GM's evolution. So here I am at GM's 2024 Investor Day to tell you GM's software story, where we've been, where are we now and where are we going? So over the years and with great credit to the many engineering leaders on my team who have spent decades at GM, software has fundamentally reshaped the automotive industry. Gone are the days when the vehicle systems were all manually controlled. Today, modern vehicles are complex, sophisticated fabric of mechanical, electrical and compute components. Working together, they enable features like antilock braking, traction control and electronic stability control. Consumers also enjoy modernized and more appealing displays. Our vehicles process real-time sensor data, delivering amazing features like Adaptive Cruise Control, lane keeping and our industry-leading Super Cruise. So how do we tame this complexity and package it into a world-class vehicle? Software. Software is the brain and nervous system of every GM vehicle. But the power of software isn't just limited to orchestrating and managing the vehicle's systems. Software's great superpower is that it can be updated with new capabilities and features. And with those over-the-air updates, we can improve the vehicle experience long after the customer has driven off the lot. The ability to update software unlocks the addition of new services over time that haven't yet been imagined. It turns the car into a software platform just as the smartphone did for mobile phones. And through continuously updated software, GM's vehicles will match the experiences that customers expect. So this is how I think of vehicles and software and the great opportunity that software brings to us at GM. And I'm confident we're well on our way with the progress we have made. So where are we today in GM's software journey? Well, we launched the Blazer EUV with great fanfare, but within weeks, had to put it on a stop sale due to software issues. This was a frustrating period for us, but it was absolutely the right move. It forced us to take a step back and evaluate where we had gaps in our software development process. We worked hard to stabilize the software issues, which were also critical in informing new processes and continued development. And what we learned continues to inform how we operate today and into the future. Since joining GM in late 2023, I focused on resetting our software culture and processes so that we have a strong foundation for doing software engineering right. This is something that tech companies have figured out, and my goal is to help bring that to GM to adopt those same principles. So I'd like to talk you through some of these key foundational changes we've made. Leaders with extensive background in building software organizations in digital businesses are migrating to GM for the same reasons as myself and Baris: for the opportunity to have great impact on the transformation of GM and the broader automotive industry. Just like with Kurt and JP's background, tech leaders are joining us from companies like Alphabet, Amazon, Apple, Lucid, Meta, Microsoft and yes, Tesla. In our software and services organization, we are all attracted to the complexity and scale of the software challenges and the belief in GM's mission. And we, together with the best people already at GM, are sharing learnings that significantly benefit the company. I'd like to point out that great software also starts with great design, and GM is creating a differentiated brand look and feel while remaining part of a coherent ecosystem. And under Baris' leadership and partnership and product management, we're building clear product road maps for software and online services aligned and integrated with vehicle launches. And the famed computer scientist and Turing Award recipient, Fred Brooks, had widely adopted philosophy that also emphasizes the need to support continuous improvement and accountability. He introduced the concept of surgical teams. These are small, skilled groups of individuals working on well-defined tasks, highlighting the effectiveness of focused work with a streamlined structure. We have seen this Brooks' law work time and time again from start-ups to big tech. Now we did have a software workforce reduction in August, which was difficult because we had to say goodbye to some colleagues, but it was absolutely critical to GM's future in software. And we will continue to make bold choices to move faster, to pivot when needed and prioritize investing in what will have the greatest impact. We have simplified our team structures to remove unnecessary layers, avoid duplication and enable speed. Most importantly, we have brought greater focus on our highest priority work. Now you've heard us speak today and in the past about our Winning with Simplicity initiative. This also applies to software. We've made great strides in simplifying the electrical vehicle configuration across our vehicles. We have been operating with too many different configurations to support the size and breadth of GM's portfolio of vehicles. We work to align our priorities for features and functionality for new vehicles coming to market. Our goal in all of this was to simplify the number of options and how they could be tied together. This allowed us to reduce the complexity by 75%, standardizing more of the software stack so that it can be used across the portfolio. In the software industry, there's a term shift to left that means moving software testing and validation as early in the development process as possible before all software components are integrated into the final product. To deliver this shift, we deploy tech industry standard tooling and processes to help developers write better code. We started structured oversight of quality products through clearly tracked metrics, introduced testing automation to catch bugs early and often and started testing our systems in the cloud so we can scale our testing better. And we built a global network of software quality labs, where we have hardware benches accessible by developers anywhere in the world, running suites of automated tests when not otherwise in use. Taking our learnings from a Blazer EV, we've seen a major improvement in software quality. These innovations have rapidly increased the efficiency and rigor of software testing, catching 10x, 10x the number of defects in development and doing it earlier in the process. More importantly, this has translated into successful and timely launches of the Traverse, Acadia, Silverado EV, Equinox EV, Sierra EV and Enclave. Our over-the-air capabilities will continue to allow for more consistent and regular software updates, including new features and functionality, and one of our most liked features is Super Cruise. As you recall, earlier this year, we announced that hands off, eyes on Super Cruise is expanding to 750,000 miles mapped. That's like traveling from the earth to the moon 3x or taking a coast-to-coast trip from New York to San Francisco and back nearly 130x. Super Cruise is a great product that makes driving easier, safer and less stressful. GM customers have driven more than 280 million miles with Super Cruise engaged. Currently, we offer Super Cruise in 22 models and we anticipate having more than 380,000 equipped vehicles on the road by the end of the year. But that's not it. We expect to double that number by the end of 2025. And today, we are generating recurring revenue streams by implementing 3-year prepaid service options plus tiered subscription plans. The data is early, but we're already seeing attach rates in the 20% to 25% range. And as we continue to innovate, we're confident we will generate additional revenue opportunities. So for example, we recently launched hands-free towing on all our EVs that can tow: the Silverado, the Hummer, the Sierra and the LYRIQ all-wheel drive. With that update, Edmunds considered GM Super Cruise to be "the only game in town." Now let's talk about infotainment. The keys here are choice, personalization and deeper vehicle integration. Your car's technology options shouldn't be dependent on your choice of phone. And when you spend tens of thousands of dollars on a vehicle, it should be simple to move from music to maps to see EV chargers on your route and easily control your vehicle, all in one intuitive and beautifully designed interface. That's what we will give customers with an in-house GM design and build infotainment system. Now when we launched our infotainment system in the Blazer EV, we were initially met with skepticism from reviewers. But that quickly turned once they gave it a try and began to understand the benefits of this fully integrated experience. And we will continue to partner with test companies like Google and Apple to offer the GM infotainment system, but the system will be designed and built by GM. Now like with infotainment, we will continue to forge other innovative and strategic partnerships in other areas. For example, last month, we opened access to more than 17,800 Tesla Superchargers for our GM EV customers with the use of a new compatible NACS DC adapter. We moved quickly to build out a fully integrated experience for customers in the GM vehicle brand apps. This gives customers the ability to purchase the adapter, locate available Tesla Superchargers, check station status, initiate a charge and pay for those charging sessions, all from the convenience of the app. We will extend this type of partnership app integration to a full e-commerce experience for customers through OnStar. Now today, we are all accustomed to fast, responsive self-service shopping experiences where we can take the time to understand and tailor our favorite services. This differs a lot from OnStar's roots where most buyers called an adviser on day 1 with their new vehicle, pick the plan but never updated it. We've evolved our commerce strategy to match the trends. We built a platform that's fast and responsive for customers engaging with Super Cruise, OnStar and our streaming products. It's flexible and scalable to add future vehicle features at a faster pace and gives our product teams a full view of a customer's life cycle to think ahead of their needs and their preferences. It functions seamlessly across channels, including web, mobile, voice, and on screen in our vehicles, all backed through customer support through a modern contact center platform. Finally, I can't leave the stage without talking about AI. Artificial intelligence will fundamentally change the world in ways that we can't fully imagine now. But at GM, it's already influencing how we make vehicles through the way we test, certify and move with speed and excellence from our early stage software development through our manufacturing processes, which you will hear more about from JP next. Of course, the path to autonomy, AI is essentially a part of that formula and progress towards L3 and L4. It is a matter of if, not if, but when. But these systems -- and this is key, these systems need to be right, done right and with safety as a priority. Building autonomous vehicles requires advanced electric architecture and software compute platforms. We can and we will accelerate our path to shared next-generation software architecture that will serve as a platform to scale ADAS and AV. We have a lot of work to do, but I'm confident that the software and services organization is set up to deliver an unparalleled scale. After all, at GM, we are not building 1 or 2 models, but dozens of models across 4 distinct brands: Cadillac, Chevy, GMC and Buick. It's critical to take the time to build software that ensures a consistently high-quality customer experience for each and every vehicle. So I'm an academic, I'm a founder, and I'm an operator, but most importantly, I'm an engineer. And we engineers love to build software at scale that will be used and loved by millions of consumers. That's what I'm at GM to do. Thank you for listening. [Presentation]

