right, excellent. Welcome, everybody. We're here with , Chair and CEO of General Motors. Thanks very much for making time and being here in New York with us.
Well, thanks for the opportunity.
Absolutely. We're gonna spend the hour, talking about all things General Motors, and I'm really excited. But maybe you wanna start off with a few comments, and then we'll launch right in.
Yeah, I'll be very brief-
Mm-hmm
'Cause I wanna get to your questions and, and your questions. But, you know, I feel really good about where we are. Strong performance. We, you know, came off a strong year, had a very strong first quarter. April and May have continued to be what we think are gonna be very good months for us. You know, from a product perspective, you know, all of our production issues from last year are behind us, and so our Ultium-based vehicles are flowing. You know, we're almost done with the month of May, and this is gonna be a very important month for our Ultium-based products. We think from a LYRIQ, Cadillac LYRIQ perspective, we'll be, you know, north of 2,500 units. From a Blazer perspective, north of 2,000.
We're seeing strong HUMMERs flowing, and really excited that the Equinox EV is just starting to hit the showrooms. So I think we're gonna have a very strong... When you think about Blazer and Equinox especially, they're, you know, right in that heart of that affordable price. We can talk more about that. Also, I think we have a very strong ICE portfolio, and, you know, we're seeing our prices hold with low incentives. So, you know, when I look at how we're doing in the market, yes, there's still a lot of change, but we're really trying to be very deliberate and very agile as we manage the business. But from a performance perspective and from getting the year off to a good start, I'm very pleased.
Brilliant. I'll remind everybody that we've got this tool called Pigeonhole. There's a QR code on your agenda. If you want to submit questions, they'll pop up here on my screen. But maybe, Mary, we can start, and I'll say: If you compare to 12 months ago, what are the two or three things that have changed most visibly to you as you think about your business?
Well, I think one is an industry issue. I think, you know, a year ago today, it, you know, we were seeing really strong EV growth. I think we all know that the growth of EVs has slowed. We never expected it to be linear, and I think, though, it's very rational. The consumer's very rational, and they're looking for EVs that meet all their needs. They're looking for EVs that are at the right price points, depending on what they're looking for. And they're also watching to make sure there's a robust charging infrastructure. But I think how people thought about EV demand from a year has changed. From GM, from a GM perspective, I think it's been a very positive change because, you know, we did a lot of work last year. We learned from some of the challenges we have.
We're past the module issue. Those are flowing, so our Ultium-based vehicles are flowing. At that same time, at about a... just over a year ago now, Mike Abbott had joined, and although Mike had to step away for health reasons, he built, in the time he was at GM, an incredibly strong team that are all still there and, really made a lot of changes to our software development process-
Mm-hmm
... and our software validation process. So, some of the issues we saw earlier in the year with the Blazer, you know, one of the things we learned, 'cause there were issues happening with a handful of our customers. But one of the things we saw is that with the variation of EV charging, with all the different providers of EV charging, we needed to harden our software to make sure that they worked on every, every charger. And that's something now that we've, you know, pushed across our, our entire EV portfolio. So I think we're very well positioned with some of our challenges behind, and we're just accelerating. I think, though, we, you will see us be very disciplined.
As we've demonstrated already in our ICE portfolio, we will be disciplined, and we won't overbuild, so we can maintain our price and the value of our products and our residuals. You'll see us do the same with EVs.
Mm-hmm. When you're on electrification, I mean, what changes to the Ultium platform, if any, are you envisioning through that slowdown? And how, how flexible is the platform, and what do you need to do in the business to kind of build on what you've done so far?
So, the Ultium platform, fundamentally, you know, we just continue to roll that out as we've scaled it up and scaled up, you know, our module capability. So cells are flowing, modules are flowing, packs are flowing, and whether, you know, it's the size we need for an Equinox or the size we need for a Hummer or a Silverado EV, you know, we're well positioned doing that. You know, we're continually... GM is one of the few traditional OEMs that we actually do battery R&D as well, and in our Warren campus, we actually have the ability to prototype and do that work with partners and some work on our own or with universities.
Mm-hmm.
So we're gonna continue to work on improving the energy density and taking the cost out. Ultium is chemistry agnostic, so with our Cell Plant 1 that's up and running in Ohio and our Cell Plant 2 that is scaling on time in Tennessee, and we have further cell plants that will scale up as our need demands. We'd always wanna stay one cell ahead as opposed to one cell behind, but we'll continue to do that. But as we do that, we're gonna continue to say, "How do we improve the technology to take cost out?" So I think that's the benefit that Ultium affords us.
What are the opportunities to take cost out of EV, kind of beyond the battery pack?
Sure.
If you think about the whole car, you've touched on affordability just a moment ago.
Yeah. Yeah.
How do we get to that affordable EV?
