GM's Q3 2024 Earnings Call

[00:00:02] Word for Strom and Erdgas.

[00:00:04] Energy.

[00:00:05] Word for Sicher.

[00:00:06] Zuverlässig.

[00:00:07] Word for Von Hier.

[00:00:08] Von uns Ena.

[00:00:10] Ähm, also Regional.

[00:00:11] Und das alles zusammen?

[00:00:12] Sachsen Energie.

[00:00:14] Hier kommen Sachsen und Energie zusammen.

[00:00:16] Ob Strom oder Erdgas, wir bringen Energie jetzt auch zu dir.

[00:00:20] Regional und zuverlässig.

[00:00:21] Mehr Infos unter SachsenEnergie.de.

[00:00:24] Sachsen Energie.

[00:00:25] Die Kraft, die uns verbindet.

[00:00:27] Good morning and welcome to the General Motors third quarter, 2024 earnings conference call.

[00:00:36] On today's call, management will make forward-looking statements about our expectations.

[00:00:41] These statements are subject to risks and uncertainties that could cause their actual results to differ

[00:00:46] materially.

[00:00:47] These risks and uncertainties include the factors identified in our filings with the SEC.

[00:00:52] Please review the safe harbor statement on the first page of our presentation as the content

[00:00:57] of our call will be governed by this language. During the opening remarks, all participants will

[00:01:02] be in a listen-only mode. Hello everyone and welcome to Kilowatta Podcast about electric

[00:01:20] vehicles, renewable energy, autonomous driving, and much, much more. My name is Bodhi and I am

[00:01:24] your host. And on today's episode, we're going to talk about GM's Q3 2024 earnings call. I should

[00:01:31] let you know that this was an actual earnings call with a bunch of financial nerdy information

[00:01:37] and not what Tesla gave us a couple days ago, which was an extended version of their WeRobot

[00:01:44] event. So on this earnings call, they actually did talk about earnings. It was weird. A bunch

[00:01:53] of financial stuff that I don't understand and doesn't necessarily translate great to this

[00:01:57] podcast. But yeah, it was the most earnings call, earnings call that I've covered on this

[00:02:06] show since I've been doing it. So because of that, I had a couple of choices. I pulled

[00:02:11] some clips from Mary Barra's opening remarks. I pulled some clips from the chief financial

[00:02:16] officer's opening remarks. And then I pulled some other analyst questions that quite honestly,

[00:02:24] I felt like I had to wedge in those questions to make them relevant to this show. So what I

[00:02:30] decided to do instead of making you sit through stuff that really wasn't relevant is I just pulled

[00:02:37] less clips. We're not going to hear Mary Barra's opening remarks, anything from that, to be honest,

[00:02:42] nothing from the chief financial officer's opening remarks, because these are all things we've heard

[00:02:46] before. So I have three, maybe four clips at the most, including Mary Barra's closing statements.

[00:02:53] And then we're going to be done. It's a quick, easy peasy earnings call for this one.

[00:02:58] So let's go ahead and start off with our first question.

[00:03:01] Thank you. Our next question comes from Edison Yu with Deutsche Bank. Your line is open.

[00:03:08] Hey, good morning. Thank you for taking our questions. For a shift on cruise, we noticed that you

[00:03:13] indicated that the autonomous miles have gone up about 3x. I'm just curious, have you given any sort

[00:03:20] of rough framework on when you might return to actually unsupervised testing like you were before?

[00:03:27] Yeah, we hope to, well, one will be gated by safety, but we hope and we're working hard to get there by the

[00:03:33] end of the year, meeting the higher standard of role model driver, as opposed to, I'll say, average human

[00:03:40] driver. So that is the goal that the team is working hard to every single day.

[00:03:46] I really like the term role model driver instead of average driver. First of all, this makes sense,

[00:03:52] right? On any average, you have the people who do great, and then you have the people who do not so

[00:03:58] great. So saying we're not going to be better than the average driver, we're going to, or we're not going

[00:04:04] to train on the average driver, we're going to train on the role model driver or what we think the role

[00:04:10] model should be. I think this is great. I think this is a really reasonable approach. Of course,

[00:04:16] GM Cruise has got, you know, a lot of baggage in terms of what they've done in the past with their

[00:04:23] autonomous driving software, but our autonomous driving service. But yeah, I like this. I think

[00:04:30] this is a good direction for GM Cruise. Let's go ahead and go to our next question.