Please welcome GM Executive Vice President, Global Manufacturing and Sustainability, JP Clausen.

Thank you. I'm very pleased to be here. I'm Jens Peter Clausen, but please call me JP. I'm thrilled to be a part of General Motors and lead the Manufacturing and Sustainability team. I've been a car enthusiast my whole life, going back to when I used to tinker with engines in my dad's garage as a boy in Denmark. Let me share a little bit about my journey. I have a deep passion for technology, manufacturing and sustainability, so GM's commitment to a zero emission future truly resonates with me. The chance to tackle complex problems in a rapidly changing automotive industry is very appealing. I have a unique background that brings great benefit to GM. My first management position was with the toymaker LEGO, where I learned the value of simplicity, which leads to significant boost in the company's profit margins. Later, at Tesla, I thrived in a fast-paced, high-growth environment focused on scaling. And after that, at Google, I tackled the challenge of optimizing data center infrastructure to operate servers more efficiently and more quickly. At each step, my goal was to maximize efficiency and drive value for the company and ultimately for our shareholders. You had a chance to meet our team and you witnessed just a subset of what we're doing today. You can see our capability to deliver, but I also want to talk about other drivers of our great potential: flexible manufacturing, smarter capital spending, advanced technology and a talented workforce. Our manufacturing capabilities have now been scaled to meet today's growing demand of EVs. We are committed to ensuring that our manufacturing operation not only support this growth, but also help drive GM's profitability in the EV space. Today, you saw one of our 2 Ultium cell joint venture plants. Our JV structure blends the best of technology and the best of manufacturing processes to deliver benchmark overall equipment effectiveness. You saw that we are making significant strides in battery module production, further strengthening our vertical integration. Our battery pack assemblies are co-located with our vehicle assembly plants, optimizing our supply chain and logistics to reduce costs. And as Kurt mentioned, we are running ahead of schedule with our battery yield. Our vertical integrated approach to EV production is helping us drive efficiency, and it will increase as we scale. Our driving this production put us in full control of the supply chain and reduces our overall cost. This will support a full range of applications across our entire EV portfolio. In addition to our 2 Ultium cell plants, we have built a very robust American EV ecosystem, with 6 plants building propulsion systems and 4 factories assembling battery packs and EV, and we are expanding this capacity with 2 additional EV assembly plants ramping up by 2026. This year, we will launch 10 EVs, more than half our total vehicle launches. Our manufacturing foundation is built upon our highly dependable and common system, which create high-quality vehicles. In fact, GM earned the most model awards in the J.D. Power Initial Quality Study, including the Cadillac XT5 and XT6 you saw here at Spring Hill. This level of quality is a competitive advantage for us because it leads to outstanding customer loyalty, as you heard today. Our global manufacturing system also results in higher productivity and efficiency. In the past 2 years, we have improved productivity by 10% in our high-volume plants, and we will deliver the same efficiency in our EV plants. Our flexible assembly lines, like the one here Spring Hill, empower us to introduce new technology while leveraging existing infrastructure. This strategy delivers substantial benefits. Our last retooling efforts have saved over USD 1 billion for each plant we convert from ICE to EVs. We reduce material, energy and water consumption, minimize waste and improve overall efficiency, and these savings goes directly to the bottom line. We successfully upskill our existing workforce, transitioning them from ICE vehicle assembly to EV production. And importantly, with each retooled facility, we are converting capacity, not adding it. This flexible approach is key to our future growth. It allows us to meet evolving customer demands, whether they prefer ICE, EV or one of each. This gives us the ultimate flexibility to follow the market. Another critical area of focus is leveraging the power of simplicity. Mark highlighted our Winning with Simplicity initiative, which have already resulted in elimination of approximately 2,700 unique part numbers. But what does that mean from a manufacturing perspective? Eliminating 2,700 parts translates to significant savings across the board. We free up valuable floor space, reduce storage needs and streamlining training and quality control processes. We also mitigate supply chain risk associated with sourcing those parts. This transformation is ongoing, and its benefit will compound over time. Across every product program and facility, we are committed to doing more with less, enhancing quality and productivity while reducing complexity and costs. As Mark highlighted, these improvements also translate to a better experience for our customers. None of our achievements would have been possible without our dedicated and skilled team members. They are the driving force behind our high-quality vehicles that we deliver to our customers. Just look at them. Our current build-to-plan rate is more than 99% and a testament to their productivity and commitment. We are also harnessing the power of technology, leveraging new software and AI to enhance safety, ensure quality and optimize throughput. Unlike others who outsource, we have the software expertise in-house to build our own software, end-of-line and in-process testing. That's a competitive advantage that allows us to adopt more swiftly and minimize downtime. Our advancement in technology is significant as demonstrated by the use of digital twin to simulate production lines before they are constructed. This virtual feedback loop enables us to scale faster, improve our direct run rate and launch products on time. Importantly, the use of digital twin optimize our planning process, saving both time and money. Creating a digital twin of the body shop, for example, helps us reduce our total product time by up to 30%, resulting in meaningful cost avoidance. The impact is substantial, especially when this practice is replicated across the organization. During your tour today, you saw how technology is enhancing quality and ergonomics. Examples include the robots at our Ultium cell plant, the advanced battery installation process [ doing merit ], and the automated wheel assembly on the production line. We will see more examples of humans and robots working side by side, where robots are deployed to handle much of the work that is dirty, dull or dangerous. It will boost our productivity and our efficiency. AI is transforming GM's manufacturing, making us more competitive, and we're only scratching the surface of its potential. In our body shop, we utilize [ Spark Eyes ], a proprietary technology that carefully inspect wells and validate quality. We have strategically deployed an area of cameras and sensors with device-level analytics to predict equipment failures before they disrupt production. Our vision system captures a staggering of 165 million images daily to monitor conveyor links and help to increase uptime. As we explained, this technology will be useful in other applications, and the cost savings will continue to multiply. As you saw, some of our automated material delivery system today, such as the [ T-rex ] robot lifting a large battery pack onto an automated cart. This year alone, we have 500 automated guided vehicles deployed across our facilities for material handling. While we're building the best portfolio of verticals in General Motors' history, we're also shaping the future of manufacturing. Our strategic investments in our manufacturing footprint are yielding results. We have the agility and flexibility to build the right vehicles for our customers at the right time. We replaced unnecessary cost and complexity with simplicity, efficiency and speed to market. The manufacturing team will continue to be the driving force, delivering our promises to reduce the cost of manufacturing for both ICE and EVs. We have a lot of work to do, and our position will be significantly improved by using highly efficient technology, further scaling EVs, Winning with Simplicity and applying AI to optimize throughput. I am confident we can achieve this because I've witnessed this type of transformation multiple times throughout my career. Based on our progress so far, I'm certain that our organization will help not only reduce the manufacturing cost per vehicle significantly, but also help lead GM's transition to EVs, and I'm happy to be a part of it. Thank you for being with us today. And now, a very important announcement. We'll take a 15-minute break, and refreshment will be available in the Buick display just around the corner. Thank you for listening. [Break]

