All right. Good morning, everybody. I'd wish this were a real fireside chat. It would be a little bit warmer up here. But I'm thrilled to welcome Mary Barra, Chair and CEO of General Motors, and Paul Jacobson, EVP and CFO, both on stage this morning. Thanks very much for making your way to New York today and being at SDC25.
Absolutely. Good to be here.
Excellent. I'd like to start not in the near term, but really set a broad stage. Mary, maybe I'll ask you first. You've described GM's future as moving from an automaker to a platform company. Can you explain that vision to someone outside the auto industry? What is, what is changing, and how is GM reacting to that?
I think we, you know, we continue to be on a journey from a, you know, from a internal combustion engine vehicle, and we have a very strong portfolio, to our EV. And EV, we truly have a platform, I think, that has allowed us to launch more than a dozen EVs very quickly, and very purpose-built from a range perspective, from a performance perspective, and from a cost perspective. You know, at the end of last year, we achieved variable profit positive. I think that was very important and demonstrates the power of that platform. For both ICE and EV, then you think about it, and the vehicle really is a software platform.
With the changes that we've made in our software organization over the last two years and the talent that we're bringing into the company, you know, we have a very strong platform in the vehicle right now. From a software perspective, we're already working on the next generation. Finally, that sets us up to have a services business. Super Cruise is an important business already, and this is a big year for us 'cause we're gonna be doubling the amount of vehicles we believe that will be on the platform or leveraging Super Cruise and generating that revenue. Again, it's the system. Super Cruise has been the best tech from MotorTrend for L2, or I'll say L2 Plus.
We have a lot of features that only General Motors has, whether it's trailering, lane centering, or now the integration with Google Maps, that it's actually taking you on your route. I think all these things are building blocks that allow us to be a company that is gonna be relevant in the future, and set up for we're talking about L2 Plus now to L3 and ultimately to L4.
Paul, does that platform approach change the long-term margin outlook? How do you think about kind of the profitability in the different segments, like EV, software, and then onto L2 Plus or L3?
I think if you look at the historical business model, you know, the overwhelming profitability revenue is all driven by the wholesale action. It is really about transforming from a B2B into more of a B2C company. What that does is gives you a tremendous opportunity to leverage not just vehicle sales, which we're really good at, but also the car park over time. It gives you revenue opportunities across the second owner, the third owner, etc. That is why, you know, we spend a lot of time talking about Super Cruise adoption as we're coming out of the three-year, prepaid period for most of our customers that started this a few years ago.
It's really important that we continue to lean in, index that, work that muscle to make sure that we're engaging with customers down that road, to be able to drive that. Because as we know, the revenue opportunities after the vehicle's already out there are gonna come in at significantly greater margins than anything that we can do in the manufacturing side. The ability for that platform, as Mary articulated, to be able to deliver services to the customer is really what the next generation of automotive is gonna be.
For looking from the outside for investors, this might be hidden under the hood a bit if we just think about the EBIT margin of a certain business unit. Are there any numbers or KPIs you'd point to where investors can say, "Look, track this over the next five years"? That's the number you should be looking at?
I think one is looking at Super Cruise adoption. There are other products that we're looking at, or I should say services, that we think we can put on the vehicle so literally your vehicle does continue to get better. I think, you know, when we talk about not just the sale, but beyond, there's our aftermarket sales and parts, and that's a business that continues to do really well. Very importantly, and it reports to Paul, he could talk a little bit about it, is the credit card. You know, that is gonna perform a different relationship and, you know, had a very successful launch. I don't know if you wanna add anything there.
Yeah. We just converted our card over to Barclays and relaunched the new GM Rewards program, alongside Barclays. We actually posted a handful of experiences out there for customers to go get. They sold out literally within seconds. We are really excited about the momentum and to have that, have the great partner in Barclays, to be able to help monetize that. GM already leads the industry in loyalty. When you look across our vehicles and, you know, through avenues like either the Rewards program or GM's Financial, it is an opportunity to just deepen those relationships and get that B2C muscle built at an entirely different level than what it has been before. That is where software starts to come in. We are really paving the way.
As far as metrics go, it's not a meaningful dollar amount right now, but as I said, we're paying a lot of attention to the attachment rate of customers whose Super Cruise subscriptions are coming to the end of that three-year period because that's what we need to continue to lean in on. 'Cause even if it's a small number right now, we're doubling the number of vehicles out on the road this year and beyond, that's the momentum driver and starts to unlock what the potential can be. When you take that across tens of millions of vehicles out on the road in the future, there's a massive opportunity out there.