... So I think those of you who know me know I have a strong manufacturing background, so I love taking cost out. I mean, I know, you know, part of the business, you gotta work on the top side and the bottom side. But I think right now, with what we've learned with winning with simplicity across our ICE portfolio and our EV portfolio, we can still, there's still plenty of opportunity to take cost out. We already said, this year alone, we'll save $200 million in our engineering expense, simply because what we've done with winning with simplicity. And what that means is less free flow options, having tighter trim packages, maybe not as many trim packages. But it actually is something that is really important for the consumer because they are much clearer on what they're buying.
We aren't giving them so much complexity that they, you know, they get through the order process, and they're, you know, on step eight and going, "Hmm." They know what they need to do. So we haven't seen any impact at all from a consumer perspective. And that is then, if you start early enough in the process, you save on what's being designed, what's being engineered, what's being sourced, what's being planned for the manufacturing floor. If you have too many options coming line side, you've got to do kitting and sequencing off-site or in a different part of the plant. That adds cost to the dealer complexity. It's easier for the dealer individual or as we present our offer online, for the consumer to understand, all the way to, from a customer care and aftersales, we have less parts that we have to stock.
So again, with—I just talked about one of those buckets with the $200 million we saw the savings this year. We now adhere to this, and it's being led by Mark Reuss, who I think is the best car person in the industry from his knowledge across all aspects of ICE and EV. He's personally championed this through the company, and we know we've got more cost to take out. I would also say, you know, we're obviously, when you talk about artificial intelligence, I think, you know, the ultimate application of that is autonomy, is our Cruise operations that use machine learning and AI. But there's a lot that we're working on to leverage AI in some of the business process to take cost and complexity out of what we do.
I'm excited about the cost opportunities that we have in front of us, and it's important because we're in a super competitive industry.
If you look at the Equinox EV, for example, how big is the cost difference to an ICE car today?
Well, you know, we don't talk about individual vehicle line profitability, for the most part, on ICE or EV. But I think when we look at the value proposition that we have on the Equinox, I have a very good... You know, we've talked about from an EV portfolio perspective, we'll be variable profit positive in the second half of this year, and be at a low, mid-single digit EV profitability next year. That is including IRA, but then we won't stop. We'll continue to take costs out. So I think we're well-positioned with our portfolio, and, you know, we look at every product that it has to earn its way over its life cycle.
And if you think about the opportunities in battery pack cost out for the car, and then maybe also looking towards suppliers, what they need to do, how do you think, you know, what's the magnitude of those buckets as you think about EVs in, I know, four, five, six years?
Well, one of the things we're doing, and I'm very pleased with the results that we just saw from the latest supplier survey, I think we were the high- we're number three, and I think that's kind of where we wanna be. But we're going in and working with our suppliers, and I regularly meet with our supply base, as they get together, and we have quarterly calls with the entire supply base, over, you know, 20,000 suppliers that support General Motors, of bringing their best ideas to us, so we can take cost out. And I think when we have a strong relationship, and we're looking at, instead of, "I need better price from you," but, "How do we work together? What are your ideas? What are my ideas?
Let's take cost out, and we both benefit from it," I think we're seeing the benefits of that as well. So, you know, clearly, the supply base, and it's almost each one is a different story, depending on, are they something that's impacted by the propulsion change or, you know, it's a seat to seat to seat kind of thing, and we're looking for changes and improvements in cost across all. Mm-hmm.
Maybe turning a little bit to sideshow of electrification, hybrids have been more in the news and been more in focus of consumers. Do you think that's a technology that's gonna stick around? Is that something you need to look at for the U.S. market, particularly?
Well, you know, we've had hybrids in the U.S. market in the past. We have hybrids right now in China, so we understand hybrids really well. Our plan is to be very focused, and then we've announced that in the 2027 timeframe, we'll have plug-in hybrids. We're choosing plug-ins because we think they're better from a consumer perspective. But also, when you look at the regulatory environment and with what's just been approved and the way the curve, 2027 is the year where the curve starts to steepen. So we think we're gonna be well-positioned with the hybrids. We haven't announced which product lines we're adding PHEVs to, but we think we have a very solid plan.
But even, you know, this year with EVs, you know, a lot of EVs that are out right now, there's people, if you buy one of those, you've had to give up something, whether it's range, whether it's performance, et cetera. And the EVs we're launching right now, and even if, you know, we see much slower growth, as some of the EVs that are out there, people are gonna be replacing, we think we have a huge opportunity. We're seeing great, as I mentioned, interest in the LYRIQ, the Blazer. I think that's gonna continue. So. But we do see hybrids, because of the regulatory changes, be a part of it.
Mm-hmm.
But let's remember, with a hybrid, you have two propulsion systems on that vehicle, and—and it's not the end game, because it's not zero emission.
Right.
We're trying to be very smart with how we do that and how we deploy capital there, but be prepared and have the flexibility to meet the customer where they're at.