Please welcome GM Executive Vice President and CFO, Paul Jacobson.

All right. Good afternoon, everybody, and thanks for hanging in there with us. I know it's been a long day. Whether you're here in person or you're listening online, we really appreciate your interest in General Motors. And we're having a great day today, so I really appreciate you all hanging in. It's been nearly 2 years since we did our last Investor Day, but believe it or not, there's been a lot going on. Through the first half of 2024, we've grown our revenue by more than 35% versus the same period in 2021. From the end of 2022 through the first half of 2024, we produced approximately $21 billion of EBIT-adjusted, $18 billion of adjusted auto free cash flow. We're on track to reduce our fixed cost by $2 billion net of depreciation by the end of the year versus 2022. We'll have retired more than [ 300 ] shares of GM by the end of October. We've improved our EV variable profit margins more than 30 points year-over-year through September, but importantly, we still have a lot more to go. So today, I'm really excited by providing a financial perspective on what you've heard and what you've experienced here at Spring Hill. The company's results over the past several years have demonstrated our ability to overcome industry challenges. Some of them are actually quite unprecedented, but we can prove that we can execute well on what we can control, and consistently achieve our financial targets. The learnings from the past have actually fortified the way we do business and are actually creating a more nimble General Motors for the future. For example, we're successfully implementing a dynamic production strategy in a capital conscious manner. Here at Spring Hill, you experienced firsthand our ability to adapt to demand trends cost effectively with a mixture of both new and pre-existing facilities. In addition, our ability to flex volume, propulsion type and the mix of products creates cost absorption efficiencies through capacity and labor utilization rates. But really, that's not all. At GM, we continue to focus on profitable growth and are ready for multiple industry scenarios as we've demonstrated. Make no mistake, nobody here is saying it's going to be easy, but if we believe, our strong financial results are sustainable and they're going to allow us to continue generating healthy cash flows. So today, I'm going to dive into our ICE business as a fundamental pillar our ongoing earnings growth. I'm going to provide an update on our EV targets, will briefly touch on software and will directionally help frame 2025 and then conclude by sharing some details on our capital allocation policy. So let's start with the key role of our ICE portfolio. Over the past few years, our auto business has delivered strong financial performance, and we're wrapping up another outstanding year in 2024. In 2021, we highlighted that we could keep our North American margins between 8% and 10% through the transformation, but many of you, including some of you in this room, didn't believe us. But since that point, North American margins have been consistently at or above that 8% to 10% targeted range. This solid performance includes even overcoming some onetime items as we did in 2023, such as the charge that we took with our LG partners and the $1.1 billion from the UAW strike, which translated to about 1.1 points of margin impact. So in addition, we've also been able to hold these margins while navigating a slower-than-anticipated EV demand growth. That's the flexibility that we're talking about. Our ICE business has been the fundamental pillar that supports our performance. It's funding our future growth initiatives, including our EV transformation, while also enabling us to return excess capital to shareholders. There's just simply incredible value in doing the basics well, and our team really deserves a lot of credit for executing time after time and demonstrating that strong execution consistently. Quarter after quarter, we performed consistently while continuing to refresh our ICE portfolio and remaining disciplined across multiple fronts. We've proactively managed our production and our inventory levels. We've successfully managed pricing and incentives while earning approximately 2 full points of market share since 2021. And we're doing it all while we're making incredible progress on our EV profitability journey. The actions that we've taken on our production schedules, combined with our consistent monitoring of vehicle turn rates, have allowed us to keep our dealer inventory days close to target, and we expect to end that this year, too. The seasonal dynamics in the fourth quarter, with fewer production days as well as high selling activity, are going to help us get within our targeted 50 to 60 days of inventory by the end of the year. Matching supply and demand helps us avoid both current and importantly, future incremental incentive costs, which as you've seen historically, can be incredibly significant. While our ICE inventory days are running currently at about 68 days, which is in line with us having the right number of products in the right place at dealer lots as we go into the peak selling season here at the end of this year. EVs, a lot has been talked about with them. We're running at approximately 10 to 12 vehicles per dealer on average. This is in line with our strategy to create customer awareness, but importantly, have vehicles in locations where customers can experience them. It's not the same as buying an ICE vehicle, for many people. But we're already seeing vehicle turn rates improve as customer demand is increasing along with our higher production rates. But this is not a victory lap. Make no mistake. It's actually quite the opposite. We expect the ICE industry is going to have a long tail, and it's going to be a significant part of our future, and that's why producing EVs is so important. But that's one of the reasons why we're still investing approximately 1/3 of our total capital budget on key ICE improvements. We've made conscious efforts to introduce models that have better margins than the ones they replace. Based on our current assumptions, in 2025, we're going to have 8 vehicles in the market that on average will be approximately 9 points higher EBIT versus the previous comparable models. In fact, we're currently producing small and midsized SUVs in the mid- to high single-digit margin range. The cadence by which we're doing this and introducing these enhanced products into the market has been, and importantly, will continue to be a top priority for us because we think it's a difference maker. We're proactively making important investments in next-generation products like full-size trucks and SUVs that are going to reinforce and extend our leadership in these key segments while supporting both our continued revenue and EBIT expansion. I'm really glad that Mark spent some time today talking about our Winning with Simplicity initiative. You've heard it before. We talk about it a lot, but I think it really highlights our commitment to ongoing efficiency improvements. But this isn't just a one-and-done program. I know programs come and programs go, but this is rather a cultural shift that we're focusing on and extending across the organization and is already making a significant contribution in the way that we do business. Reducing the number of parts, buildable combinations, trims all sounds simple, but it actually requires a completely new mindset. It requires cross-functional synchronization. And importantly, you've got to be able to execute well. We expect to see these benefits actually continuing to grow over the coming years as the organization continues to embrace more efficient ways to both engineer, produce and finally, ultimately sell our vehicles. This will mean that we can continue to drive improved margins in our EV portfolio as well, even as we have had early success scaling. All of these wins also extend into our fleet operation. I know that's a hot topic among a lot of folks, so let's switch gears just for a moment and talk about this part of our business. Our fleet business includes sales to commercial, governmental and rental customers. In the U.S., we achieved a fleet market share of approximately 20% in the last