The strategy on EV and software and then into kind of monetizing L3 Plus isn't unique just to GM. Everybody's kind of in that same stage somewhere where they're trying to reposition their business. What's the unique angle or competitive advantage you think that you're building at GM that will really enable you to capture higher margins in the next, next decade?
I think a couple things. First of all, we are doing extremely well with the products we have today. I mean, I think at the end of the day in our business, sometimes people forget, having products people want to buy, having vehicles, cars, trucks, and crossovers that people want to buy is very important. We are growing share with both our internal combustion engine portfolio of vehicles as well as our EV portfolio business, outperforming the market. We are growing in both. I think it starts there with having vehicles that are beautifully designed with the right technology, the right safety features, is step one. You have got to have a vehicle people want to buy. We are able to do that, grow share with strong pricing. We are maintaining, you know, discipline with our inventories, and we are significantly below the industry average from an incentive perspective.
That's a foundational thing for what everyone else is trying to do. I think we're winning in that with the strength of our product. I think the second thing that sets us apart is our software talent. You know, we have brought in, successfully attracted very strong software talent from the MAG 7. They've come to General Motors because they've realized the opportunity and the fact that the vehicle is a software platform and they want to be a part of doing that. Paul and I were just there a few weeks ago, and the amount of improvements that they're making and ways to drive efficiency, take cost out while giving a better performing experience in the car from the software perspective is something I'm very excited about.
You know, the system we have in the vehicle right now is not, it's not kind of clunky when you're switching back and forth if you were in Android Auto or CarPlay. It's a very well-integrated system that is really, I think, the customers are, we're getting strong feedback from the customers. I think that's a second, the talent we've got to bring in. And frankly, you know, I think with the hire we just announced last week with Sterling Anderson joining, who's got a strong software background, you know, he's got his PhD in robotics from MIT, the experience he had at Tesla and Aurora. I, again, those are all areas that we think we've built the foundation, but we're gonna continue to separate ourselves.
I think General Motors has been very successful in bringing in talent that our software-defined vehicle, as we roll out the next generation, will be as good or better than the companies that, you know, started with a different construct.
Yeah. You've definitely got an amazing model cycle right now, and it's showing in all the data. You see the cars being selling. You know, the ramp-up curves look amazing. What did you put in place over the past five, six years to kind of get to this point? And what of that is repeatable for the next model cycle as well? Kind of where's the confidence or what do you need to do to continue on that success?
I think it's the strength of our product development team. It starts with great design. I think one of the things that makes General Motors unique, and this is under the leadership of Mark Reuss and his team, is how well design and engineering and now manufacturing engineering work together to make sure that we're being efficient. You know, our winning with simplicity mindset has really transformed the company. We talked about it last year that, you know, with I'll call it the first phase of it, being able to save about $200 million from an engineering perspective. You know, when design is working with engineering to enable a great design that's also manufacturable, that puts us in a very strong position. Then it's really having chief engineers who understand their product.
When I say that, it means they understand the customer. You know, for instance, there's a lot of excitement right now with the ZR1 from a Corvette perspective, but there's a lot of technology that, you know, we take and learn, and then we can leverage our scale to put across the portfolio on other vehicles. The engineering knowledge, and then I think one of the competitive advantages of General Motors is our ability to integrate the vehicle. The work that we do at the Milford Proving Ground to make sure that just the drivability, every aspect of how a customer interfaces with the vehicle is well thought out. That's what people see and feel when they get in our vehicles. I think that's core to what General Motors is.
We have been very successful in bringing in new talent and taking people who are very seasoned in that, working together, to enable great vehicles.
I think this is an area too where the finance profession tends to over-index on the cost side. The historical view of the industry is get your cost down as low as possible. Of course, there are things we can always do to get more efficient, but you can get your costs down in a vehicle so low that people do not want to buy it. At the end of the day, if you have a vehicle that people do not want to buy, it does not matter how little it costs to build, right? We have to make sure that we continue to do these investments. I think one thing that sets us apart is we have been remarkably consistent over the last four years. We have gone after fixed costs.