One of the other issues in electrification, you talked about charging already. How do you see that developing? I think the industry thought that a lot of capital will be flowing in, and kind of other providers will be solving this for the consumer, and that hasn't happened. So how do you think that side of the value proposition develops?
Well, I think it is developing. I think some of the early startups that were in the space, when you think about EVgo and ChargePoint, and there's a number of others, they've really got to work on it. It's not only getting the charger there, you've got to make sure it works all the time. And so I think there's a lot of effort going on from that perspective. So I think that's all positive, and we're working with the EV charging startups to really help them and make sure they understand their reliability and dependability. We also are working with Pilot Flying J, and again, those are just coming online, and Pilot Flying J has coverage across the United States from an interstate perspective.
You know, the beauty of doing that at Pilot Flying J is there's something for the person to do, you know, while they're there charging. These chargers are going to be attended to, that we're going to know immediately if there's an issue. So I think that's going to be something positive. IIJA, the bipartisan infrastructure bill. So you think about it, you're like, "Well, that was a long time ago.
Mm-hmm.
Well, the very first charger that, you know, was activated was last December. But now that money's flowing and the states were able to apply, so those chargers are going to come online. We've also been working with our dealers in local communities because they know best where the locations they think charging should be. So, that's something that's growing as well. And then finally, GM, you know, in the not-too-distant future, we're going to have access to the Tesla charging network, as many are. And then GM is one of six OEMs that's a part of IONNA that is also looking at how do we scale up charging. So I think there's things we can do to support it, in a very capital-light way.
Maybe to round out the electrification topic, could you talk about the joint ventures you have on the battery side? How does that work, and what's the capacity you're shooting for?
Well, I would say we want to make sure we're tracking that. I mean, you know, we have a very good partner with LG and others that we're in discussions with right now. But I'd say LG is our partner on Battery Cell Plant 1, 2, and 3. One is running well up to speed, actually, with great quality and strong performance. Two is on track in Spring Hill, Tennessee. And right now we're looking at what's the right timing from a Plant 3 perspective to match because we want to make sure we deploy the capital in a responsive way, but we're ready for the consumer adoption, because we never expected it to be linear.
If you look at what you have in plant 1 and the cost of the battery pack that's ultimately coming out of it, how does that compare to some of the best in class, which you see in China right now? How, how far off kind of is that cost point right now?
Well, I mean, I think there's a lot of factors that you know are in play there.
Mm-hmm.
You know, I think we're working, as we scaled, we're seeing our costs come down and, and within the United States, with the manufacturing tax credit, I think we're probably best positioned for anyone who's building cells in this country.
Mm
... or right up there. You know, I think you have to look from a China perspective, especially what's happened from a tariff perspective. It depends what country you're putting in.
Mm.
But, you know, clearly, they've got a scale advantage, and that's work that we have to do. You know, there's a lot of talk about LFP right now, and we have announced that we'll use LFP chemistry in, as we bring the Bolt back online next year.
Mm.
But I think there's still a lot of work to do on improving cell chemistry and getting overall battery costs down. We're working on that as we're trying to make sure we have supply chain resiliency, not only in, you know, we choose to purchase batteries where they're coming from, in addition to the cells that we're making, but also battery raw material.
Mm-hmm.
Because we know right now, you know, every EV has a pathway somewhere in their supply, battery supply chain that flows through China.
Maybe turning a little bit the page and thinking about the markets you're in.
Mm-hmm.
For the next five years, where would you say there are priorities in the U.S., in China, and then in the smaller countries, the rest of world? Well, then, how are they different?
Well, you know, clearly, we sell more vehicles in the United States than anyone else. We have the— Oops, is that me? We have the highest customer loyalty. We have the highest quality, as rated by J.D. Power. So I think we're very strong here. We think we will be disciplined. We will not overproduce and then have to incent and destroy our residuals, but I think we've been demonstrating that for several years now. And actually, as you look at our performance before COVID to now, we're even more disciplined that we're lower from an incentive perspective than the industry average. And, you know, we're seeing the strength of our products, even when others are heavily discounting. A good example is in full-size truck over this last couple of months, we grew share. So I think we're well positioned in the U.S.
I think as we roll out our EV portfolio, people are going to see we've got strong EVs. We have a very strategic portfolio across luxury, across trucks, and affordability that we're going to have a nice selection for consumers. And they're going to be, I think, very delighted with our EVs as they see that there's, you know, they're not giving up anything to be able to drive an EV, and they've got beautiful design, instant torque, et cetera. So I feel we're really well positioned. And, you know, there's so much being said right now about... I never thought necessarily the propulsion system of a vehicle would be political, but we're well positioned either way because we've got a strong internal combustion engine portfolio and a strong ICE portfolio.
