General Motors Company (GM) Earnings Call Transcript & Summary

Thank you very much. Joe Spak, auto analyst here at UBS. Very pleased to have with us General Motors, Paul Jacobson, Executive Vice President and CFO of GM. Paul, I know a bunch of news out the past couple of days and you want to make some opening comments so let's start there and then we'll dive into the Q&A.

Yes. Sure. Thanks, Joe, and thanks, everybody, for being here and for tuning in on the webcast. I have a couple of announcements this week. I knew we were going to be here today and wanted to make sure that we had a chance to talk through those and provide a little bit of color. Talk about the first one, which came out on Monday, the news about the Ultium Cells site 3 with LG. We reached a deal to essentially sell our interest in that plant back to them. As we talked about at Investor Day, we currently with our 2 pouch plants in Lordstown and Spring Hill. Lordstown running about 80% capacity, Spring Hill running about 40% and ramping up. We felt we were very good with pouch capacity, and we've been talking with LG for a few months, I would say about their capacity needs, our capacity needs as well as our shared interest in prismatic cans, which Kurt Kelty spent a lot of time talking about it at Investor Day. So this is a really good opportunity to really keep talking about be agile as we go through EV adoption and see what's coming up as well. I can assure you this had nothing to do with the election. We've been talking about this for months, as I said. But really looking forward to continuing that partnership. It doesn't look anything that is related to our first 2 cell sites. And as we said in that press release, looking to partner with them on prismatic cans as well. So this was a really good example of both our flexibility as well as the quality of the partnership that we have with LGES to be able to structure this deal that I think is going to be beneficial for both of us each in our own ways as well as together for our partnership. So looking forward on -- looking to move forward with them -- excuse me, on the prismatic cans as well and still moving forward on our SDI work. So that's the update on the cell plants and the cell strategy. And then I'm sure many of you saw this morning the announcement that we expect to take a restructuring charge in China. As you've seen in our 10-Qs and with our performance, this is something that we've been expecting as we continue to go through and look through the impairment analysis, understand that the China business was put on the balance sheet back in fresh start accounting more than a decade ago on a much, much bigger company than what it was. And as we've talked about before, we've been in pretty substantial good, I would say, conversations with our partners over at SGM and it worked through a restructuring plan, and that ultimately triggers the impairment analysis on that balance sheet. A couple of things on the restructuring. I can't go into a lot of details on that other than to say that many of our main goals are still very much intact. Number one, not to inject more capital from the U.S. into China. That's been an imperative for us is that the business has to stand on its own, and it can't take a significant amount of investment. So that principle is going to -- we believe, is going to hold, where the restructuring is not going to require us to actually put any capital over. We'll restructure some of our agreements and make sure that we can manage with the cash flows as we rightsize that business to a much smaller demand set. The second principle is we expect that we'll be able to put in a position where we're continuing to target being profitable again next year. like I said much -- on a much smaller scale than what we've been. And that's okay. The real challenge, as we've seen for China is if it were to become a significant capital draw to try to keep the business going. But I think we are very close to finalizing everything with our Chinese partners, and I think it's progressing about as well as we could be expected. Some tough decisions, obviously, have to be made in that space, but it is something that preserves not only our ability to be profitable on a smaller scale, but also not to do it with incremental capital into the country. So the team has been hard at work, especially our team on the ground in China, made a trip over there as well. And I think they've done a good job on to the circumstances.

Great. Maybe just to start, we'll start with the first announcement on the battery side. So one, can we sort of confirm any sort of amount of cash you're getting back for that sale?

We haven't disclosed that. But what I can tell you is it's a transaction that's really representative of the value that we put into it as well, but it's a good transaction for us.

Okay. And then -- so now that, that plant is under LG control exclusively, I think there has been some equipment put in place there. Is that -- are they going to use that equipment? Is there so much to be pouch, they'll just -- they could just start to sell to anyone they choose? Like is it the Ultium form factor and chemistry that's still going to be made in that facility or is that up to them?