We've done that, but we've also engineered where we need to engineer, designed where we need to design, and make sure that we're investing those dollars. The result is a portfolio that is generating significantly more revenue on a vehicle-for-vehicle basis than our competitors are. We made the example, we do a town hall after earnings, and we talked about the 300 basis points below industry average that we were for the month of April in terms of incentives. That's $1,500 per vehicle on an average $50,000 vehicle. You can't cut $1,500 out by surgically removing a bunch of content without really impacting the customer's perception of it.
We've got to make sure that we strike the balance between being as disciplined as we can but continuing to really focus on where it matters, which is the dollars we spend to the customer to create that demand, which ultimately allows us to price the product and drive superior cash flow.
Let's double-click on electrification for a moment. And the Ultium Platform was a bold bet a couple of years ago. What surprised you most over the past couple of years as you think about that process?
I think it absolutely, you know, we had the experience of doing the Spark EV before we did the Bolt. We had taken internal combustion engine platform vehicles and converted them. What you end up finding yourself in is you're making a series of decisions that you're gonna have to take something away from the customer. That's why there's so many EVs out right now that don't meet customer's dem, you know, whether it's range or performance, if it's a truck, can it tow, does it have the payload, etc. When we started with a dedicated EV platform, that allowed us, and the fact that it's modular, we can, you know, is it 10 mods from a battery perspective all the way up to a truck that's 20, you know, 20 or 24, that really gives us flexibility.
When you look at the portfolio of EVs that we have in North America, we have 13 different EVs that once we got through the challenges of modules, we were able to roll out quite quickly. We're getting that scale already. The second thing we said when we did this is we wanted it to be battery chemistry agnostic. Just in the last couple weeks, we announced that by 2028, we'll be rolling out LMR, which allows us to improve energy density by 33% so we can get more range for less, less cost so we can get cost down. That's the type of battery efficiency that we've achieved with this platform. We're not doing a bunch of snowflakes or one-off where we've got to do a lot of unique engineering.
We're able to leverage this, continue to drive the cost improvement from a battery perspective and a performance by, by leveraging the chemistries. And, you know, we started up, we have the plant in Ohio, we have the plant in Spring Hill, Tennessee that are running at benchmark levels, with our partners. So, and frankly, our module assembly and pack assembly is very strong now too once we, you know, kinda got through that hiccup with a supplier that, it was just too big a ramp. I'd say all those lessons learned position us well to be able to be in the market with EVs that people wanna drive. I get letters on a weekly basis of people telling me they've gotten in one of our EVs and, you know, whether it's the Lyriq or the Equinox or the Silverado, and they love it.
They're making decisions. I just got one this morning where someone's telling me, you know, "I have a Cadillac Lyriq already, and my wife drove it. She likes it so much she's gonna get one too." That matters because you win customers one customer at a time. When people get into our electric vehicles, they love them. Just to note, even from a European perspective, I do not know if everybody realized the Cadillac Lyriq won a luxury EV of the year in Germany. I think that's a pretty strong statement of the strength of our portfolio. I do not know, Paul, did I miss anything?
No.
Hindsight's always 20/20. What has it been over the past couple of years? Was it, "We might've approached this differently," and how is that informing kind of your plan going forward on EVs?
I think our plan going forward, we have all the building blocks in place. We made the investments so we have the battery plants. I think we were smart about what we did with our third plant when we look at where demand is. I think we demonstrated the capital discipline that we need to have. I think we're well-positioned to continue to take cost out without taking it from the consumer from an EV perspective. You know, we talk so much about EV, the way the vehicle's propelled, but software is very significant.
One of my lessons, you know, the team we brought in now, as I mentioned, we're seeing such strong performance and the ability to take cost out and really give the consumer more and higher quality software that I, if I had a do-over, I brought that talent in a little bit earlier.
When your engineering team and design team invites you to kind of do the test drives and the tear-downs, what are some of the cars where you say, "Well, that's something we need to kind of benchmark us against"? Who are the leaders in this space that you're looking at to compete with?
We respect every competitor that we have. You know, this is a very complex industry. It's very, you know, globally super competitive. As we look at that, we're clearly looking at some of the, I'll call it the EV startups to see, you know, what they do. I think also we've torn down the Chinese vehicles to understand, component for component, and how the design is put together. You know, we feel we're very, very competitive. I think we know the Chinese auto market is heavily subsidized, and with their excess capacity, they're shipping globally. We're gonna continue to look 'cause good ideas can come from anywhere. We're constantly benchmarking, but we're also challenging our own teams.