couple of years and expect both 2024 and 2025 to be at a similar level. This implies approximately 550,000 vehicles in a fleet industry that's just under 3 million vehicles. But importantly, and I want everybody to hear this, our focus on profitability also extends into this part of the business, driven by volume, fleet mix and importantly, incentive discipline. We want to, and in fact, we must avoid the past pitfalls of this business, where we pursued incremental volume in this space with less regard for margin. This is just an extension of what we're already doing in the retail space. So for 2024, we expect to achieve fleet margins that are similar to vehicles in the retail segment with comparable content, and we expect to continue our disciplined approach in the fleet segment going forward. So to summarize, these results and the powerful combination of a strong full-size truck and SUV franchise with leading loyalty rates, as Mark mentioned, of more than 60%, gives us the confidence in our ICE business continuing to support North American EBIT margins in the range of 8% to 10% through our transformation. Eventually, that will click with a lot of folks. Next, let's spend some time providing an update on our EVs by highlighting some of the accomplishments that have really helped us improve our EV variable profit by more than 30 points year-over-year through Q3 at the vehicle level, and importantly, puts us on track to achieve that variable profit positive this quarter. It really can't be ignored, and you saw it today, that the benefits that scale has on the positive impact of our variable profit. Unlike others who are procuring battery cells and just hoping to make it up with volume, our methodical investments over the past several years have put us in a position where we're able to reap the scaling benefits for ourselves. Higher EV production drives efficiency at the assembly and at the JV plants by lowering cell cost and maximizing labor and utilization rates, and it really is exciting to see our cell and our vehicle manufacturing facilities tangibly showcasing the leverage we expected as we continue to ramp. We've produced and wholesaled about 120,000 EVs through the end of the third quarter, representing a year-over-year increase of more than 11x, excluding the previous generation of Bolt that was sold last year. For the full calendar year, we expect our EV volumes to be approximately 200,000 units. And as you can see in this showroom or you experienced earlier today, these are great vehicles, like the Equinox EV, the Blazer EV as well as the LYRIQ, which continue to lead our volume ramp and are doing very well in the market, thanks to exceeding customer expectations on performance, range and combining that with our winning designs. During the third quarter, our U.S. EV market share increased more than 3 points versus 2023 to a total of 9.8% as we achieved our near-term goal of becoming the U.S.'s second largest EV retailer. What's more special though is that more than half of the vehicles that were delivered were delivered to customers that are new to General Motors. And we're doing this with incentives that are around 12 points lower than the EV industry average, which highlights the increase both in customer awareness and interest in our attractive EV lineup. In addition to our own EV production targets, as many of you saw, we're also building vehicles for Honda as part of our collaboration agreement. This incremental volume helps us in our operational and our financial journey. It validates the power of our existing platform and really represents a win for both companies. So let's move on to mix. The previous generation of Bolts were really a great start to our EV journey as they helped us gain thousands of loyal customers. But as you know, their margins were, well, let's say challenged. Our EV lineup has replaced that previous generation of Bolt in terms of wholesales, leading to improved margins, thanks to product placement in different segments and price points, as you can see in the showroom here. The upcoming launch of the Cadillac Escalade IQ, the VISTIQ as well as the GMC Sierra and EV Denali are going to further propel our pricing and our margins due to the uniqueness of each of these product offerings. So let's dig a little bit deeper into some of the items included in our variable profit calculation. In addition to the typical items included in the VP calculation, we include both the benefits of the advanced manufacturing tax credits as well as the emissions credits that are generated. Regarding IRA, scale also helps us capitalize on the benefits for not just cell manufacturing, but also module assembly. As a reminder, we recognize our portion of the $35 a kilowatt hour for cell manufacturing at the time of cell purchase from Ultium, and the full $10 a kilowatt hour for module assembly at the time of wholesale. We expect the IRA benefit to be approximately $800 million in 2024, and only expanding from there. While we remain confident that policymakers appreciate the substantial manufacturing and jobs growth that we've created through our EV transformation, we are continuing to drive towards long-term profitability without any IRA benefits. That's where we're heading, and that's where we need to go. So let's move on to emission credits as we think about variable profit. So let me start by saying that EVs generate significant compliance benefits for GHG and CAFE and in some cases, California GHG and ZEV. Although under each regulation, the benefit is different, the value of those credits is substantial. On average, each of our EVs represents between $2,000 and $4,000 of credit value. These are credits that we would otherwise be required to purchase. We've worked with a third party to independently validate the current assumptions and quantifications that we've used for the values that we assign here, but these are largely based on past commercial transactions and publicly reported deals. Furthermore, some of the credits that are generated by our EV production have a higher value due to the HD credit multiplier contemplated in the regulations. In other words, we're striving towards being self-sufficient and complying with the regulatory standards because it will be critical to our and anybody else's long-term success in this business. Also, by including this item in our EV profitability, it ultimately portrays the current and future cost avoidance that drives economic value, and importantly, mirrors the benefit that pure EV players enjoy by selling their credits. All things considered, we expect scale and mix to drive approximately 50% of the total VP improvement on a year-over-year comparison. This is lower than we expected about a year ago, but we're still expecting volume to grow and to continue to drive us forward. So let's switch gears to battery cost improvements. We expect to reduce pack costs by more than $60 a kilowatt hour in 2024, thanks to the production ramp at our battery joint ventures, along with lower raw material costs. As Kurt mentioned, our battery road map is only going to get better, which is going to provide an ongoing tailwind to our business case in 2025 and even beyond as we get through the end of the decade as we begin to realize the benefits of our supply chain deals and our vertical integration as well as other cost savings initiatives. We expect battery improvements are going to drive approximately 50% of EV variable profit total improvement year-over-year. So in summary, assuming that current trends remain stable, we expect to exit 2024 with an EV variable profit positive run rate. This is an important milestone that puts us in a position to continue improving EV profitability moving forward. So now let's talk about EV EBIT. I'm going to pause here because this is probably the single most important metric that we should all be focused on. Let me start by reminding you that in addition to variable profit items mentioned earlier, our EV EBIT definition includes all digital and software-enabled services, EV customer care and after sales as well as the requisite depreciation and fixed cost allocations in the business. The scale ramp creates further leverage benefits for us here as we continue to drive down unit costs related to both fixed manufacturing, engineering and depreciation. We're expecting our EBIT margin to improve approximately 55 points year-over-year by the end of 2024, and this is despite having a significantly lower volume versus our expectations at the beginning of the year. We're really proud of this accomplishment, but as you know, lower-than-expected market growth implies a slower profitability improvement outlook. 