Well, it's really up to them. It is set up for pouch, but they've got many other pouch customers as well. So that's something that rather than us being in it and try to balance what is the chemistry that goes in specific to customers. The easier solution, I think, for both parties is to just turn that over to them. And we're going to move forward with them on a prismatic can solution. So this would be good for them as well.

So that was the second part. So -- because you also had that announcement about working with them on prismatic. That's not necessarily from that facility.

Correct.

Okay. And is it -- I think we sort of briefly touched on this topic at your Analyst Day in October, but is it possible that some prismatic cells end up in the 2 plants that you still have a ventured interest within Ohio and Tennessee?

I would say it's possible down the road that we could do that. Obviously, that might -- that would be more capital efficient than building an entire new plant, but that's going to be a balance of both the pouch needs, which we think are going to carry on for a while as well as the growth in the prismatic as we go forward. So the key in all of this, as we said, is just make sure that we're flexible as we flex the EV demand and where it's going. So this is going to help preserve that flexibility. And we'll stay nimble as we think about how to schedule those improvements or changes.

And then moving over to China. Again, as you sort of said, I don't think this is sort of a big surprise that there was a charge coming. On the restructuring, are those plans actually set -- the release was a little bit unclear. It seems like maybe there's still some stuff to be worked out or what -- I know you can't say a lot about the restructuring, but what stage are we at, I guess?

I would say that we're -- we're in the finalization stage with our partner. Obviously, as we get closer to year-end, the reason we wanted to come out with that today is we obviously didn't want it to be a surprise at earnings. But like I said, we've kind of telegraphed that in the Qs as you look through that because we do have to do this annual impairment test anyway. So as the business is smaller and we're close enough to where we think the end goal is on restructuring, we put a range on it because there are still some moving pieces. But we're confident enough in getting it done and what that landscape is going to look like that allowed us to go ahead and disclose the charge.

And by your comment about not having to commit more capital to that business or at least that's the goal, this can all be funded with what's held on the JV balance sheet?

That's our expectation, yes. So we would defer some payments, obviously, and we've deferred some of the dividend payments. We took the right thing to do. But the whole goal for us is not to have to inject a lot more capital into it. And I think we're going to be successful with that.

Okay. Great. Let's sort of turn over to the core business, if you will. And we had another sort of sales data point last month. It seems like sales remains strong. Pricing remains strong. We only have, I guess, less than a month left here in the year, you gave some guidance. I mean, any sort of major surprises you've seen either from a demand or output or sort of pricing perspective?

I wouldn't say any major surprises. I think November was a strong month for us and for the industry as well, but that's generally in line with our expectations. So we had a little bit of insight as we were preparing and went through our last conferences. But November performed well. We're continuing to drive more EV momentum. I think we'll probably end up in around a 12% market share in EVs for ourselves. So we're outpacing the general adoption rate. We're well over 17% market share overall for the third consecutive month. So what we have said before is that we actually think we can grow EV penetration while at the same time preserving or growing our ICE market share, and that's kind of what's holding as well. So it was a good month on the retail side, also a good month for fleet. I think our GMT beat Ford Pro, I think, for the third month in a row on fleet, we'll see that as the numbers come out. But the team is really, really performing well for the month. But generally in line with our expectations that we put out.

It also seems like you're probably on track to sort of hit your inventory goal, at least sort of maybe -- at least we calculate maybe even more towards the high end, but you don't see any significant...

Some of your peers panic about it, you don't, but I'm quite comfortable with where we are and we've set up. And as we said, we were going to be a little bit higher going into the fourth quarter because we lose so many production days due to the holidays in the fourth quarter, and it's also a pretty big selling season for us. So I think we're positioned well. I think we'll be right in that 50- to 60-day range and just kind of continuing to watch the market.

And I guess the last part just sort of on a very -- very, very near term, and then we can sort of talk about the bigger picture businesses you had the variable profit positive target for use here in the fourth quarter. You just mentioned sort of another good month. So that -- is that still on plan?