I think another thing that differentiates General Motors is our strong relationship with the supply base. The rankings just came out, and I think we're number three, the highest score we've ever had. I spent a lot of time, I was just at our Supplier of the Year conference talking to suppliers. What's important to suppliers is they get on vehicles that are gonna be successful. I think the work we're now doing together with suppliers to say, "How do we, how do we make, how do we take cost out and make it win-win for both of us so we both improve our business?" That approach we've had with the supply base, I think, is paying dividends time and time again.
I can tell you it definitely is now as we look to make some changes based on the tariff situation.
Paul, you've shaped, the, let's say, the volume ambitions of the EV segment, quite specifically looking at consumer demand. Could you remind us kind of where you are for 2025 and how you would expect the, the EV business to trend?
You know, I think, going into this year, and certainly last year, expectations were quite a bit higher, I think, than where they are for EV adoption, heading into 2025, and what we do for the rest of the year. I think, you know, the important piece is, and going back to the investment that we've made, I mean, four years ago, we were behind where the EV curves were going. Adoption was increasing at a pretty significant rate. We did not have the production capacity. We were making all the right investments to build the foundation and to build the platform, and we built that capacity. Now we are in a good spot where we have more capacity than we need, which allows us to be able to flex and respond to where demand is.
We've always felt like this was a case of we need to help the customers come along to that. I think the way that looks in the future is gonna be different. You know, it's not going to be as much carrot and stick in all likelihood between the regulatory environment and the tax policy as much as it's gonna be the old sort of roll up your sleeves and win customers over. I think the approach that we've taken to date where we haven't engaged in nearly the same level as the industry on incentives, we have focused on delivering range and capabilities to the customers. That's why our share is growing faster, even though the growth rate has slowed down quite a bit, growing faster than our competitors.
What we've gotta do is make sure that we maintain that discipline going forward. We've said a lot that, you know, our journey to profitability in electric vehicles, a big component of that, has been and will continue to be scale, right? Because we've built this infrastructure, we get to grow into it. That's a much better position to be in than somebody who has just put together a couple of vehicles and they can't get it out of the supply chain 'cause there isn't enough volume to drive it, etc. What we can't do is be so focused on profitability in that journey that we overproduce. There's a big incentive out there to do that. Historically, the industry's done it a lot.
We've gotta make sure that we maintain that discipline on the revenue line to make sure that we're not playing with customers' residual values and taking a vehicle that they just bought three months ago and slashing the price because we need to incent it heavily. We're gonna continue to be disciplined. That might mean that the profitability of EVs doesn't improve as fast as we would otherwise like it to be, but the long-term, intermediate-term outcome is much better than us trying to solve to a single variable. In the meantime, the capital that we're gonna be spending in the future is going to be increasingly focused on getting cost out of the platform, while maintaining customer amenities and content, rather than blasting that out to a lot of vehicles. We've got a really good portfolio out there.
There are great benefits to each one depending on which segment that customers wanna choose to be in. I think we've got a good platform leading into whatever demand might be going forward. It's always gonna be much better if it's natural demand that's coming in versus if it's forced demand through third-party forces.
If demand is slowing down and kind of the targets are pushed out a little bit, does that give you an opportunity to revisit the CapEx you're spending on EV at this point in time?
I think, like I said, the CapEx is different now than it was over the last two to three years. If it was really oriented around a lot of different entries and getting more variety, you might slow that down. The capital to go in and make the changes to the battery chemistry and the production that we have there with what we announced just very recently, those are the multiple thousands of dollars of improvement in the cost of supplying power and propulsion to the electric vehicles. We should keep doing that type of capital to drive that efficiency. Yeah, depending on where the regulatory environment goes, we might have to pivot some of that capital into extending and refreshing ICE vehicle programs, etc. We're gonna continue to do that.
I think what we have done, and it's a real testament to Mary and Mark especially, is we've crafted a portfolio that is winning. That portfolio has a lot of embedded flexibility in it, whether it's the plant at Spring Hill where we can produce ICE and EV on the same production line, or it's the capabilities across multiple price points where we are more profitable in small and mid-size SUVs than probably we've ever been, from that standpoint. It's a testament to making sure that we're creating these products efficiently but with a desirability that allows us to go to market in various different areas and environments. That's what the team has really done. This portfolio matters.
I think the historical perspective that comes into our relative outperformance in terms of what we've done on cash flow and go-to-market, I think is lost amidst that history because it gets dismissed as a cycle. It's been a very different and very intentional change in our approach of how we go to market and what the portfolio looks like.
