General Motors Company (GM) Earnings Call Transcript & Summary

Okay. Great, and we're live. Thank you, everyone, for joining. This is the 16th Annual Barclays Global Autos and Mobility Tech Conference. I'm Dan Levy. I lead autos research -- U.S. autos research coverage at Barclays. Really pleased to see how the conference has evolved over the years, and we're really glad to kick it off with GM. A very interesting and resilient earnings power story in the face of what's been an interesting year with tariffs. So I'm going to run through a series of fireside chat style questions. We have Paul Jacobson here, the CFO.

I'm going to run through a series of questions. Anyone who has questions toward the end, we can take some Q&A. If you have questions via e-mail, please e-mail my colleague, Josh Cho, [email protected], and you can ask your question anonymously. With that, we're going to kick it off. Paul, thank you so much. Why don't we just start with -- you've given us periodically on some of these updates, a sense of how the quarter is going. We're toward year-end. You gave us an updated guide on the 3Q call. Maybe you can just give us a sense of how 4Q is shaping up and any developments we've seen?

Yes. I would say, first of all, Dan, thanks for having us, and it's great to be with everybody this morning. It's a rainy day here in New York City. But I would say that the quarter has been going right in line with our expectations. It's obviously been a noisy quarter as we came through October with the sunsetting of the 7,500 tax credit -- consumer tax credit. But as we look at where broad demand is, it's held in there really well, I think, consistent with the way we had guided for the quarter. There's a lot going on, as we talked about on our call with making sure that we're positioning the company for 2026 with lower EV demand versus the capacity that we've built up. I'm sure we'll spend some time talking about that. But generally, I think our trends are good. We saw full-size pickups pick up a couple of tenths of share in October. So I know a lot was written about share erosion in September month. And we don't put too much stock in those month-to-month movements, we just are looking at trends. Because what we don't want to do is we don't want to overreact and be impulsive about the discipline that we've achieved in the marketplace. So whether it's inventory discipline, incentive discipline, our competitors are going to do what they're going to do. It's really about making sure that we're getting the vehicles in the hands of our consumers and demand for the vehicles remains really strong, and it has despite the volatility that we've seen across the market.

Great. Okay. Well, you referenced '26. And I think that was to a lot of us, one of the big positive developments on the last call that you did give us a sense that '26 can be stronger than 2025, I think, which to some people early on, that was a bit of a surprise given the tariffs and the way that, that flowed. But you talked about a number of factors, reduced EV losses, warranty costs, tariff offsets, regs, fixed costs. Maybe we could just unpack. And maybe let's just start with an early look at how you're thinking about the industry right now. Maybe any preliminary views on what type of SAAR because we have a lot of pull forward this year, what type of SAAR you're looking at? And maybe you could just talk about the broad pricing environment that you expect.

Yes. So I mean it's too soon to conclude on what pricing for all of '26 is going to look like. And so it's interesting when we talked about the '26 versus '25, there wasn't anything in there on price. It was just really looking at the things that we know we can control and we can execute better on warranty. We're doing the rightsizing of the EV manufacturing footprint, et cetera. That will give us a tailwind. We expect tariffs to be much more stable, whether it will be enough to overcome that extra quarter in '26, still unsure, but a lot of things are kind of breaking in the right direction. And then as we look at the regulatory environment, we should start to see some of the savings. And if the administration follows through and is able to make sure that they're adjusting on the GHG, the way they've done CAFE. There's still a lot of procedural stuff that has to happen. There's some tailwind there as well. So I think all of it is sort of girded by the expectation that the consumer is going to remain pretty stable. And if we're hanging around in that 16 million unit, plus or minus a little bit, I think we can do really well. And that's the power of inventory discipline and ultimately, what we're doing with incentives. It's just much more consistent than having to just try to flex to get that extra unit of sales where it just doesn't make that much sense to be able to do that. So that stability in this market feels like a good environment to us to continue the success and the momentum that we've seen.

You talked about inventory. I think we've seen industry inventory has ticked up the last couple of months, 2.8 million units. We've sort of been in this 2.5 million to 3 million unit range. Are you comfortable with that as a level that can provide -- still provide an umbrella of price discipline in the industry?