2024 is an important year in terms of our EV volume ramp, but given the negative margins to date, the result has been a significant amount of EV losses. That being said, peak losses in 2024 is only going to help upcoming years as we expect EV EBIT to improve significantly from here. For 2025, we expect a significant year-over-year tailwind as we realize further benefits from scale and lower battery as well as materials costs partially offset by potential softer pricing. The ultimate dollar value is going to really depend on how industry dynamics evolve. There's no doubt that the EV adoption curve is likely to ebb and flow as customer preferences, pricing and competitor actions affect the industry. But based on our current assumptions, we expect our EV EBIT losses to narrow by $2 billion to $4 billion for next year. So let's walk through this. Different third-parties are projecting that the U.S. EV industry penetration is going to grow from around 8% to 10% in 2024 to somewhere around 12% to 15% in 2025. This is much lower than the expectations that we and most industry observers had in 2023 when we set our prior targets. So our expected EV tailwind assumes that current selling trends extend into 2025, thus generating an ongoing volume increase for us that we believe will continue to outpace the industry in general. The key drivers include higher volume from the full calendar year sales of vehicles that we introduced this year, a few new models with more affordable trims, combined with a lot of enhanced customer awareness that Norm de Greve and the marketing team are generating. We expect scale to contribute about 50% of the total improvement next year, driven by higher volume, along with both the emissions credits and the IRA benefits that we receive. Platform efficiencies, lower battery raw material costs and battery cost improvements are expected to add another 50%, which are going to provide some cushion against potential pricing headwinds. We're going to continue to monitor external uncertainties such as the political outlook, EV industry growth, but importantly, and I want everybody to focus on this, we remain committed to not overproducing to simply hit a near-term profitability metric. We are focused on creating sustainable value for the long run. The bottom line is that we expect improving EV profitability though to be a significant tailwind for us in 2025. Beyond EVs, our strong ICE performance is also fueling investment in our software and EV businesses, as Dave mentioned earlier. We continue to work on making software a strategic advantage at General Motors. Our improved quality processes are already paying off by helping mitigate risks, helping our launch and delivering our vehicles on time, and then ultimately lowering our warranty costs. Our focus now is on enhancing our market presence. An important item to consider is OnStar services. This is a key enabler to unlocking our digital future. In addition to being a well-established part of our business, is projected to generate over $2 billion of revenue in 2024 with substantial margins. We expect to create new offering streams to support revenue growth of more than 15% in 2025 and through the end of the decade. Safety and convenience, digital vehicle performance upgrades, a variety of fleet products are all a part of that strategy that we're going to monetize through customer experience value. So now let me make some comments on our future financial performance. I know many of you are questioning whether our strong financial performance is sustainable. We're not going to provide specific 2025 guidance today, but I do want to start to introduce some directional help. So let me start by saying what Mary has already said. We expect 2025 EBIT to be in a similar range to what we will deliver in 2024, and here's why. Overall, we're planning for a U.S. SAAR to be in the low 16 million unit range, consistent with where we've seen it. Regarding our total volume, we expect it to be essentially in line with industry projections. But our goal is to grow revenue while remaining disciplined on inventory management, and incentive spend supported by our strategic portfolio of products, including next year, the refresh of our full-size SUVs and what we expect to be further market share gains. And let me reiterate my point that I made earlier in my presentation. We're expecting a $2 billion to $4 billion EV profitability tailwind next year. Next, the actions that we've implemented to accomplish the $2 billion net fixed cost reduction are going to extend into 2025. We expect to stay disciplined going forward, with the objective of keeping our fixed cost structure essentially flat, excluding depreciation. On the headwind side, similar to 2024, we're going to start the year with a working assumption for softer pricing. Whether we see that or not is going to be a function of the month-to-month market dynamics and our discipline as we've seen for the past few years. Higher labor costs, mix, LCM, lower of cost or market adjustments, year-over-year comparison dynamics complete the list of items that are going to potentially offset some of those additional tailwinds. A similar level of EBIT adjusted in 2025 is naturally going to result in another year of robust cash generation, just as we've seen over the past several years. In addition, we expect to maintain our investment discipline and expect 2025 capital spend to be consistent with the 2024 level. Our actions to align cell and vehicle production capacity with revised expectation for EV adoption trends paired with continuous enhancements to our existing vehicle and battery platform strategy are going to help offset any new project requirements. So now that we walked through our puts and takes for EBIT adjusted and adjusted auto free cash flow for next year, let's move on to the last topic, which is returning capital to shareholders. Since the announcement of the ASR in November of 2023, our total return to shareholders have been approximately 60%, significantly outperforming our peers and the S&P 500. On the share buyback front, we're just weeks away from completing the current ASR, which will result in a total of roughly 250 million shares being retired via this program. During that time, we've also retired approximately 53 million shares via open market repurchases through the end of September, and we plan to remain active, and we are targeting getting below 1 billion outstanding shares by early 2025. We believe that buying back shares at a depressed valuation represents a great opportunity for all of our owners and for all of you that have yet to join us on our journey. We expect to continually return excess capital back to shareholders moving forward. So to conclude, we hope that today's event is going to build some confidence in our ability to sustain our strong financial execution, make the company fundamentally better and extend our earnings power. This transformational journey that we put in motion a few years back is now becoming very observable. It's becoming quantifiable. And importantly, it's not a temporary phenomenon, but rather a permanent shift in culture. This gives us the opportunity to help mitigate industry cyclicality and other challenges as they arise. As a result, we believe we can achieve EV variable profit positive in the fourth quarter and EV EBIT tailwind in 2025 in the $2 billion to $4 billion range. We believe we can generate similar EBIT adjusted and healthy auto free cash flow in 2025, and lastly, continue to consistently return cash to shareholders. This General Motors story only gets better, and I encourage each and every one of you to join us. The combination of both value and growth elements in our company paired with a compelling valuation, makes us an attractive investment opportunity. Thank you so much for all your time, all your focus and attention. Now we're going to move to the Q&A portion.