So I think we're well-positioned in the US, and we have a lot of opportunity, as you mentioned earlier, to continue to take cost out to strengthen our position. Already, with every ICE vehicle, as we launch a new ICE vehicle, it is more profitable than one that we, it replaced because of all the cost work that we're doing, not only from a piece cost and a, and a material cost and a vehicle design perspective, but also from our structural cost. We're on track for the $2 billion we said at the beginning of last year, we'd take out by the end of this year, and again, we see more opportunities to pull, as I've mentioned, as I've mentioned before. Next, let me go to South America.
You know, we are number one or number two in many South American markets, and in most South American markets, Chevy is considered a premium brand or a, you know, it's a top brand. So we have strong sales. We know there's a lot changing in some of those countries with the China OEMs entering, but we think with the strategies that we're employing, we're well-positioned. We're watching that carefully, so I think we still have the opportunity to be... remain very strong as we look at the South American market. Similarly for the Middle East, there's strength in that market as well. In Europe, we're just growing into it, and we're going in in a very asset-light, primarily EV way.
There's a lot of, I'll, I'll say, change happening, not only in the transformation to EVs, but also what's happening, with how the Chinese OEMs and how they're being received, and, you know-
Sure
... I think there's a lot of conversation going on across Europe and different opinions country to country, so we're watching that carefully. But we're very nimble and very capital-light in the way that we've gone into Europe. And then finally, China. You know, China's a really interesting market right now. It has, to me, there's been a seismic shift-
Mm-hmm
... as the move from ICE to, to EV has changed. It really has enabled... And right now, there's over 100, you know, domestic, EV producers in China. And, but many of them, most of them, there's only a handful that are profitable. So at some point, that has to sort. You know, I think the government is looking, and there's, it's public, that there's those that are being subsidized. So they're, they're picking their winners. But I would also say from our business, I think we could have managed better the EV transition. I didn't think we had the right EVs in the right segments.
We're working through that now with our partner, and we have more work to do, but I think there's a place for us to play in China, especially at the premium and the luxury segment. You know, we're gonna continue to make sure we get that business right, and get that back to profitability.
What are the steps you need to take, or what's missing in China at this point in time to really get back to that position?
Well, I think, again, if you look at what's happening in China, it's not sustainable because it's kind of a price war and, you know, racing to the bottom.
Mm-hmm.
That's not – no one's gonna win in that scenario. It's gotta stabilize, but then it's clear you're gonna compete. Cost is still gonna be very important, and you're gonna need to compete with the domestic OEMs. So that's the work that we're doing with our partner there and our two JVs. We also have Durant Guild, which is where we'll be exporting direct with some of our premium products. And so I think we're positioned, but again, I don't wanna get out in front of the work that our partner, but we're doing work together to make sure we can compete as appropriate.
Mm-hmm. And what impact do you think the China overcapacity... I think, you know, you read different numbers, but round about 50 million production units, maybe 25-30 million local demand, what do you think that does to kind of the global landscape?
I mean, I think any time in any industry you have that kind of overcapacity, it's not great. And I think, you know, that's gonna have to be right-sized at some point. And you know, when you look at most auto companies are required to drive profitability, I think, you know, we've got to look at that. I've always said, "Give us a level playing field." If you give GM a level playing field, we'll compete based on the strength of our brand, the strength of our design, our products, our quality, et cetera. And but cost is gonna be important, so I think, you know, we've got to stay diligent. I take the Chinese competitors, especially the top ones, very seriously.
We've got to continue to take cost out so we can, we can compete successfully, and that's what we're doing.
Mm-hmm. Maybe your view on consolidation, but not in China. If you think about the industry in the U.S., but also Europe, there's a spread of the OEMs, where you have some who are performing better on a cost basis and some lagging behind. Do you think there's gonna be kind of more consolidation, or will we continue to see the players we have in the markets right now?
Well, first of all, in China, I don't know if it's consolidation as much as there will be-
Exit
... some Chinese OEM that go away.
Yeah. Mm.
I, I think that absolutely has to happen. I think this industry, one of the things that's frustrated me, especially now being in this role for 10 years, I think there's many more opportunities where OEMs can collaborate and reduce, at a minimum, your R&D or your engineering expense.
Mm.
There's a lot of aspects of a vehicle that the customer just wants it to work. It's not a differentiator. You know, I don't buy a vehicle for its HVAC system. I want it to work.
Right.
You know, blow cold air at a right amount of time and blow hot air at the right... I mean, but I'm not, I'm not gonna compete on that. And I think there's things, especially as you look at hybrids and you look at, you know, as we look at ICE engines are gonna exist around the world for a long period of time, but how do we do that more economically? So I think there's opportunities to partner. I think when you look at a lot of OEMs, the traditional OEMs, there's a lot of ties to, you know, from a government perspective, many are partially government-owned, or, and also they're important to the different countries that they operate in from a jobs perspective.