We still are on track for that, and that's been a great effort by the team. And I think as we've kind of set it up, for the year, a really important milestone for us because we've got to get those vehicles scaled up to the point they're contributing to their fixed costs. Now obviously, the next step is EBIT profitability. And as we said at Investor Day, that's going to be a really a function of where the adoption rates are. And obviously, there's a lot of uncertainty as to administrative priorities as we see a turnover in the White House. But I think when you look at our EV products, we're actually stimulating demand at a higher rate than where the industry is. And that's a good thing for our progress. And as we get into the 2025 guidance, we still expect to have that $2 billion to $4 billion of profit improvement in EVs. And ultimately, we'll see where the volume settles out.

That's irrespective of what happens on EV policy from a consumer credit or...

Nothing is irrespective of everything. Let's be clear. But just on those trends. And I won't speculate on what policy is going to do other than just to say we've got to remain agile. I mean, we've done that for more than a century across more than 20 Presidents. Things change. And while there might be some changes that are pretty big shifts, we've always endeavored today, we want the products to sell themselves, and we want to deliver value to the customers. And certainly, as we've shown with our EVs, they're coming towards us at a faster rate. So we've got to just stay focused on the customer. And I think things will work out, but it might mean we have to change tactics a little bit.

Right. And I think on that front and I think immediately post the election, you made a comment that alluded to sort of still a need to continue to sort of invest because of the directional arrow on EVs, even if the slope might change or ebb and flow a little bit, right, is up and to the right, with a little bit more time to sort of reflect? I mean, any sort of changes to that view? Or do you still see the need to continue this push at the pace you're on electrification? Or if the customer does change next year because certain incentives are push back or pulled away, you'll have to retain that flexibility?

Well, I actually think we're probably better positioned than we've been since the real advent to the electrification initiative. I mean for so much of the early parts of it, we were chasing it from behind and trying to scale up. Now we made a lot of deliberate moves, and I think they were all the right ones to take our time and to do this the platform rather than rush vehicles to market because now scaling actually provides a benefit to us versus just scaling a product that isn't making money. So -- but as we've caught up with manufacturing and gotten our battery cell production up, we're finally at the point where I think we've got enough capacity to just maintain just above kind of where the industry is. That gives us a chance to flex up if we need to, but it's much easier to flex up than it is to flex back. So the decision on the LG site 3, that's a function of maintaining that agility going forward, and it gives us time to digest that. So I think it is still very much a part of our long-term future. we might see a time where ICE might be more profitable for longer, and we'll have to see what happens with the regulatory environment, et cetera. But clearly, we've got 2 lines of business, one that is mature and doing really, really well. And we have full-size SUV refreshes coming very, very soon. We've seen the order of magnitude improvement that we've had in the midsize and the small crossovers. We think that can continue in the full-size SUVs. And then we've got an up-and-coming EV business. We sold more than 15,000 EVs in the month of November. I think we're only the second company to Tesla in the U.S. to do that. So that's a good expanding business. We've got to get it to that core profitability, and I think we'll be fine, and it will give us time to balance as the consumer responds.

Understand there's a myriad of ways that sort of policy can evolve. But there's already been suggested reports, right, that a consumer credit gets pulled. In that world, how do you think about -- and I think even before that, I think you were sort of expecting EV pricing to be a little bit more challenging maybe than ICE pricing. But in that world where sort of government help is pulled, how do you for GM think about that price versus volume lever? And the reason I ask is because it seems like there may be some points where you are willing to give a little bit on price just because there are still other profit and/or cash savings to GM from being able to -- from the battery production tax credit, if that stays in, but the consumer goes away or even from selling EV and less of a need to go out and buy a credit all that's -- and that's sort of a whole separate conversation whether that remains. But at least in the near term, how do you -- in that specific scenario, how do you sort of think about price versus volume?