Thanks, Paul. Great job. If I could have the rest of the presenters please come up on stage, and we'll get set up. So we're going to do about 45 minutes of Q&A. While they're setting up, though, I wanted to take a moment to recognize some of the senior leadership team that's also here in attendance. Many of them are actually fairly new to GM. So I'd encourage you to maybe say hello to them at the reception afterwards. So we'll start -- they're in the back row. Maybe you can stand up and wave when I call your name. Baris Cetinok, who is our Senior Vice President of Software and Services, Project Management, Program Management and Design. That has got to be the longest title around. Thanks, Baris. Norm de Greve, who is our Chief Marketing Officer. Thanks, Norm. Grant Dixton, who's our Executive Vice President and Chief Legal and Policy Officer; Rory Harvey, Executive Vice President and President, Global Markets. Thanks, Rory. And Lin Wu, who is our Chief Communications Officer. We also have Dan Berce, President and CEO of GM Financial. Thanks, Dan. We also have the privilege of having our heads of vehicle brands with us, many of whom you probably already met: Scott Bell, who heads up Chevy; Jaclyn McQuaid, who heads up Buick and GMC; and last but not least, John Roth, who heads up Cadillac. Thanks, John.

[Operator Instructions] All right. With that, let's go ahead and get started. Maybe we'll take the first one from Tom here.

Yes. I think you guys have showcased how, compared to other carmakers recently, you've staved off needing somewhat of a disaster situation. The question is -- you guys have controlled, because of your portfolio that you have, your financial performance, but you can't control what others do. We've noted others in the D3 with very elevated inventory positions in North America trying to cut production, but their incentives are starting to rise. So the question is you have this plan here, which makes assumptions pricing normalizing slightly, but to what extent do what others do, cutting pricing, heavily discounting, make it so you have no choice but to follow suit? Or does your product portfolio make it so you're not worried about that?

Well, I think, first of all, I appreciate the question and I understand the sentiment that's out there. And every time somebody is trying to break out of a historical cycle, you've got to actually prove that the cycles are different this time or you're going to behave differently. So what we've really been uniquely focused on is our product portfolio, and you look at the work that Mark and the whole commercial team that's here today is -- we're out there meeting customer expectations. So rising incentive levels isn't something that's brand new or is it going to hit us by surprise next year. They've been going up steadily over the last 2 to 3 years. But what's changed significantly is the pace at which that. I think historically, we would have probably matched that immediately and been out there in the market, but now what we're focused on is how do we just continue that steady demand and ultimately, price to it. And that starts with great products. So we saw, at the beginning of the year, we saw Ford significantly kick up their incentives as they had a flood of pickup trucks come out. We kept ours consistent. We gained market share. We saw Stellantis start to make headway in their inventory burn down in the second quarter. What did we do? We kept ours pretty constant, and we picked up market share over that time period. So I'm not saying that we're going to be able to do all of this flawlessly. Our incentives have gone up, too. But they haven't gone up nearly at the level of the industry, and that gap to industry average has actually been widening as we consistently bring our vehicles to market. So we're going to be focused on the customer. We're going to be focused on the competitive quality of our vehicles, and ultimately delivering the value at the prices that we can.

And my follow-up has to do with the positives on the Q3 performance of your EVs, especially the Equinox. Just wondering if there were lessons to be learned. Is this EV slowdown in North America over? Have you figured it out? Is it a pricing question? Is it that the car feels expensive despite the price? What are the lessons we've learned from your success in Q3 with your EV performance?

Well, it's multidimensional, but I'll go back to the product piece. This is not a vehicle at $34,000 that doesn't get 300 miles, number one. This is well over 300 miles. The design of it is gorgeous. I mean you saw that. It looks more expensive than what it is. That's Chevrolet. That's value. And we price with confidence with a great product. And so I drove one for probably 6 or 7 months before we went into market with it. It's bulletproof. It's fun to drive every day. You open the door and you want to drive it, and that's a big deal for people. And I read on their blog here the other day, on the Equinox EV blog, that someone bought one, next door neighbor went over, saw it and then went out and bought an RS. So this is what happens with this stuff is you get something really good that you produce, which is -- we're full of that. People talk about it, and they're proud of it, and it's a great value for the money. And so we drove that, just like that in the midsized truck market, like I mentioned. Everybody said it's over with. It's not going to ever expand. It's not going to be bigger. You can't make money on it. We did, and we drove it. And we're doing the same thing with particularly Equinox, even with a new ICE Equinox in the showroom, which is very different if you look at it.

Emmanuel?