So I think, you know, we're very open to looking for opportunities to continue to take cost out. I think we've had a good partnership with Honda for many years now, that we've collaborated on fuel cells, on autonomous, on battery electric. They've leveraged our Ultium platform, and so I think those type of opportunities with other OEMs, we are certainly very open to. I don't have anything to announce today, but I think we're, we're very open to, how we can take cost out, and I think it's gonna be an important part of that equation to compete globally.
I mean, one, one example that springs to mind immediately is kind of the Renault-Geely-Volvo drivetrain joint venture, where they're taking-
I'm sorry, which one?
The Renault-
Oh, yes.
Volvo-Geely drivetrain joint venture, where they're creating kind of a joint powertrain unit. Do you think it's easier for an OEM to collaborate kind of globally with partners that are quite distinct? Or could you also see an opportunity collaborating here in the U.S.?
Well, it's an interesting question because I guess my answer is, I think both can work.
Mm-hmm.
Because sometimes it's, "Okay, you have strength here, I have strength here. How do we leverage each other's strengths?" What I think works best when you're partnering with someone, is symmetry.
Mm-hmm.
And whether it's, "You have this, I have this, we're both, we're both dependent," or, "Hey, we both need this, and we both need that. I'll do one, you do the other." I mean, a couple years ago, that's what we did with Ford with transmissions, and that worked out very well for us. So I think well-structured, if you have the right partnership, I think either can work, and I think both are necessary.
Mm-hmm. Maybe the last point on the traditional auto cycle and structure on the suppliers. We've seen a lot of OEMs kind of go deeper into the supply chain, kind of going more into Tier Two, Tier Three, sometimes even raw material contracts. How do you think the role of a Tier One... Or what is your wish list kind of for your Tier Ones over the next five-10 years? How do you think that changes?
Well, I think it depends on the commodity or what part is in the vehicle. I mean, as we did the shift to electrification, you know, there are times where, especially, you know, when you talk about battery raw materials. You know, I think we're well-positioned now with IRA because of the work, and actually, Paul Jacobson led it for us, of, you know, really being strategic and looking through the entire battery raw material needs for EVs and having the right contracts and partnerships, and looking at how do we get resiliency in our supply chain in either nearshore or onshore, that we're well-positioned from an IRA perspective.
I think in other commodities, what I found is there's been a couple commodities, even in the ICE world, where we don't have to make all of them, but we need to make enough to kind of keep the, to have enough knowledge to keep the supplier honest with us. Of, you know, that if you get to a place where there's a supplier and there's only two or three choices, there's been times where we've gone in and said, "Okay, we're gonna make a portion of ours, and then we know what the cost structure is, so this is what we expect from you." So...
And then there's some that are so important, that are gonna distinguish and are going to differentiate you, and the cost of your vehicle, that I think it's important, that you have, you know, you do a majority or, or, enough to control your destiny. So we've tried to be very strategic. Another area is the semiconductors. I mean, it was huge learnings for General Motors with the semiconductor situation because we never bought semis. We relied on our Tier Ones, or Tier Twos, or Tier Threes, and when we had to map them all as we went through the semiconductor shortage, we had way too much proliferation. And so we've now gone in, developed a family, we've got strategic partnerships.
And I would say one last thing from a supply base perspective, especially if you're in the area of software. I can't rely on your black box and your update. You know, if I need a change in the software, I need a change in that software. And so, you know, what I expect from our supply base. I think there's a couple, I won't name them, that we're actually working. We've had that conversation, like, "How do we work better together, and we just both win from it?" And we're changing the historic relationship in a very positive way. I should actually ask them, and we should talk about it, and I'm really excited about it. But, you know, really, we need a robust supply base.
We need one, you know, where the prices are fair. I don't expect our supply base to lose money, but we also need to—and they need to move at our speed as well.
Mm-hmm. I think that's a good segue to talk about Ultifi.
Okay.
Could you just remind us, where are you on that journey, and kind of what are the next milestones for your software platform?
Yeah. So, you know, we kind of have moved away from Ultifi. I think we were over-branding it, but, you know, as we look at, we just think that the vehicle the software in the vehicle can be a differentiator, and that's why I'm so excited. It's been... I'm an electrical engineer by degree, and I have just really enjoyed this past year working with Mike and now his entire team, on, you know, how we're leveraging all aspects of the company. But, you know, this year's really been a focus on the software in the vehicle. Not only, you know, I'll say our first generation software-defined vehicle that started with the LYRIQ and is now continuing to roll out, and we're already working on our second generation. But I think it can be a real competitive advantage.
And I think, you know, it's been great because a lot of the people. And we've had people join us from Apple, and Meta, and Amazon, and Google, and Microsoft. I was gonna say Mike. I mean, just many of the tech companies. And they're so excited because they're like: "We know how to do great software. You do great vehicles. Let's win together." And they love the mission. They absolutely love the mission of what, you know, General Motors lets, you know, create a world with zero crashes, zero emissions, zero congestion. And so, it's just been really fun for me to see how quickly we've been able to make this transformation within the company.