Yes. I mean, it may sound a little sacrilegious. I don't really subscribe to the Dave on hand of inventory mechanic because I think you're trying to solve for too many variables at the same time. So if you actually look at our total dealer inventory, it's down about 16% year-over-year at the end of September. So we're managing to that number. And sometimes, the days might be a little bit higher because the SAAR is moving around so much, and we can't flex the capacity that fast. So we've maintained that discipline. And I think when you look at the way we've responded really kind of over the last, I would say, even 2 to 3 years, to competitor inventory and competitor incentive levels. We've remained remarkably consistent. It's actually done quite well for us in terms of the consistency of our residual values and our sales, et cetera. So I'm okay with where the industry is right now. There's a lot of noise around EVs. And I think there's going to continue to be for the next several months until we find where is that natural sort of non-incented demand level for electric vehicles. We know pre IRA. It was sitting around 5% to 7% penetration. Maybe we level out there, maybe it goes a little bit lower, maybe it goes a little bit higher based on repeat customers. But we're just going to kind of take it easy a little bit and see where that goes. And I think it's going to take a little bit of time to settle because we have seen a lot of noise out there, both in inventory and incentive levels that, to be honest, post I seems a little bit confusing with some of the competitive pricing that we see.

And maybe just to double-click on the competitive dynamic. One, we have more capacity that's coming into the industry, somewhat '26, but also '27. Two, we know that one of your competitors that had seen share drop quite a bit, another U.S. competitor that's seen share drop seems potentially interested or trying to rebuild that share? So how do you think about that competitive dynamic considering the capacity and maybe some others that might try to recoup the shares?

Well, I mean, I think that goes back to what we've been saying all along because I think many out there we're saying with the change in regulatory environment is our CapEx is going to come down significantly. And we said, no, we don't expect it to, but we will pivot some of our dollars from EV to ICE because we've got to maintain that freshness of the portfolio. It really comes down to the quality of the vehicles. incentives and pricing can have a little bit of an impact. But when you're producing the type of portfolio that we have that has proven to be really resilient against a lot of those competitive pressures. We think that sustainable and that's where our discipline comes from. So as we go into 2026, we have the new trucks coming in. So we feel really good about where our position is going to be. in trucks, and that will lead to more and more. So I feel good. We continue to believe that we've got the best portfolio in the history of GM and customers are really responding to it.

Okay. Let's maybe unpack some of the cost elements. So I just put a second on warranty. I know this has been a year of headwinds at roughly $1.5 billion this year. There was an issue with L87. Can you just give us a sense of -- what has happened on warranty? And what is the line of sight for the warranty situation to improve?

Yes. So this has been probably 1 of the areas that has probably been most disappointing about our execution, but one that we're all acutely focused on right now. So I think if you really step back and think about what's happened, I think a lot of these things have been driven by supplier quality issues. And I think when you look across the supply base, there's been a lot of challenges with labor retention and so on and so forth, especially as you go down the tiers. So we're really focused on making sure that we get the sort of quality supervision in there, and we're spending more time helping them with quality systems to make sure that we don't have these big spills that we've seen, but we're dealing with it. I mean the centerpiece of the strategy is, number one, keep the customer we're right at the center of the strategy. So that actually impacted us this year because we took a number of 87 engines out of manufacturing out of the production cycle to get into the field because we saw that customers were waiting too long, et cetera. So those are the types of conscious decisions where in a short run, it cost us some units that we could have otherwise produced. In the long run, it's absolutely the right thing to do for our customers. And so we'll have a little bit of momentum, I think, that way in 2026 as we're largely getting through that. What we've started to see in the last probably 2 to 3 months is a stabilization of the monthly cash flows because if you understand how the accounting works, it starts with the cash and then it really projects out across the entire car park, the incidence and the cost of the warranty repairs. So the first indicator that we can start to bend the curve down is getting that monthly cash spend flat, bringing it down and then that will start to have a lagging effect on the accrual going forward. So we're optimistic that we'll be able to turn that as we get into 2026. And one of the things that we're counting on to help give us a tailwind into next year.

Great. Tariffs, you said should be better. And I know there's a lot of moving pieces in that. Maybe you could just help us unpack what's going on? What's in the numbers, what's not in the numbers I think you haven't embedded any benefit from Korea this year. That seems finalized. There's some potential for Mexico, Canada, and we know that -- there was some relief on the parts side, expanding the number of parts codes that are -- that can get the rebate. So maybe you could just walk us through the puts and takes on tariff for both this year and next year. I think the prior guidance you gave was $3.5 billion to $4.5 billion gross, the 35% mitigation.