Emmanuel Rosner from Wolfe Research. One question on EV and one on ICE, if I may. First of all, on the EV side, can we get a little more detail around the $2 billion to $4 billion of improvement in EV EBIT in 2025? If you look at this $2 billion to $4 billion range, what sort of volume growth range is sort of implied in terms of possibility of outcomes? And let's say, maybe at 100,000 units of EV growth in one of the scenarios, you get maybe $700 million from higher credits, maybe $1 billion from lower battery costs. Where does sort of the rest of the improvement come from?

Yes. Well, we're not going to get into specifics on 2025 yet. We'll obviously do that as we give the full year guidance. But clearly, we're thinking about a slower EV ramp in '25 than where we were a year ago, starting from a lower baseline, et cetera. So there is some scaling in there, we think, but we've given a broad range simply because we've got to zero in on what those volume assumptions are going to be as we complete our 2025 plan. As we talked about, about half of it is coming from scale. So if you remember about a year ago, we talked about 60% of the improvement or 80% of the improvement this year was scale. Well, we didn't scale as fast as we thought we were going to because we didn't want to overproduce to the demand that's out there. So some of that scaling benefit is continuing to lag into 2025. And then we get the battery cost savings and some of the raw material savings as well as the new models that we're rolling out. So there are a lot of different contributors. We'll give more detail on that as we give 2025 guidance.

And then on the ICE side, so you spoke about this 10-point improvement in the current version cost structure versus the prior version. That's potentially very large. Can you talk about how should we think about the impact from this in 2025, specifically?

Again, we won't give, I don't think, specifics on the numerical impact, but it's a big swing on the second gen of what we call D2-2, which is the Equinox, and basically the biggest segment in the world. And so when you get to the second round of that and third round of the architecture, you can really drive improvement in engineering efficiency and scale in the supply base and also into what people see and want become something that you spend money on. And it's -- you saw it. It's a gorgeous vehicle, and that is a big deal for us. We have one powertrain option there, too, by the way, on simplicity. So you get into that piece of it. We know what people want. We know what our dealers want and our customers want, and then all of a sudden, the magic happens, right, because you're not out there blowing your brains out on marketing or incentives or anything else. It becomes really the most competitive piece in that segment, and that's what it does.

Yes, it's not just a cost. It's a revenue...

No, no, it's a revenue. It's a cost and revenue equation, big time.

Mark?

A question on the software business. You mentioned $2 billion of revenue and growing at a 15% CAGR out through the end of the decade. Maybe you can double-click a bit more on what drives that kind of revenue CAGR, how much is proliferating Super Cruise and how much is maybe incumbent on newer technologies like Level 3 ADAS?

So you want me to take that, Dave, since you got here? Some of the stuff that we've talked about for a number of years, but really, it starts with that platform that we have in OnStar, which has been a very successful platform for our customers and the enhancements that the team is building into it. But Dave drilled down on it a little bit around Super Cruise, so we're just starting to see that inflection point where people are coming off the 3-year prepaid period, and we're seeing attach rates of 20% to 25% of people that are buying up. Those numbers are going to continue to grow pretty significantly as we come out of the years of the chip shortage where Super Cruise penetration wasn't what we wanted it to be and start to build that up going forward, not to mention the enhancements that we're making with it. So this is actually laying the foundation for a lot of the work that Dave and his team are going to be doing around the new product offerings and the new services that are value enhancing for our customers going forward. So while we haven't abandoned what we talked about a couple of years ago around $20 billion to $25 billion, the GM financial team is doing a great job in scaling OnStar Insurance. But we're also making sure that we do this very deliberately so that we don't make the mistakes that others have made that are trying or have attempted to charge for those things that customers believe should be part of the core vehicle. So that's what Dave and Baris and the whole team are working on. Excited to see what you guys are going to put out there.

We'll take Colin.

Colin Langan from Wells Fargo. I understand the EV story in terms of profits improving, but I think on your slide, you mentioned EV ICE mix headwinds. And isn't that pretty material? I mean because if you're just getting to variable positive on EV, don't you make something like $12,000, $15,000 variable on ICE? So isn't that EV to ICE switch going to be a pretty material headwind? And why isn't that something that's going to offset a lot of the savings you're talking about?

Well, I mean, what we've seen in the short run is we've actually grown EVs and ICE at the same time. And I think many folks thought that wasn't going to be possible across the board, but we've seen it. It's at various rates, and they're changing from time to time, but as we start to see that over time, we should expect to see that EVs are going to grow faster than ICE is in certainly in different categories. So we're trying to balance that across the board. It can be a headwind, but at the same time, when you look at the products that are out there now, a lot of that mix benefit is coming in on the backside with more profitable ICE vehicles as well. So it's not just a single variable that's moving. The ice is getting more profitable even as EV is taking over. So multiple parts to that equation.

Got it. And then you didn't talk much today about China competition, which seems to be a pretty big concern for most automakers, given the real pace of innovation that they seem to be able to get cars done in 2 years instead of sort of the normal 4 to 5 years. How do you plan on sort of competing against that? Or do you just think the regulatory protections in the United States give you sort of leeway there?

Yes. China is -- of course, we've been there since like 1984, so we've been there a long time. So we understand the dynamic. By the way, it doesn't take us 4 years to do a product program. We did the HUMMER with an all-new platform in a little over 2 years. So we're pretty good at that, and that's ground up zero. A lot of other vehicles are faster than that. And so if you look at -- and we've bought quite a few Chinese products, and brought them into the United States and benchmarked all of it from ground zero and driven them and done all that. So we have a very good read on what they're doing, how they're doing it. There seems to be an insatiable amount of brands in country that fluctuates. Some go out of business, some come into business, pretty rapid rates there. There's a lot of duplication, particularly in the sedan market, on each other's products. So they'll go in and you'll find similar -- identical suspension layouts, identical pieces and parts from identical suppliers configured it in a different way. The design piece is a big opportunity for us in China to separate ourselves in design, and so that's one of the real focuses that we have. Also the go-to-market commercial piece of this is very different in the United States, North America or anywhere else in the world. So it's a very much GDP growth-driven, plant-driven activity. It's not particularly aimed at the customer or the dealer, and so there's an opportunity for us to be really good at that as well. And then finally, at the end of the day, our brands. Our brands are very valuable. So people buy for brand there. They may buy something at the very low end of it for a temporary vehicle purchase, but the brands become more and more, as the market matures, more important. And so our focus on that is very, very intentional. We will compete from a material cost and quality standpoint in a very high manner like we always do. So now we don't take that for granted, but we are very serious about competing there and winning.

Thank you. Take the one over here. It's Philippe.