Knowing you, when you say reallocating capital, there's a lid on CapEx, I'm assuming. This is not spending more; this is spending differently.
I think we have to watch that. I don't, I don't think that at the end of the day, the market fears of CapEx is suddenly going to spike because we have to onshore everything. That, that's a reaction. That's not actually a strategy, to think about it. We're being very deliberate in how we think about it, how we think about what the tariff environment is, what the tariff environment's going to be, what the EV environment is going to be, where ICE is going to be, etc. We balance that. As we've talked about before, I mean, capital budgeting is a function of two things. Number one is affordability. We can certainly afford to spend more than we have been, right? You look at our free cash flow.
It doesn't mean it's the right thing to do because the second piece, which is probably even more important, is can you implement it effectively? Because in order to spend more on capital, you've gotta hire more planners, more supply chain, more engineers, more technical people. Your fixed costs start to creep up. We've gotta make sure we strike that balance, across the board. If we spend a little bit more than what we've been spending the last couple of years, it's done very thoughtfully and done with a lens of it's temporary and within the realms of what we can afford and not to get our fixed costs out of whack.
Generate a return.
Absolutely.
We thought that was a given, but good clarification. We talked about EV side. We talked about kind of the combustion engine cycle. What about the drivetrain in the middle? What about the hybrid, which is notably absent from your portfolio in the U.S.?
Again, we know how to do hybrids. We just launched a successful hybrid in China, and we're growing share after we've done the restructuring. From a U.S. perspective, everybody has to understand when you have a hybrid, you've got two propulsion systems on the vehicle. We've also had ups and downs with hybrids in the past in North America, specifically the United States, where the adoption went up and then as quickly it went down. Customer research says, especially with plug-ins, people do not plug them in, so they do not even get the benefit of it. We will have the right hybrids in key segments because we think it is a smart thing to do, especially in a world that, you know, we're seeing a lot of change.
We also think getting to the end game and deploying capital on getting EVs to be, you know, profitable and approaching being on par with where our ICE profitability is, we think that's the better long-term play 'cause that's where the industry's gonna go. I very much believe that's where we're headed. Every month, charging gets a little bit better, and, you know, there's the industry association with IONNA. There are still startups continuing to invest in this space. We have a very successful partnership with the Pilot Company, and that's one of the highest-rated, if not the highest-rated, charging experiences when you're going on a road trip. Again, we know how to do the technology. We have it in our portfolio for where we think it's important to have.
We'll announce that as we go forward of what segments we're well on our way to having that. We do not want to get distracted and deploy a ton of capital and engineering resources on something that, again, the customer has already gone through a cycle once of not appreciating, of valuing, and, therefore, delay the end game, which we think is the longer-term play.
Is this something where the partnerships you've been talking about for the past couple of years might come into play? I mean, you've announced some partnerships with other OEMs. Is there anything that can help you in that arena to also save CapEx ultimately and join forces on some of these initiatives?
You know, we have a very long-term partnership with Honda. We have announced that we have a memorandum of understanding with Hyundai, and I think you'll see more. I don't have anything to announce today, but I think you'll, you know, we're continuing to strengthen, and those are opportunities in some cases clearly to share in engineering and R&D dollars, which I think is important. Some of it will lead to, I think, driving more efficient capital as well, depending on how we decide to capitalize the things that we work on together. I think there's an opportunity both from an engineering and a capital side as we move forward. We'll have more to share as we move forward.
We have talked about EV and software. Let's talk about ADAS and autonomous vehicles. Maybe we will start with the cruise experience. I will just ask, what did you learn? What did you take away from your cruise involvement, and what is next?
I think we wanna be clear, when we made the decision with Cruise, we made a decision not to continue to deploy capital in Rideshare. Rideshare is not our business today from a, you know, a Uber or Lyft type of perspective. Running a fleet like that is something that we looked at, the capital that was gonna need to be deployed because someone needs to own that fleet. We thought the technology's important, and we believe that it's gonna be a differentiator and something that customers will expect over the medium to long-term for personally-owned vehicles. That is where our focus is. We had tremendous technical talent with Cruise. They are now working, you know, very closely with the GM team, as we move from what I'll say L2 plus today with Super Cruise to L3.
We have plans, specific plans there and then beyond. You know, I think what we've learned, and continue to understand, is how important this technology will be for the future. We have a great understanding, and we've got strong technical talent continuing to work on it.