Yes. So you're right, Korea seems finalized, but it's not. And until it is, we're still paying at that same rate. So we're optimistic that those parties are going to come together and actually get that completed, and I know they're making progress on it. When that gets done, how it gets done in terms of what's the effective date, et cetera. we'll have somewhat of an impact on us for the year, but not huge. But it is going to be a tailwind for us into 2026. We feel very good about that, where it's heading. . So as we look at '26, we pick up an extra quarter. That's the biggest headwind. But I think we overcome a lot of that when you look at Korea getting done, Mexico and Canada potentially getting done. The expansion of the MSRP offset and keeping that at 3.75 is really a strong level of support for the industry and will help us tremendously as we go into '26 and already helped us in '25. I think we tried to communicate that on the call that it allows us to capture that. So there's current savings, and that's why we took it down from 4% to 5% to 3.5% to 4.5%. So that will be an even bigger tailwind into next year that will help us overcome that extra quarter. So a lot of moving pieces, you're right, but I really applaud the team for how they managed through this because we didn't panic, right? It was -- we had a playbook. We knew at the end of the day, it was probably going to start high and negotiate back a little bit as the administration made progress with various countries. But we stuck to that playbook, and it really, I think, worked well for us going forward because all of this becomes easier when you're managing with discipline. So you don't have 6 months of inventory on the ground. So you don't have to respond with discounts et cetera. You're just much more nimble the way we've been running the business. And that, I think, has paid huge dividends for us.

Okay. The EV question, which I think this is -- to us, the largest developments or the largest change in the U.S. industry and really taking away what we call the carrot and the stick. So on our numbers or our guests, you can verify this, if you want, you're probably losing roughly $4 billion to $5 billion on your EVs.

I will verify that's your guess.

Good. Okay. You've talked -- there's a few different levers to improve the profitability. Maybe you can just unpack those between mix, credit, overhead, how do we think about the opportunity to reduce that loss?

Yes. Well, I'm really glad that you mentioned the carrot and the stick because I think the market for most of this year has been really singularly focused on the carry. We read a lot about, well, what's going to happen to EVs when the $7,500 goes away. But what we saw is that the regulatory environment under the prior administration, which was aiming the industry and really sort of prodding the industry to get to 50% EVs by 2030 under the power of the regulatory environment was creating a lot of dislocation, right? So we saw competitors out there discounting EVs by 70% to 80%. Well, that's not a viable business model. That's a model to acquire credits, right, to be able to basically continue to pay for ICE vehicles. So a lot of irrational behavior when you look at the market for electric vehicles. That's got to normalize and settle down, but I think it's fair to say that the demand is going to be lower than what it was in a world where the carat existed. So we have, for the last few years, been gearing up to be compliant in that world. And as we had said a few years ago, building up to about 1 million units of capacity for electric vehicles. Well, it's probably now going to be a while before we get to 1 million vehicles of demand. So we have the capacity there. But what we've seen is we started to pull back production schedules and production schedules in '25 was there's a wave of adjustment costs that constantly happen every time you take that down, whether it's suppliers or cost thickening at plants, et cetera. So part of the reason for the charge that we took in the third quarter, and we foreshadowed that there's going to be a charge in the fourth quarter related to this work is how do we get the footprint rightsized so that every EV we produced isn't shouldering a big burden of underutilized capacity. So I don't like writing off capital. It's certainly not what we intended to do. But with that regulatory change, we have to take a big sort of step change to rightsize what that capacity looks like, and it'll put us on a much more stable footing going forward on our march towards EV profitability. And it's going to be a longer journey. I mean we've said scale is a really big piece of it for us. But when you look at the next few years with what we're doing with LMR technology and going to prismatic cells, et cetera, we've got a road map to consistently improve that EV profitability. And if we can sort of shed that overcapacity burden and rightsize it and take a couple of sort of clean sheet approaches I think there's a better sort of broader profitability story for electric vehicles over the next 5 years. And as we -- long as we continue to produce to demand, I think that will be good. And I think it will work well for us.

Just on the red credit, can you just give us a sense how much you've expensed this year? And is there a further need for Red credit into next year?