Yes. Thank you very much for the day and for all the visits. It's Philippe Houchois, Jefferies. Got 2 questions. The first one is on Cruise. I think there was expectations going into the day today that we would hear about ways of funding Cruise and what your ambitions were. And so if you can comment on that, that would be helpful. I'm surprised that question hasn't come up yet. And the other part is, I think recently, GM announced a wide-ranging partnership with Hyundai out of Korea. And I haven't heard anything since. Nobody seems to talk about it. And I'm just wondering, Mary, if you can kind of explain what you expect to achieve with a working relationship with Hyundai in the coming years.

Sure. I'll start with the Hyundai. We signed a nonbinding MOU. I will tell you the teams are working closely and making progress every week on what will become definitive agreements. And so I don't want to get ahead of our partner, because we have total respect for Hyundai and the work that we're doing together. We see great opportunity working with each other because we complement each other, and this is a way we could move faster. We can share each other's strengths and still compete. And so you'll hear more about it in the not-too-distant future, but there's very important work going on right now as it relates to the MOU that we signed with Hyundai. As it relates to Cruise, first of all, today was really about our vehicles. We really wanted to get to somewhere and show you the battery plant, show you how we have the flexibility to go between ICE and EVs here and to get in and drive our vehicles. As I mentioned, Marc Whitten is with us now. The team is back on the road, continuing to make progress with the technology. One of the things that I think is so important about our Cruise team is the tremendous talent that we have from an AI, ML perspective, and they're doing very important work. So we'll have more to share as we move forward either later this year or early next, and as that team keeps progressing, I'll provide regular updates.

Ivan Feinseth, Tigress Financial Partners. Great event today. My question is about what kind of programs, training programs for dealership sales force do you have to help in converting people, which will be, most of the cases, first-time EV buyers. Because for example, in my state of New Jersey, right now, there's no sales tax on an EV, which gets phased out in the middle of next year, but there's also a lot of confusion about cost of charging versus cost of gas. And also in my state that the power company will give you a rebate to install a high-speed charger in your house, and if you charge at night, the cost per kilowatt is much lower. And there's a lot of -- both the salespeople and prospective EV buyers don't even know about.

So you're talking about in North America, primarily?

Yes.

Okay. Yes, that's a big competitive advantage for us, I got to say right now, and the people who run our brands in the back of the room would tell you that. We have very specific people in our dealerships that are trained to sell EVs. And in fact, that's growing day by day. But in fact, we had dinner with some of our best dealers here about a week ago, and they went through and told us about the best practices they have and how that's spread across our dealer network. So this is happening very fast, and they know the sales goals that we have for EVs and they know that people will walk if the car is sitting in the back of a lot, not charged, or they don't have a charger on site, or there's people that just don't know what the vehicle is. That's not -- there's not a dealer in our network that is doing that and doesn't understand the importance of what it is to get everybody trained up on it. So we have incredibly intentional programs in place from GM for our dealers that everybody is very enthusiastic about because of the lineup that we have, and it's starting to pay dividends big time. Our dealer network is a big strength of ours.

I'll take the next one. Matt?

James Picariello, BNP Paribas. Just on -- back to Cruise. So as we think about the pathway to redeployment, commercializing the robotaxi operation, right? If we rewind back to last year, you were at about a $3 billion annualized loss rate. We're doing $1 billion better this year. As we think about the redeployment, is the $2 billion annualized run rate the right way to be thinking about it because of learned efficiencies? Or should we rather assume that the cost structure could grow intermediate to the redeployment?

I think there's a couple of things that factor into it. One is we have learned ways to be more efficient with what we're doing as well as build the regulatory, I should have mentioned before, build the regulatory relationships that we need to have at the state, at the local level and at the federal level. And so we are learning to operate much more efficiently. I'd say the second thing is what we announced with the pilot that we'll have with Uber next year of looking at different ways that we go to market that will be potentially less capital intensive. And then third, as I mentioned in my prepared remarks, we are in discussions with a number of potential partners that gives us an opportunity as well. So I would say don't make any assumptions yet. We'll provide more guidance as we know it, as we get closer at the end of the year, or certainly as we provide guidance for January. I don't know if you have...

But we don't expect it to be higher.

No. No. Definitely, I do not expect it to be higher.

Very helpful. And then just my follow-up, the $2 billion to $4 billion in EV improvement, it's a big part of the bridge for next year. Just to contextualize the volume piece of it, if -- for the folks out there who want to get incredibly bearish on EV demand, future EV demand, if GM were flat next year in volumes at roughly 200,000, what could the EV profit improvement look like for GM under that scenario, just so we can gain some grounding on the volume piece? Because it sounds as though there are still many pieces of that bridge that generate improvement for you guys next year.

Yes. So we said about half of it was coming from scale and about half of it was coming from battery costs and other savings as well. So when we hit the variable profit positive target, you should expect to see that we've incurred peak EV losses, and they're going to continue to improve. Depending on how that scales is going to really affect the rate of that improvement as we're in this phase, but we expect to continue to make progress even at lower volume levels. Lower volume levels of growth, not shrinking. I want to be careful there.

John, in the back.

John Murphy from Bank of America. I just wanted to ask a question about your comment on OnStar, Paul, and then maybe a follow-up on the software side. I think we've been hearing about OnStar for over 20 years now. I'm glad to hear that we're getting $2 billion of revenue out of it this year. It still seems like there's a huge opportunity there and the tether to the vehicle and driving lifetime revenue opportunities on software and services, but then simply in old-school SPO stuff where you hold on to the vehicle for a much longer period. So I mean I don't know if you can quantify or talk about that because, I mean, SPO is probably doing about $1 billion of profit. OnStar's doing $1 billion of profit, maybe, maybe more. Both of those were $2 billion combined and there's a whole iceberg of opportunity. I mean, where could that ultimately go?

Do you want to take it, Mark? or you want me to do that. Either one...

Hopefully, pretty far.

Look, this is a big part of our business, as you mentioned, John, so -- and it has been, but now it's even more. And so if you own one of our vehicles, for instance, and use the OnStar MiGarage, whether it's my Chevrolet, my Cadillac, my GMC Buick, whatever that is, that you have in the app with your garage on it. We're driving a lot of sales on accessories. And then as the vehicle ages, on parts that need to be serviced. We're driving oil changes or battery maintenance or whatever tire -- whatever that is into the dealers been drive through this app through OnStar. And so it's an integrated ecosystem. There's a -- that's just the beginning of it. I can say that. And I think the stuff that Dave showed today on the screen is all very real and active. So yes, I think the -- yes, 20-plus years OnStar, great driving it today. sort of the world's the limit on OnStar and connectivity from a customer standpoint, yes.

I don't know, Dave, if you have to add.