Well, I don't think we can look at the consumer tax credit in isolation. And I think we have to figure out what, as a matter of policy will the administration do. And like I said, I don't want to speculate on it. But a change in that consumer tax credit alongside a change in regulation, I think changes the marketplace completely because you've got a lot of people in the market selling EVs and incentives in the 30% to 40% of ATP range. We're hovering around 10% to 12%. So while we're well above where we are in ICE, we're actually much, much wider to the industry in terms of the gap versus what the industry is doing to incent EV sales. So I think the marketplace could change, but we've tried to maintain a level of consistency about that and not get into the dynamic pricing game, not overinflating incentives to try to push that inventory out. And I think it served us well. It may take us a little bit longer in that world to ramp up, but I'd rather ramp up from a position of strength then make it artificial and then have to gauge back profitability. So when you ask about, yes, I think we are advantaged by the production tax credit because we made the investments we've built and deployed the capital into U.S. production, which I think is wholly consistent with what the incoming administration said about U.S. manufacturing jobs, et cetera. We've made those investments. So -- but we're not in a position where it's like we can deploy that in the form of incentives to try to win share. We're still using that at least in the short to intermediate term to get to our profitability targets. So that ultimately, long term, we can get EVs to parity with ICE, which has always been our goal.

You have, though, I believe you used -- at least use sort of the leasing channel as it means to sort of get more EVs out there and that -- and especially for some of the more expensive vehicles or maybe either the vehicle or the consumer would not have qualified either. I don't know if you -- if you could give us sort of a percent mix of the EVs as just sort of released. But I guess is that in respect of that, is that less of an issue going forward just because the more affordable vehicles are starting to sort of scale more going forward versus that initial wave that tended to be more expensive.

Well, I think when you look at our portfolio, I think we probably have more entries that are eligible for the full $7,500. Obviously, the gross income limited side. But on an MSRP basis, I think we have more vehicles eligible and more models eligible than anybody else that's out there. I wouldn't say that we're using the leasing market to drive demand. I think we've got the leasing market available to those customers that want to choose it, and they're choosing it at a much higher rate than traditional ICE vehicles. And I would say that a lot of that is probably driven by still early adopters of EVs that are buying an additional car for their household or choosing EVs probably skew towards higher income levels that otherwise wouldn't be able to take that tax credit. So the question is, without the consumer tax credit, do they lease the vehicle? Do they buy the vehicle or do they walk away? And I think there's still a proponent to say that they're still interested in the vehicle, they're choosing the leasing option because while there's a lot of incentive for them to do that, it's not otherwise there. So I would expect that, that might normalize a little bit going forward, which I don't think is a terrible thing.

And just on the leasing front. I mean, how does assuming GMF handles it, do they sort of approach the lease for an EV and these are probably different from sort of some of the more established mature products? Like how much risk do you think there is on the EV residual side?

I think we're managing it well. I mean there's an element of conservatism in the residual value assumptions, but we partner with the ALG guides and others to look at what our residual value assumptions are. We certainly don't want to book a lease only to have a massive impairment at the end of it. So I think we're trying to shoot right down the middle, it likely is going to be some conservative EV residual values at least until they mature a little bit, but they're certainly coming in lower than where ICE counterparts would be and that's okay.

Yes. Look, irrespective of who was going to win the election, you had already sort of moved down this path where you're going to look towards hybrids or sort of plug-in hybrids and sort of more multi-energy type of platforms and plants like you showed us in Tennessee. Are you reassessing at all the pace or the percentage of the portfolio that might look to some of these other sort of non-BEV type but electrified type vehicles in the portfolio?

Well, I think we've always said that the plug-in hybrids were really the way I looked at it an option for compliance with the regulatory standards. So in the event that those change, and you don't need that or they're lessened, then maybe that could be something we could look at is skinning down some of those models. Actually, if you look at from a performance perspective, we have many vehicles out there today in both our truck and crossover portfolio where our diesel power units are cheaper, get better mileage and better performance than some of their hybrid competitors. So I think we've got the product out there for what the consumers are looking for. They don't meet the regulatory test. So we'll just have to see where that is. But in a world where compliance is eased, you could see where you don't necessarily need as much plug-in, you might not need as much BEVs as well, but we'll cross that bridge. What we don't want to do, and I know this is tough for this audience that's listening today. The market hates uncertainty, I don't like uncertainty either. The problem is I have to wake up with it every day. I can't go on the sidelines and wait it out. So we're trying to not overreact anything out there in the short term. I understand the rhetoric that's out there and some of the unease that results. But what we've got to do is just say, look, our path forward is still very consistent with where we were going. We've made these investments. We still think that the road is right. It might have to pivot a little bit and respond tactically. But I'm not going to overreact to a tariff if I don't know that it's not going to be traded away in 90 days for something else. So we just got to make sure we don't overreact to what's out there and model the business appropriately. I think what the team has really proven over the last 3 to 4 years, is that really sort of unique ability to be agile through a lot of changing circumstances. I see this as another one of those.