[00:04:37] You know, around the sort of walk of $2 to $4 billion in lower EV losses next year. And this

[00:04:44] is a question I've been sort of surprised that I've been getting from investors to going to pass it

[00:04:49] along, which is if EV sales were flat or down year over year in 2025, could you still achieve that $2

[00:04:57] to $4 billion in lower EV losses? It's sort of my way of asking the election question without

[00:05:02] asking the election question. Well, I'm not sure that's an election question as much as it is what

[00:05:09] our consumer is looking to do. But, you know, we've seen the recent uptick in September month,

[00:05:16] both in terms of demand, but also us getting share gained. And so I think that there is an element of

[00:05:23] growth next year for us in EVs as we continue to bring our products to market, because the customers

[00:05:29] are responding to those. So, you know, when you look at what we were able to do to give our customers

[00:05:34] access to the Tesla supercharger network, we're out there proactively addressing things like range

[00:05:40] anxiety with vehicles that have over 300 miles of range, as well as supplementing that charging

[00:05:47] infrastructure with a really efficient solution for them. So we think that there's an opportunity to

[00:05:53] continue to expand that. Clearly, as we've articulated for the last year or so, scale is an important piece

[00:06:00] of it. But, you know, what's more important is making sure that we scale to demand and we're there

[00:06:06] with a flexible portfolio for consumers and meeting them where they are. So obviously, if we don't grow

[00:06:13] as much, those scale benefits aren't going to be as fully realized. But our best estimate today,

[00:06:18] based on the momentum we see and where we see EV adoption going next year, is that we can realize

[00:06:24] meaningful savings in our EV profitability. And so, Paul, to summarize, the volume is a component

[00:06:32] of that, but it's not the only component. I mean, obviously, you know, you're only just getting

[00:06:36] positive contribution margins now. So I imagine there's also some of the annualization effect.

[00:06:42] And you also talked about ZEB sales and things like that. And so volume is one component of that two

[00:06:48] to four billion. But there's obviously a lot more on the year over year compared.

[00:06:52] For sure. We're constantly making improvements in terms of the efficiency of production,

[00:06:57] as well as the part number reductions that Mark has talked about, as well as we should see some

[00:07:05] mixed finishes coming in with, you know, the Cadillac Escalade IQ and some of the other vehicles

[00:07:11] that are coming to market. So there's a lot going on, a lot of moving parts, but that's just our best

[00:07:16] look where we are today on our journey. But again, the most important thing that we can do

[00:07:21] as a company is get to that positive contribution margin. And I think we've got a good roadmap.

[00:07:27] And I think we've proven our resiliency in that, even though we're at the lower end of

[00:07:33] what we projected our production to be at the beginning of the year. So, you know, continuing

[00:07:40] with that kind of scrappiness is, I think, what sets this team up.

[00:08:01] All right.

[00:08:05] So just for a point of reference, GM was number two in the third quarter of 2024 for electric

[00:08:13] vehicles. That was behind, of course, Tesla beating out Ford, who is the previous number

[00:08:18] two. So are we talking about huge numbers, delivery numbers for GM? Absolutely not. But are we

[00:08:25] talking about, you know, a positive direction, the way that they're moving? Yeah, absolutely.

[00:08:32] Absolutely. So I think that GM has settled a lot of their technical debt or they're addressing,

[00:08:41] I guess, a lot of their technical debt. We talked about them doing away with the Ultium platform.

[00:08:47] You know, they're moving to prismatic cells. There's lots of things that GM's doing to try

[00:08:51] and dig themselves out of the hole that, I guess, dig themselves of the hole they dug themselves.