One of the key features you see increasingly adopted in China, and of course, we've got FSD in the U.S., is what I'd call navigational autopilot. You get in the car, you put in the destination, the car handles the majority of the drive itself. There's not necessarily autonomy because the driver's still supposed to be in charge. If I look at your technology, you're getting towards that. What is your roadmap? Can you give us a sense of is this five years away? Is this longer away for you to really expand the capabilities of those vehicles to handle kind of end-to-end Super Cruise?
We continue to add features to Super Cruise. I mean, we're still the only ADAS system that allows for trailering, which I think is very important because, you know, again, a lot of times people really enjoy using Super Cruise when they're on a road trip, and that likely can often involve trailering. We have lane centering, and we now are in the process of rolling out the integration with Google Maps so it will know where you're going in the route and guide you there. I've already experienced it. We're continuing to add features and move in that direction, moving on a roadmap to L3 and beyond.
Is the limitation of kind of just being on highway and not on off-ramp right now, is that mainly a software limitation within the cars, or is that also a hardware limitation? Can you retrofit, for example, some of the cars on the road now if the technology becomes available?
I think we are able to add, we've been adding features to existing portfolio as we roll that out. Some require, as we go forward, depending on what generation. I think as we continue to have more and more vehicles that have our, I'll say SDV 1.0, or we've called it VIP, I think that enables us to continue to upgrade. It's not a clear-cut answer, but I think with the vehicles we're putting into the marketplace right now, we can continue to add those features.
Paul, right now, that's a big portion of the service revenue or the software revenue that's coming in, the continued kind of conversion of customers onto that technology. If you take a really long-term view, is L2 Plus, maybe even L3, is that gonna go the way of the airbag, the NAS system, the seatbelt? Is it gonna be commoditized in the long term?
I mean, I think first of all, the Super Cruise is a relatively small component of what we think in terms of total services. We've had OnStar for a long time, and that produces significantly higher margins across the enterprise and has continued to be a strong force and a strong contributor to the P&L, even as technology has continued to improve in the vehicle. We think that's an opportunity to continue to leverage that direct point with the customer. Ultimately, you know, the automakers that are going to thrive in the end are the ones that are going to be able to continue to enhance the vehicle and continue to improve the experience going forward.
I think that applies to ADAS as much as it applies to, to software and the capabilities of the vehicle as well. You know, I think we've gotta continue to go into it as if there is a real sort of long-term differentiator that's going to be possible. We can continue to assess that, and that's what we're doing right now. Part of the reason why, you know, we opted not to continue to put capital into the rideshare business, instead focus on that personal autonomy component and enhancing that. That was a much better use of our capital base than building up a rideshare enterprise, which, you know, in theory, there are gonna be multiple players in that that will ultimately get commoditized.
For your platforms.
Can I just add to that though? Even when you think about what we have right now with L2, might it become commoditized many years from now? You know, I do not think we can predict, but, you know, right now, Super Cruise continues to be distinguished as the best. Again, MotorTrend called it the best technology because of our focus on how we integrate from moving, you know, where the vehicle's in control versus the individual, how we are monitoring to make sure the person's paying attention. From a safety perspective and just a comfort level where the person in this environment understands what's happening. I mean, even with technology that maybe you can say over time is gonna become more standard, the way in which you integrate it into the vehicle, I think matters.
I think that's what Paul is talking about from how, how we can continue to differentiate ourselves.
We've covered a whole bunch of the aspects of the platform strategy. You've got a good model cycle. You've got the EV components in place. You're improving on software. If I take a step back, for the past decade or even since the GFC, you've been successful in right-sizing your global portfolio and concentrating on the more profitable bets. Is there maybe an opportunity to turn that around? If you look at the global market share, I think GM's bowed down from 10% pre-GFC to around 5% globally now. With the technology in place, with those building blocks, is there actually an opportunity to think differently around global sales than you might have for the past couple of years?
Absolutely. I think that's a growth opportunity for us. Europe is a great example. We're going in, as we have still no sellers' remorse from the decision we made with Opel several years ago. As I look at it now, it is an opportunity for us. We have great EVs, I mentioned already, the recognition that our EVs are getting there. I think there's some stabilization that needs to occur in the European market from what are the, what is their regulatory system going to, or regulatory requirements going to be? How are they going to make sure that, you know, they're not vehicles coming in that are, you know, literally being, you know, dumping going on? I think as that market stabilizes, which it will, and it's an important market, I think that's a growth opportunity from an EV perspective.