I want to get start in a second, but just last -- last point on the portfolio and the powertrain options. There's 2 main things, right? There's EPA and there's California, both of which are -- let's just say on...

MDOT.

Right. But at least one of those might be a legal challenge and the other one is just sort of has to work through sort of the legislative process. So that could take a while. So as it stands now, you're saying you don't sort of see meaningful changes from the sort of the path you were on and how you're attacking the portfolio. But is there an ability to react more quickly if you sort of start to see some signals and signs that things may move one way or another?

Well, I mean, I'm not sure what you mean by a move quickly because if you look at it, we've got a really well-established ICE business. In a world where compliance requirements are eased, that's probably going to be more profitable longer net of the regulatory charges of producing it. So that's a business that we can keep up. We can extend as we've said, pretty repeatedly, about 1/3 of our program capital is still going into ICE program refreshes. So we have an opportunity to pivot that if we need to. As far as electric vehicles go, we still see that as the future long term, and you can see the trends globally. And many of the customers that are new to General Motors are coming in through the EV channel. And so I think that's an opportunity to have a successful business there. That's in a sort of nurturing stage where we've got to get it to profitability. That doesn't change if the regulations ease. We might have to focus on taking costs out faster to do it on lower volumes and not take advantage of scale. But those are, I think, are tweaks to the strategy rather than a full-blown pivot. So we're going to comply with the regulators. I mean we can't take the risk of not complying. But I'm not going to speculate on how that's turned out. We're just going to make sure we look at the landscape, and we continue to march forward for the best of GM and its customers.

So let's turn our attention to trade. And I guess, the big focus obviously has sort of been Mexico to date. We saw the stock reaction on the date of the tweet or whatever social media posting. There's no hiding behind the footprint for GM or really even right, the industry at large. Obviously, a good chunk of the supply base is in Mexico. So based on your comments, it sounds like you're not overreacting one way or another. But clearly, knowing you and knowing GM, there's some planning or at least thought going on behind the scenes in Detroit. So maybe you can just sort of shed a little bit of light on sort of how you can sort of think about that problem, maybe even the likelihood of sort of tariffs.

Yes, I'd love to stick my head and say, let's just wait for this to go away. That's not the reality of the world. So yes, we do have to plan. And that really involves a short-term scenario, a longer-term scenario and what would you do? And clearly, as we're thinking about investments down the road, we've got to make sure that we maintain as much flexibility as possible. We don't want to make a bet on a short-term tariff environment that turns into a long term. But likewise, we don't want to set off the business on long-term decisions that don't actually make. So we kind of catalog what are those things that we can switch with low cost, low friction. What are those things that are going to take a little bit more investment and a little bit more time? And then how do you stairstep into those. But the key in situations like this is just not overreact because as we've seen the industry do in the heavy pivot to EV and then back and then dip your toe in the water that just burns a lot of capital, and it creates inefficiencies. So it's better to be a little bit patient. And if that means we have to incur some costs in the short run, that might be the better long-term solution. We just don't want to overcorrect the business. But we do have multiple levels of plans depending on how this might go.

It would be quite inflationary, right, for the consumer. So is there like the part of your thinking also has to be, right? Like what can you sort of pass on at the expense of sort of volumes. Is that sort of the...

I mean our costs would go up for sure. And we actually have to just figure out where the market is and so on. So I don't want to go out on a limb or I don't want to be quoted as saying it's going to be inflationary. It's not. We don't know. We don't know how the consumer will respond. The consumer has been very resilient over the last few years, especially with new vehicle purchases. And what we've been able to do with pricing, it doesn't necessarily imply that there's a lot more. It doesn't imply that there's less, et cetera. So there are so many variables to this. I just don't want to get into specifics of how we might address it other than to say we're planning and we're trying to make sure that we've got scenarios in place to act for the best interest of the business.