And it's actually been much more significant than just bringing in talent, because we also have really changed a lot of how we do the hardware in the vehicle, how many variants we have, how we're managing them. And so it's been pretty profound, the change at General Motors, that the software talent that we have now has brought in, and I, I think it's gonna position us well. When I look at, you know... Yes, we've had some hiccups, hiccups on our software. I think we're well on our way to that being in the rear view mirror. I think we're well-positioned, and again, it's because of the talent. And, I have to give Mike Abbott just tremendous credit, and now his team with, Baris Cetinok and, Dave Richardson, and I, I could name them all-
Mm-hmm.
have really significant contributions.
What are some of the key milestones consumers will see in the next coming years?
Yeah
... when you think about the software capabilities in the car?
Well, one, it will work well consistently. And but it will do things... It will be very intuitive. I think leveraging more from a voice perspective, being able to bring your media, you know, or how you relate. Not everyone has an Apple phone, and so integrating their phone, but doing it in a very seamless way, that it's not because what we have seen and consumers have told us, you get into one environment or the other, and they kind of want to keep you. And if the person wants to kind of jump out and say, "Well, no, I want to use this feature," it doesn't want to let you out of their environment. You know, again, ultimately, it's our vehicle, and it's the consumer's vehicle.
Mm-hmm.
So we want it to be seamless, not clunky for them. I think as you see what we're doing and the ability to over-the-air update and then offer new features. You know, right now, you know, with adding miles to Super Cruise is one great example. Through this year, we're adding 750,000 more miles of road where you can engage Super Cruise. So I think it's, to me, what they'll see is, "My car is going to become more intuitive, easier to use, and it can actually get better over time with adding more features.
How long will it take to bring most of those innovations to your product lineup?
Well, with each EV, I think we'll see it. You know, it's going to be continual. So with each Ultium-based EV that's rolling out now-
Mm-hmm
... they have the first generation, but then we'll see the second generation, and we'll keep growing it. But I don't think it's ever—it's like with your phone, you're never done. It's not like, "Boom, I got it. It's set." You get that foundation level, and then you immediately start working on what's the software product roadmap to just continue to add more features to make it better, more intuitive.
How do you think about the software capabilities kind of between EVs, but also the existing combustion engine cars?
Well, for us, what we're doing from a Software Defined Vehicle, our first generation that's out, that's also now going to be rolling out, or rolling out on our ICE as well.
Mm-hmm.
So it's an area, it's powertrain or propulsion agnostic.
In the past, you've talked about kind of incremental revenue opportunities-
Mm-hmm
... in that context. How has that thinking evolved over the past 12 months?
Well, I think one of the things you have to do is make sure you get, you know, you get the foundation safe, you get the foundation, not safe, but sound.
Mm-hmm.
I think the work that we're doing—we do think, and we'll talk more about it later this year when we have our Investor Day, but the team now, with the foundation we built, is working on what are those opportunities, and also looking at what's the customer willing to pay for versus what do they expect just in their vehicle getting better?
Mm-hmm.
I do think we have revenue opportunity as we go forward. There's we have it right now with OnStar and, you know, not pretty significant. But we think that there's going to be room to, to grow that with the right services and upgrades, that the customer says, "Yes, this is better than when I bought it. I'm willing to pay for it." And others, it'll be like, "No, I expect that." But it also keeps the customer in your, in your environment, and loyal to you.
Maybe moving on a little bit to what you're building on top of that, then, towards Level 3... Level 2, Level 3. How do you think or how far do you think the cars will be in 2, 3, 4 years' time as we think about eyes off?
Yeah, I think, you know, Super Cruise continues to be one of the highest-rated. I'll call it Level 2 ADAS system. We have a whole new team leading that now. And with the team at Cruise, one of the things that we've seen and been able to do is find more areas where we can partner and work together.
Mm-hmm.
And so I think, we're going to be able to leverage the both, you know, the miles that we have, the data that, you know, we're going to be able to gain and, you know, what we learn from Level 2, Level 3, and up to 4, and then backwards.
Mm-hmm.
So I'm really excited with what's already happening, the teams working together to leverage. So I think it's going to more quickly advance our Level 2, Level 3, while giving us the opportunity to improve Level 4 even faster. So I think we're really at a sweet spot now between General Motors and Cruise and what we can leverage. That's going to benefit both, and we'll be able to, you know, we'll save R&D in both.
Mm-hmm. I mean, you, you took a close look at Cruise-
Mm-hmm
... for a couple of months now. Or if you were to say, "These are the key capabilities I found in that organization," I mean, what, what is it that makes Cruise unique here?