[00:08:57] Yeah. There's lots of things they're trying to do to, in the fire service, we use a term that is the

[00:09:06] un-F yourself. So they're trying to un-F themselves right now. But yeah, I think that this is definitely

[00:09:15] a positive step for them, for sure. Let's go ahead and move to the next question.

[00:09:19] My other question was just on your manufacturing flexibility. And to the extent there's a material

[00:09:24] increase in tariffs on vehicles imported into the U.S., can you talk about how much flexibility

[00:09:28] GM has to shift more of its production domestically and or potentially offset tariffs with either pricing

[00:09:34] or cost reductions? Thanks. Well, I think we're always working on cost reductions. I think it depends

[00:09:40] on specifically, you know, what the tariffs would be. I would tell you, you know, we are paying

[00:09:47] careful attention to the approach both candidates might take. And I'm not going to speculate on what

[00:09:53] either might do, but what I will tell you, we have and will continue to engage constructively

[00:09:57] with the policymaking process, regardless of the election outcome. When you look at the number

[00:10:04] of jobs created in the U.S., even with some vehicles that are manufactured outside, a lot of them are in

[00:10:11] our partners, you know, from an ally perspective. So I think it's a very complex situation.

[00:10:20] When USMCA was formed, there was a lot of input being provided. And I think looking at jobs, looking at the

[00:10:25] jobs that have been created, especially when we look at battery plants and some of the other facilities

[00:10:31] that we've leveraged for drive motors or drive units, et cetera, you've got that's going to all be factored in.

[00:10:37] So we're going to work constructively. And so it's too hard to speculate, not knowing exactly what's

[00:10:42] going to happen. But to just reiterate what Paul said, we're going to be disciplined and we'll be

[00:10:48] resilient and we'll, you know, we'll make adjustments to the extent that we can to continue to drive

[00:10:54] growth and profitability.

[00:10:57] One of the things that the analysts were trying to get, Mary Barra and the chief financial officer,

[00:11:04] I'm forgetting his name is Paul, I think, one of the things they were trying to get them to do is

[00:11:08] answer what was going to happen in 2025. And really, it was, hey, how are you going to handle it

[00:11:14] if Donald Trump becomes president or Kamala Harris becomes president? But they weren't asking it in

[00:11:20] such a direct way. They were asking it in a way that is, I guess, politically correct,

[00:11:28] not the right answer, but like politically generic, you know, they were just asking in these really

[00:11:36] bland ways and they refuse to answer in any way, shape or form. So that's kind of where this question

[00:11:42] came from. But yeah, we get a little insight as to what they're thinking there. All right. I am

[00:11:51] having just nothing but technical issues on this. I don't know how the sound quality is going to turn

[00:11:56] out. So here's where we're going to end it. I do want to let you know that if you want to email me,

[00:12:03] you can. It's Bodie, B-O-D-I-E at 918digital.com. You can find me on Twitter at 918digital.

[00:12:10] And I'm going to leave you with a clip from Mary Barra. These are her closing remarks. And then I will

[00:12:16] see you on Tuesday. I hope you all have a wonderful weekend.

[00:12:20] Again, I want to thank everybody for your questions. I appreciate your participation.

[00:12:24] I hope you look and you see our performance this year demonstrates that our focus is on building

[00:12:29] great vehicles because great vehicles matter. Vehicles that have beautiful designs, the right

[00:12:34] technology, the right range of their EVs that customers really want to buy. We're going to

[00:12:40] continue to improve our ICE and EV profitability. We're going to maintain cost discipline. And we're

[00:12:45] going to continue to drive and look for ways to improve our capital efficiency. So in the weeks and

[00:12:50] months ahead, you'll see more clearly than ever how we intend to leverage the tailwinds that are

[00:12:54] within our control to deliver strong results in 2025 that are in a similar range to 2024.

[00:13:01] As we've said, we'll share more information about Cruise, China, and our other new collaborations

[00:13:06] as soon as we can. And as Paul said, we'll wrap all of this into formal 2025 guidance that we'll

[00:13:12] share in January. So until then, please stay safe and I'm sure we'll talk to you soon.

[00:13:34] That concludes the conference call for today. Thank you for joining.