Yes. So '24 is probably the best year because we've already sort of written off the cafe and so on. So 24 was about $1 billion of sort of total compliance costs across the board. And in the past, we've spent as much as $2 billion a year from time to time on credit. So that will be both in accounting savings and a cash savings going forward. We -- I don't think we bought any credits in '25 even before the regulatory environment shifted. So I think we see that as a tailwind. Again, it's got to be finished because the greenhouse gas is still there, but I know procedurally, they've said that they're working on it. And we expect that, that will be done sometime in 2026, if not sooner, and that will be another tailwind for us.

Then maybe how do you balance the R&D overhead spend? Because you went through a very large product push now that as far as we can tell, after Bolt there's not really any new EV product. So maybe there's not maybe as much product, but you do still want to push forward on maybe advanced technologies. So how do we think about the level of R&D or overhead spend on EVs?

Yes. So what I would say is it's really sort of compartmentalized. So all of the R&D right now is on architecture changes, battery cell changes and pack changes Kirk Kelty is doing an amazing job as is Sterling Anderson getting up to speed on the business and really having an influence. And that's part of, okay, let's shift from product proliferation and making sure that a strategy that follows the compliance environment to get to 50% EVs has to have a broad swath attached to it because you have to reach many markets to be able to get there. We've got that. We've put the capital into it, and we can work on now improving the profitability of 1 of those vehicles through structural architectural changes. But the bigger piece and where I think the real importance is it's not just EVs, it's also on ICE, it's on the software-defined vehicle. We had a tech forward day for the media a couple of weeks ago and really started to lay out eyes off hands off by 2028 and getting to software-defined vehicle, which is going to be what the future is. And we think that, that can be done with our approach, both in EV and ICE going forward. So irrespective of what the next regulatory environment looks like, we're going to be well positioned to drive that software and tech revenue into the P&L as we go out over the next few years.

Okay. I just want to talk about margins more broadly. And I told you I've put in a little joke that any GM historians out there. spotty, executives from GM used to go around with pins, this must have been like some 20 years ago, that said 29%, because it used to be 29% markets share. You have pins on your lapel. You're obviously not at 29% share, but you had pins on your lapel. So you're talking a lot about 8% to 10%, but I don't see a pin on your lapel that says 8% to 10%. So when does that 10% come out?

Well, you can't see my 8% to 10% tattoo or my inventory discipline tattoo over here, et cetera. But No, I actually didn't know that those pins existed, but I will tell you that we talk about it a lot. And it's really important to us to be able to prove that we can get back to that 8% to 10% margin over the next couple of years, even in a tariff environment. And I think back to when I started and what a lot of the mantra was in '21 and '22 was can GM preserve 8% to 10% margins with EVs. And we said at the time, we can grow EV share at the same time that we can grow ICE share, and most people thought it was a cannibalization story, well, it wasn't. We actually grew ICE share and EV shares simultaneously, and we had gotten to that point where we were running pretty consistently in that 8% to 10% range. then tariffs came in, it was, okay, well, 8% to 10% is a dream. You'll never get back there again. And now we're saying that we think we can do it within the next couple of years with a good product road map, but it's not one that says we have to take a lot of price we might take price. Price is going to be a function of what are the features that we add in model years and what do customers perceive as the value in our vehicles. but there's a lot of things that are directly in our control on the cost side that we still think we can go after work our way back into that world where we can get to 8% to 10% margins in a post tariff world. And I think that's a huge success story coming off of where expectations have been for the last 5 years. We were at a conference in Europe and hopefully, many of you have looked at the materials on our Investor Relations page because we kind of outlined how different we looked than where we were 10 years ago. structurally. I mean we're running about 2 to 3x free cash flow, very consistently year in and year out. And this is a story that I think even with the run-up that we've seen since earnings, I think is a bit underappreciated because there's still the legacy cyclicality thought about where we're going. But I think what we've done here is we've created significantly less self-induced cyclicality. So when you think about the effect that inventory and incentives had on the business, you were basically sitting on a pile of finished goods that as demand waned, you were chasing demand down with price. So it had this amplifying effect of cyclicality. And I say all that because I think it's made us more nimble. And that's where I think we can look at $3.5 billion to $4.5 billion of tariffs and say, okay, what do we need to do to adjust the business, let's do it as quickly as we can and let's get back to where we were. And I think that's worth something. And I think the market is they're starting to recognize and realize that maybe a 6 multiple on that business, is a little bit too big of a risk premium that's based on historical norms, not really based on a forward look of what we can continue to do.