Well, it's the technology talent, and I'm really proud that through, you know, this pause that we took starting last October, and, you know, now we're back on the road, the core of the team didn't change. They're there because they're committed to the mission, and they are some of the most talented machine learning, artificial intelligence, robotics, simulation talent, I think, that exists. We just did two actually external reviews of the technology, and, you know, we'll say more about it, but they were very complimentary of where Cruise is, not only what they've done, but where they're going, their strategic vision. So I feel very good about it, and the secret sauce at Cruise is the people and the technology talent. They're just spectacular, led by Mo Elshenawy.
Big shout out. And now with the talent that we have at GM, they're working together. There's collaboration going on. You know, Mike continues to be involved in GM as an advisor to me, and he's advising both our software, the SDV for vehicles as well as Cruise, and highly respected. So, that's what makes Cruise and... You know, I think as we continue to move out, we're very confident in the technology. And what didn't stop, when we stopped running the, you know, had over 5 million autonomous true Level 4 autonomous miles, when we took the pause and, you know, we're now out with supervised autonomous going. But what. That tech team never stopped. Because the big aha!
That happened last October, other than you have to have strong relationships with your regulators, and you have to have strong relationships with your first responders and with the local community, you know. I think there was the perception there wasn't as much transparency. I think the team thought they were being transparent, but if your regulators don't perceive that, that's a, you know, a challenge you've got to fix. You know, GM, that's where our strength is. We have, you know, long history of having a strong relationship of transparency and trust with the regulators. They are our regulators. They're not our partners, they're our regulators, and we respect that. So we've been able to do that.
We also, though, hired a new head of safety at Cruise, who's very highly respected, and so that's. I think that whole area is, I don't want to say fixed, because you've always got to be investing and working on it, but we have the right strategy there going forward. But what happened with the technology, because the aha! was people. And we're seeing this with AI all over the place. People have more tolerance for other human beings than they do for technology. And so the technology can't just be better than a human driver; it has to be substantially better than the average human driver. In fact, it's got to be better than the good driver. And so, with that, that team has been working on taking levels.
So the technology, the autonomous technology we're testing right now in Phoenix is significantly better than where we were last October, and that's why I'm very excited, and I do see this as being a part of the future, and I think it's gonna be a distinguisher because I do believe in personal autonomous vehicles as we move forward.
As you bring those together, is there an opportunity to also kind of make this a product to sell to any and everybody else?
Well, you know, as we look at how we move forward with Cruise, and we know there's a very important piece, you know, what's the right structure for the rideshare business, and then the personal autonomy that, you know, obviously is a, it's... you know, it's continual, or it's like, it's on a stream of what you need to do there. So we're open. I mean, that's something... You know, first we wanted to make sure we were stabilized. We understand, you know, what happened, how do we improve it? All those plans are in place. Did the technology assessment check? We're on, you know, very proud of where the technology is and where it's going, and that's been, again, with some experts from MIT that we brought in to look at that.
We'll have an opportunity, hopefully, to share that more broadly as we go forward, but it's Cruise's to share, not mine right here, to do today. You know, as I look at that, we're looking at what is the right way to fund the business going forward, and that's what we're working on now. You know, we'll share as we work that out, and we're very open to looking at what is gonna be the most cost-effective, capital-efficient structure.
Um-
Stay tuned.
Yeah. Since you're not gonna make an announcement today, I'll move on to maybe a broader topic. As you think about your role as CEO and you think about the broader universe at GM, what are some of the capabilities you still want to bring into the GM universe in the next couple of years to set yourself up for success?
Well, you know, I'm really proud of the team. You know, if you think about in the last few years, I think we have a world-class CFO who's sitting in the front row. Yeah, it's okay to clap. No, I'm just kidding. No, I really do. Paul has really brought tremendous expertise and is building a strong talent, you know, as part of his team. We have a new head of communications who joined us from Google, and I think that's important to understand because there's so much of how we need to communicate, you know, across from a technology perspective. Our Chief People Officer joined a year ago and also came from the tech world.
I think that's been instrumental in bringing all the technology or, yeah, the technology, the software talent to the company. You recruit in a different way for that talent, and so that's at all levels. I think that's been very, very important. Marketing, I mean, with many of you, for years now, I've had conversations about marketing, our marketing budget, and how do we do that more efficiently? There's a lot of money we spend there. We hired Norm de Greve, and he's gone through and done a complete review. He's a performance marketing expert, and I think we're gonna be able to do more and get more out of every dollar we put into the marketing budget.
You know, so I think what I've observed over the last couple of years with the talent that we brought in is we have to have the best person in every position, full stop. And, you know, and it, that's the bar we hold everybody to. And frankly, I look at that across the top 250, because that's of the company, that's really the group of senior leaders in the company that I hold myself accountable to making sure we have the right person in each chair. And so we're gonna continue to look at that and just continue to strengthen the team, because in a company, when you look at how every industry is being transformed by technology, we are not only facing the technology transformation, but we're in this generational propulsion on what the vehicle can do.