I also think, you know, as we look at some, the opportunity, we are successful in the Middle East, but we have more opportunity to grow there. Our business is strong in South America. There's been, you know, some up and downs from a macro perspective there, but we continue to be strong. And, frankly, our vehicles are doing well even with the Chinese competition. I think, and we're growing here. When you look at other opportunities that we have to grow, for instance, with GM Defense, you know, it's a very good business for us when we're taking parts off of our part shelf, integrating, and delivering highly capable, for instance, the Infantry Squad Vehicle, a highly capable vehicle, where we're leveraging our existing components so it's more effective and it's faster.
We're getting, I think, nice reception from, you know, different, from the Pentagon as well as from other allies, with the opportunities there. Those are just a couple areas that I think we can continue. We've grown for the last few years. I think we can continue to demonstrate growth over the long term, even, you know, on our base.
You just mentioned the competition between BYD and GM and others, of course, in South America. What are you learning there? Maybe also, how does that inform how you view the Chinese market if you're successful against BYD in South America?
I think it's important if you go look at China today. I mean, the China market, anytime you have a market where they're in the midst of a transformation on propulsion and you have a hundred new, domestic competitors, many of whom aren't profitable, and also, you know, I think some of the largest are being, I shouldn't say think, are being subsidized, it creates an interesting dynamic. We needed to restructure our business. We did that last year. That is on track right now. We also are rolling out the portfolio that we need from a new energy vehicle perspective that's key from a China perspective. As I said, we're seeing we're on track with the restructuring plan, and we're seeing share growth. We know how to compete and have products, and we're at the premium level with Cadillac and Buick.
I think there's a smaller but important way we can participate in that market because over time, I do think that market will, in the midterm, have an opportunity to grow when you look at the density of vehicles versus the population.
Before we start wrapping up, I would be remiss if we did not talk about tariffs today. We will contain it, but I will still ask, what have you maybe learned over the past couple of weeks that gives you an edge or where you have seen opportunity where GM might actually carve out something that is not all bad in a move that raises costs across the industry?
I think, you know, first step back and look at what General Motors has successfully navigated and shown agility and resiliency, whether it was COVID, the semiconductor shortage, you know, some of the supply chain challenges that have plagued us since COVID, and we continue to outperform. I think when you look at from a tariff perspective, we actually, as we went through COVID and semiconductor, and I have to give Paul a lot of credit for this because we reflected and said we need to have a much more resilient supply base and started taking steps five years ago. From a North America perspective, we've increased our US content by 27%. That's incredibly significant.
When you look at battery raw materials and some of the key areas, we've invested and we're going to continue to invest, but we're not just starting now because of the tariff situation. It's something we started working on several years ago. The decisions and the investments we made will be coming online late this year, next year, into the following year. I think those types of decisions, and at that point, we were looking ahead to say, okay, no one has a perfect, you know, vision of what the future's gonna be, but we can look at where we need to have that resiliency. We're taking that same mindset.
Again, we're taking the fact that we have a great relationship with the supply base to look at how do we make smart decisions, how do we use it to drive scale, how do we look at where the suppliers have opportunity and open capacity, where do we have open capacity. I think you're gonna see us be very resilient and, again, strengthen our business as we move forward. In some cases, seize opportunities where the vehicles are so successful, it'd be nice to have more.
Paul, you quantified a bit the impact that the South Korean imports into the U.S. have, and those are some of your most affordable vehicles that also are a great entry into the GM family. It'd be sad to lose them altogether. That can't be the strategy. At the same time, if the tariffs kind of remain, that provides probably quite a bit of cost headwind to those cars. How are you thinking about the dynamic with the vehicles from South Korea?
Yeah, I mean, it's a little bit of a wait-and-see approach, right? We're still contribution margin positive on them. You know, I think we're optimistic that, you know, as the administration continues to work with other countries on bilateral deals, that Korea's gonna be an important trading partner. They're a solid ally, et cetera. I don't think we wanna rush to make any decisions about the long term while we're in this position where it's sitting at a 25% tariff. You know, I would say that the highest likelihood is that's going to be lower, and we'll be able to assess that from the standpoint. The business we have over there is really strong. The vehicles have probably never been better, in terms of what we're bringing over. I think there's still a lot of opportunity there.