There is one more on trade and we'll see if there's anything in the audience. And when -- I know they're not sort of -- it's a smaller number and -- but there are some vehicles that are made in Korea that are brought over. If there are tariffs on other countries also for export to the U.S. is reallocation of some of that, something that would also be in the consideration. I guess now it just sounds as I'm thinking extremely conscious as I didn't even think about sort of some of the other stuff that was going on in Korea as well, which I guess, wasn't on my bingo card. But how do you think about, I guess, some of the international production that's testing for this market? Is that something that you would reconsider?

Well, I mean it all falls into that category of how much, how long, et cetera, because there are decisions that you can take that, like I said, are relatively low friction, low cost. There are other things that are pretty highly capital intensive that if you felt like the trade environment was permanently shifting, you might make some of that investment. But if you thought it was going to be temporary or just over an intermediate time period, there's degrees here where you don't want to go and spend a lot of capital that 5 years down the road, you wish you had never spent from that because that feels like an overreaction. So where we can adjust the business to a higher cost environment, we need to do that. Where we can't, we need to think about do we make a pivot.

Yes.

I can't hear you, sorry...

Yes. Arlington, you talked about -- you mentioned the large SUV refresh. Could you talk more specifically about that as we head into '25. And how that could help you positively with pricing? And related to that, as you're rolling out the IQ, what's in GM's control there in terms of just managing the cannibalization if you're marking more to the coast, but just talk about how you see about that playing out in '25?

Yes, sure. So I think we've got high expectations for the refresh of full-size SUVs. And what you see typically is a little bit of a bubble. Now how that manifests itself, I'm not exactly sure because we're already at a level that is well below industry incentive levels and much stronger pricing than what we've got, whether we can take a little bit more or not. I'm not sure if the market is going to determine that. But we're excited about our products. And so far, over the last few years, we've had a pretty good track record of rolling out those new products. Interestingly, our incentive environment today after the month of November, actually looks a lot more like Toyota than it does Ford or Stellantis. And I know that comes as news if you followed the industry historically, we almost always matched them and Toyota was always kind of floating along the bottom. But we look a whole lot more like Toyota now, which is a great thing, and I think it's a great testament to the sales and go-to-market team that we've got in North America and what they've been able to do with the products. So there's some optimism with that, and we'll have to see how that goes once we get into market. When you look at the Escalade IQ, I mean, so far, and this has been one of the things that I think the market was really skeptical on. And it's -- we can't declare victory yet because it's still relatively early. I mean, we're selling more than 15,000 EVs. But so far, the preponderance of those sales have been accretive to our share. And you can see it in our total share numbers. So this hasn't been -- I think the fear of the market was it was a zero-sum game and every EV was going to cannibalize an ICE vehicle. I think we've seen examples and a good bit of data where many of those are additive. And I think the same could be for the Escalade IQ because you have many customers out there who have been environmentally footprint conscious that would love to have a full-size SUV. There hasn't been anything in the market that they would consider because they don't want a V8, et cetera. So I think there's an opportunity to bring that to a whole new set of customers, and we're optimistic about what it can do and not really worried about any material level of cannibalization at this point.

Anything else in the audience? Just so they can hear you on the webcast, sorry.

One last question. Did you quantify on the 9 points of margin improvement with the smaller and midsized truck portfolio. Did you quantify the revenue number that that's over -- I don't know if it's 20, 30? What is the number there?

We haven't quantified that. But obviously, when you look at the pricing environment over the life cycle average of the prior models, we're actually in a much better pricing environment, both in terms of industry, but also in terms of our own go-to-market approach, where incentives are quite a bit lower. So we haven't broken that out, but I would say it's a decent split between revenue and the cost side in terms of what we've been able to do.

On -- just as it relates to pricing and as I'm sort of thinking about some of your comments on the IQ customer versus the, let's say, Escalade customer. If we are in a world next year where EV pricing is more challenging because a credit is taken away or some support is taken away. Do you think that has the potential to bleed over into ICE pricing? Or do you sort of view them as sort of 2 different consumers at this point?