I agree.

I do, too. I own a lot. I don't think you can.

You just of the drivers you've talked about, the reshoring costs and software, is it software and services? Is it fair to say that the reshoring is probably dimensionalizing it the largest of the 3 opportunities? Or how would you dimensionalize these opportunities?

Well, I mean, I think reshoring is as much of a sort of cost mitigant as giving us some incremental growth. So as we've looked at Fort Wayne, what we did with the line rate there and what we're doing with Orion we'll get some incremental SUV production, which we can actually use for optionality. We could produce a little bit more. We could take the pressure off of Arlington, who has been under a lot of stress. They do an amazing job there. But getting a relief valve is also pretty important. So I think it just gives us more flexibility. The software story is really more about the future. It's -- as I learned pretty quickly, when you think about the business model of manufacturers, we've made well over 90% of all of our profitability from the wholesale event. And -- yes, we get some customer care and after sales, parts and accessories, et cetera. But largely, it's a wholesale business. This gives us an opportunity over time to monetize the car park. And you think about the explosive amount of growth that you can see in revenues and margin performance if we're able to capture even a small slice of that. I think the last estimate there is about 55 million GM vehicles out on the road, that we get a little bit from. But when you start to say, okay, that's going to grow from a software-defined vehicle base and get opportunities for people to continue to engage with the company for years and years. that's where it's really game changing. And between now and there, I think what we've taken as an approach to say, we're going to run the business for disciplined free cash flow performance. We're going to continue to buy down our share count, and get that share count rightsized while we can do it at a really substantial discount to what the future value of the company is going to be. And I think that's going to pay huge dividends for us down the road.

Okay. So on that topic, maybe like you've given us a brighter outlook on 2026. You have cash that's nicely in excess of the $20 billion target. So how should we look at the capital allocation framework going forward? What percent of the cash flow -- free cash flow, should we expect to be allocated toward cash return to shareholders and share buyback specifically.

Yes. I mean I think if you look at it, while we haven't put out a commitment that says, this is how much it's going to be, just look at the way we've deployed our cash flow this year in the last couple of years. So we've already given the guidance that we think CapEx will tick up just a little bit. over the next couple of years, $10 billion to $12 billion instead of $10 billion to $11 billion. It's very reasonable and as much as people like to say, well, when are you going to get back to $8 billion, $8 billion on an inflation-adjusted basis is $10 billion today. But we're doing it with much, much more efficient cash generation if you look at our yield on cash -- or cash conversion, I mean, it's more than double what it was 5, 6 years ago. So I think the business is much, much more resilient. And that means we can invest a little bit more even adjusted for inflation, but do it within that disciplined mindset. The second thing we do is we need to continue to protect and make sure that we strengthen the balance sheet. We paid down about $1.5 billion, a little bit more than $1.5 billion of debt this year. It's was a really good investment for us. Just pay it as it matures. We're not rushing into a bunch of balance sheet fixing because I think we're in really good shape with the pension and the on-balance sheet debt. And then that leaves returning cash to shareholders. So if you look at what we've done in the year-to-date, it was about $3.5 billion if you if you just assume we do the same in the fourth quarter as we did in the third quarter, that's about $5 billion. plus or minus, it's pretty consistent to what you've seen over the last couple of years. So we continue to watch it. But I'll tell you, even with the run-up that we've seen in the stock, it still feels very, very cheap when you look at it, not just against our competitors but against other industrials. And I think that's, like I said, a burden of the history. But it takes time to be able to convince the market that it is different this time. And I know that from my prior industry as well and -- but it's a discussion and an argument worth making because eventually, it does work. And I think the key to all of that is cash flow because it becomes really, really difficult to ignore that free cash flow. And the company has done an amazing job of flipping the script on that versus history.

Okay. I want to just ask a question about tech because after the earnings call, and you referenced that there was the GM Forward event, you laid out sort of your tech road map path to eyes off driving 2020. So maybe you can just Give us a sense of what the revised road map is now for advanced ADAS. What can do you want to play in making consumer EVs? And maybe just on resource allocation. I think the GM that we've seen in recent years is 1 that is trying to get a delicate balance of pushing forward on technology, but really being much more efficient on resource allocation. How do you think about that and your use of partners as opposed to doing things fully internally, that's maybe a bit more resource intense.