Maybe turning a bit to the broader view of the GM stock, which is valued as it is valued today. If we look kind of towards other elements like Tesla, there's a big valuation gap. Now Tesla has a lot of other elements, but are you comfortable with where GM sits today, or what would you tell investors when they're looking at your valuations and kind of wondering why the free cash flow yield is so high?
I wonder if a CFO has ever been up here and said they're comfortable with their valuation. Probably should be fired if I said yes to that question. No, I mean, I think this is a journey and something that we've done. The industry's been really tough for a long time. Yeah, there are others out there that come into favor and out of favor from time to time. What we're really trying to establish is just a really consistent track record. Get out of as much of the cyclicality. Yes, this is a cyclical industry, but behaviors that we and others in the industry do actually amplify that cyclicality. We overproduce. We create a lot of inventory. We have to discount it because demand falls, et cetera.
Maintaining that steady discipline of how we go to market, how we set up our inventory, how we produce, and really focus on that consistent, both margin share and cash flow generation is gonna be the recipe that I think over time really works. You know, we've tried to lean hard into that, with the buyback activity that we've done over the last few years and really kind of changed this into a little bit more of a math equation rather than the emotional equation that exists. I think makes many of your clients and other sell-side clients quite happy with the volatility that gets generated. What we're really focused on is let's just run the business consistently through this.
When Mary talks about the track record that we've had over the last several years through a lot of really challenging environments, I mean, keep in mind what the attitude was about the chip crisis. It was all going to fall apart. We and others in the industry had some of our best years ever during that timeframe. I think we've learned and applied a lot of those lessons going forward. Tariffs are probably not going to be as bad as the market reacted to, and we'll be able to mitigate that. I think if we can establish a track record of just staying focused and making sure that we keep our focus where it needs to be, which is on the customer and producing great vehicles that the customer wants, I think there's a great recipe for success.
Yeah, we may have to pause the buyback from time to time as we go through periods of uncertainty, but it does not mean that our resolve is not changed. You know, I fully expect that we will be back into the market repurchasing shares as we get into the second half of the year.
Is there something?
If I can just add too, Paul is absolutely right. Just to build on, though, we're also making investments in what I think differentiates the automakers who are going to be strong in five years, ten years from the investments that we've made from a software perspective. We're not abandoning our S, you know, and SDV 2.0 doesn't care what the propulsion system is. It's gonna go across our EV and our internal combustion engine portfolio. That gives us a stronger platform and will be done very efficiently and gives us a platform as we go from L3 to L4. In the areas where I think this, how people move is going, we're making those investments in a very smart, smart way, not waiting for them to become commoditized and get them. We're being smart about how we do that.
I think, you know, when you look at what the vehicle is gonna be in the future, we're well positioned. And then from an EV perspective, you know, Paul talked about already, we're going to make the investments to continue to take costs down because we know another differentiator is demonstrating that our EVs are profitable. We have the right software. We have the right autonomy. And that is really where the industry's going. I think that's why some have different valuations 'cause there's a view on that. We're gonna prove it to everybody. Those are the foundational things we're doing that are, frankly, quite different than a lot of what are labeled our traditional peers.
Maybe that's a great bridge to take a three, four, five-year view. And I'd ask, what are the three most critical things that GM needs to execute on in those next three to five years?
Our strategy has four pillars, so I'm gonna give you four. It, it.
Walk right into that.
It's going to continue to be to have winning products from an internal combustion engine perspective, continue to grow share, continue to differentiate ourselves with products people want to have. Then it's EV. I've talked about getting EVs profitable, and continuing again to have EVs that people want to pay for that are, we're able to have the right pricing as well as be low from an incentives perspective because we're disciplined and focused on the customer. It's that software platform. I would say, you know, we're very, I'm very pleased with where we are now as we roll out our next generation. We'll be as good, if not better than anyone in the industry from a software perspective. Then building on that autonomy. Those are the four things that I think are the future, not just the business the way it is today.
We're not making knee-jerk decisions of, oh, the regulation might change. We're not gonna stop. We're gonna stop doing this. We're gonna stop doing that. No, we're looking where the long game is. I think because of the strength, because of our discipline, because of our platforms, we're able to make those decisions, to have a successful business today, tomorrow, and three, four, five, six, ten years from now.
Excellent. I'd almost say we'd leave it there because I don't think we can wrap this up better. Mary, Paul, thank you very much for being here. Thanks for the time. I know we've got some meetings to get to. Thank you very much.
Thank you. Thank you all very much. Thanks.