I think there's still kind of 2 different consumers at this point. Like I said, either somebody is really focused on being an EV household or somebody's buying an EV to supplement their vehicle portfolio and add to their garage. So I'm not sure that we would see a lot of bleed over in that, but I don't think we can take anything for granted in the market. And that's why I really commend the team at building this share from a position of strength, which I think is somewhat of a unique accomplishment in this space. And I think, hopefully, that's going to continue. That's our expectation.

One other area of update that you sort of have -- have sort of promised the market that we haven't gotten yet is Cruise. And obviously, there's been a lot of AV rather enthusiasm in the market of late, even some hopes for maybe some federal framework. Can you just provide the latest and greatest on sort of where we stand on their need for funding and what the plan is there?

We already gave you 2 big news items for the conference and yes, we -- look, we're still working through that as we said at Investor Day. We expect to have more clarity on that before we get to the end of the year. So we're going to continue to work through that, but more to come.

Okay. Anything else from the audience? I guess just while we have you, I think this has been pretty clear, but just one on cash flow and sort of the commitment to sort of return cash. And now it seems like maybe there's a little bit of a capital inflow as well from sort of the LG agreement. Is sort of this continued sort of steady return of capital, what investors should come to expect here? Or like what would sort of cause that to change one way or another? I think in the past, you mentioned you might look to sort of dividends as a way to sort of supplement some of the capital returns.

Yes. So I wouldn't say that there are any major changes. We have been much, much more deliberate about following the company's capital allocation policy, and I think that's paid significant I was going to say dividend, a significant benefit to shareholders this year. We did say that we've completed the ASR. So that's clean, that actually gives us a much clearer market to be able to go and execute. And I would say under sort of current conditions, we would expect to exhaust our $6 billion authorization we did earlier this year before we get to the end of the first quarter. So I think we're making good progress on that. The goal is still out there to be below 100 million shares outstanding or a bit below 1 billion shares outstanding, that would have been breaking news. 1 billion shares outstanding by early next year. So the team is progressing. Cash flow remains strong as we would expect it to be when you combine the performance with the capital discipline that we have and no reason to believe that's going to change.

Would you want to -- I mean, I know you've talked about this [indiscernible] to $1 billion level before. In light of maybe some of the political and geopolitical developments. Is there any change to that buffer where you might want to keep a little bit more until sort of some of that uncertainty clears or do you feel comfortable at that level?

Yes. Yes, I would say maybe a little bit, but that targeted range already contemplates a buffer. And remember, we've got $16 billion of liquidity facilities if we need it. So I'm not overly concerned about the ability to pivot the business if we need to. And I think we've got strong liquidity across the board. And you asked about the dividend as well. And I think what we've said about that is with the valuation where it is, we've seen a little bit of uplift in the multiple, not a lot. But we still see share repurchase as a bigger value add for our owners. But we're going to continue to tilt into the dividend. As you saw us do a year ago. We took the advantage of retiring some of the shares and raised the dividend. And I think there's opportunities to do that and potentially a little bit more in the future.

Okay. Maybe if we could end just on the fun one because we did miss one piece of news, which is GM's entry into F1 so maybe if you could just talk a little bit about the rationale and maybe the commitment that's required for that.

Well, I think GM has a long tradition in motorsports. I think F1 is a really, really great business. Obviously, they've been on a tear lately, and the opportunity to be a U.S. flagship team in that sport, I think, is really good. The structure I think that with our partners going in there is going to help us do it in a manageable way but also help to get the benefits of what we think could be a winning team down the road. So I was at a conference in Washington yesterday. I mentioned I've done 2 training sessions at Spring Mountain. So I might submit my name as a driver, but I'm not sure I'm going to make the cut, but it certainly is something that's exciting. And one that we think can actually be a good financial investment for us down the road.

Right. And so future Analyst Day is in Monaco.

That's a heavy competition with the Indy 500 so we'll have to see.

Okay. Thanks, Paul. Really appreciate your time.

Thanks, Joe. Appreciate it. Thank you, everybody.