Yes. I think we continue to believe that partners can play a role on a but we want to make sure that at the end of the day, we control that key value, which really comes back to the data and we don't see that. So there are things that will never do better than what the market can do around maps and voice and things like that. But there are a lot of things with the vehicle specific that we can do well and that preserving that is really, really important. So I think we're trying to bridge that gap between how do we remain capital disciplined. At the same time, we're investing in what we need to do for growth. And I think the best example of that is the rather tough decision we made with Cruise in terms of saying we've got to abandon robotics cause at the end of the day, that was going to cost us tens of billions of dollars to ramp up that fleet. We don't have cost of capital to be able to do that. And as we went out to the market and look for capital. There was some capital there. but it was all sort of capital behind us that said, okay, as long as GM is willing to foot the bill will come along and right along with us. That was something that as we look at the cost of capital disadvantage that we have with other players and capital availability, it was the right tough decision. So we've taken that resource or we saved $1 billion a year on it. But we've taken that resource and we brought it in and said, let's focus on personal autonomy. So we're doing that from a retail perspective. We're #1 guiding factors is safety. I mean that is just paramount to the GM brand that we've got to do. And then number 2 is how do we get an affordable system out there that leverages the expensive system that we have built with crews, and really helps us move forward into more of a retail platform. So I think we've got a good road map that's achievable. Like I said, Sterling has been a great addition to come in and help guide that team and lead that team. And we feel confident that we're going to get there. So eyes off hands off by '28, and that will just continue to expand and roll out from there.

Okay. Folks, any questions? All right. Go ahead, Jim.

Paul, we were talking about earlier, but if you look at the demographic that your U.S. customer fits, how has that changed versus 5 years ago? Was it like the top 10% of income earners in the U.S. today versus 5 years ago, it was the top 15%. Is it more concentrated in that upper demographic group. And then second, what information do we have about those buying patterns? Are they holding the vehicles for 4 years on average, 3 years? Just kind of curious how that's shifted and how that gives you some additional confidence in that demand for your product in the next couple of years?

Yes. It's a great question. It's one that we probably wrestle with the most is how do you take all of the data that's coming about the U.S. economy and sort of dissect it down into what it means for us. I think, first of all, we've got a broader portfolio than we've really ever had. I mean when you look at the success of the Chevy tracks, which is #1 in the small SUV. We can do that profitably even in the tariff world and that is a game changer for us because historically, it was you make all your money in full-size trucks and SUVs and you try not to give it away in the other markets. But now we can make money across the spectrum and the midsize pickup trucks are another great story for that. I think, number one, the breadth of our portfolio is a little bit stronger. But I'm a big believer that there's not just 1 economy in the U.S. There are multiple economies that we're dealing with. And I think that's where you can see some of the information about the value seeking in the retail environment that maybe we have pushed an industry, maybe industry pricing has pushed some people into the used car market that weren't there and maybe the historical 17.5 million unit industry is maybe 16.5 million or 17 million now in the future, at least until we start to see some rate relief or more wage growth. But I think that customer, especially at the top end for the full-size trucks and the full-size SUV has been remarkably resilient, and we continue to see them buying in similar patterns that we've seen before. I think availability has hampered that. So I think to the extent people are holding vehicles longer, it's a little bit based on that availability noise we've seen over the last 3 to 4 years, but certainly not holding people back from buying at those levels. And we've got to watch that. We got to be flexible, but that's why we maintain that inventory discipline. So if we do see a softening I think we'll be able to come through it more consistently than maybe what some of our competitors with more inventory might be able to do.

We'll squeeze in one more.

[indiscernible] $55 million on any number is a huge number, but question is, will a manufacturer view to retain the [indiscernible]. Can you -- what is the [indiscernible] continues or [indiscernible] Google where somebody coming with a side starting [indiscernible] to break the assumption of [indiscernible].

So what we're really focused on is, okay, how do we take the control modules, make those our own and then use people off the side of it. So partnering with Google, for example, helps, but it layers into that. But we actually, at the end of the day, control a lot of that vehicle.

[indiscernible]

Yes. Yes. And that's the definition of where we are with software-defined vehicles and ultimately, the platform that we're building to be able to commercialize going forward.

[indiscernible]

Yes. It will take a while to get there, but that's the future.

Great. I think we're out of time. Paul, thank you so much.

Thanks for your time. Thanks, everybody, for coming.