One of my key jobs is to make sure we have the absolute best talent in the company, and I've seen the benefit of it over this last couple of years.
Switching a little bit to the financial side, you did a $10 billion accelerated buyback-
Mm-hmm.
-last November.
Yes.
which was quite well received. But, I mean, how are you thinking about capital allocation for the next couple of years going forward?
Well, we've had a well-defined capital allocation strategy that... Our framework that we've talked about many times. Three pillars: first, we're gonna reinvest in the business to generate a greater than 20% return on invested capital. We are going to make sure we have an investment-grade balance sheet, and then we're gonna return cash to our shareholders. And we had been doing that on a, you know, as we started to make the investments in EV, but, you know, as I started in this role, we had been doing that on a regular basis.
With COVID, with the semiconductor crisis, with the supply base instabilities, and then with the labor negotiations, we went through a period where we had to extinguish that risk to know you know, that we, we were, that we, you know, maintained, and we were able to respond to what the business needed. But as each of those risks are, were became manageable or became less or were, you know, we, we resolved, that's why we did the ASR. But you've seen, and I've said this at the end of last earnings, and I'll reiterate it here, that, you know, we are committed to all three pillars of our capital allocation strategy, and we recognize, you know, that we...
We think we have the ability, with the strength of our business and the sustainability of our ability to generate the cash flow, that we're going to be able to continue to do that. Obviously, Paul and I work closely with our board, because our board ultimately approves our capital allocation strategy. As you look at where we are with the dividend, what we did in the first quarter, you know, we're gonna continue to execute to our framework.
Maybe zeroing in on 2024 a bit-
Mm-hmm.
You raised guidance slightly on Q1. What gives you the confidence this year with all the, say, uncertainties we're facing in the upcoming months?
Well, if you think about what we did is, when we rolled out the budget, as Paul communicated, we built the budget with a not necessarily assumption, but with a with the in it the ability that we could handle about 2%-2.5% of price, you know, price, I'll call it, normalization. When we didn't see that in Q1, you can think about that's what the, you know, kind of roughly the size of what we upped the guidance to. So, you know, that's something we're gonna evaluate through the year. We wanted to make sure we had a budget that we were... And guidance that we gave all of you, that we were gonna continue to execute to.
But as we continue to see opportunity and the strength of the business as we execute, we'll evaluate that, you know, each and every quarter.
Mm-hmm. How's the business going kind of in the early, early months of the quarter? You've mentioned inventories earlier. You're kind of on the low side. Discounts also still quite respectable compared to the rest of the industry. Any feedback from the dealers at this point? How are they looking into the next couple of months?
Well, first of all, you know, again, we're almost at the end of May, and I think, you know, April and May have continued to be, you know, continued to be on pace with what we saw in first quarter, so I'm pleased with that. The feedback we're getting from the dealers is, "Stay the course. We love the consistency of what you're doing. You're not moving price all around. You're not moving incentives all around." That really gives them a strong foundation to say to the, you know, the customer, you know, "Yeah, you don't have to wait till the last week of the month or wait till see what's gonna happen next month." There's this consistency. So they, they are saying, "Keep this consistency.
We can win with this." And I think we're seeing it with our average transaction price, our low incentive load, and the fact that in many segments, we're growing share. So I think that's, that discipline is really enabling us to, I think, maintain over the long- you know, the mid and longer term, our pricing strategy, and that discipline is what we are gonna operate to. Because when you start to get into an overproduction, over-incent, destroying residuals, it's hard to work out of, you know, with the way residuals are set.
Mm.
So, you know, we learned that more than a decade ago. We're not going back to that world.
What are you seeing on the GM Financial side? What’s that business telling you?
Again, you know, right now, we're still seeing a relatively strong consumer that this business continues to execute to plan. And, you know, Dan Berce and team at GMF do a really phenomenal job.
Okay. So almost up on time.
Okay.
If we meet again in a year's time, which I hope we do-
I look forward to it.
What are the two, three things you want to get done by that time?
I want to demonstrate that, you know, first, that our Ultium-based products are winning with customers, and we've priced them right, but we will be disciplined. So I think I'd love it next year if you came back and said: Well, Mary, you talked about discipline. You maintained discipline through the year. You demonstrated the strength of your Ultium-based products. You demonstrated that you have a really strong ICE portfolio, and I've seen the progress you've made from an autonomous perspective, and I... You know, so those are the four. And you've got software that is not only a customer distinguisher from the GM platform or GM vehicles perspective, but you also have the opportunity to continue to grow that business and generate revenue and margin with your software business.
Those are our four pillars of our business: It's ICE, it's EV, it's software, and AV. I hope you're gonna see us continue to execute in a disciplined way, and we did what we said we're gonna do.
Excellent.
Great.
Thanks very much.
Thank you.