General Motors at J.P. Morgan Auto Conference: Strategic Resilience Amid Tariffs

On Wednesday, 13 August 2025, General Motors (NYSE:GM) presented at the J.P. Morgan Auto Conference 2025, outlining its strategic response to global challenges. CFO Paul Jacobson highlighted GM’s resilience in the face of tariff impacts, while also detailing plans for electric vehicle (EV) strategy adjustments and operational improvements. Despite headwinds, GM remains optimistic about maintaining a strong financial position and capital allocation strategy.

Key Takeaways

• GM projects $7.5 billion to $10 billion in free cash flow despite a $4 billion to $5 billion tariff impact in 2025.
• The company plans to offset 30% of tariff costs through cost reductions and strategic changes.
• GM is investing $4 billion to increase U.S. vehicle production capacity, adding nearly 2 million units.
• Success in China has been achieved through restructuring, leading to profitability and market share gains.
• GM’s software revenue, including OnStar and Super Cruise, is growing, with $4 billion in deferred revenue.

Financial Results

• Tariff impacts are anticipated to be $4 billion to $5 billion in 2025.
• GM aims to mitigate these costs by 30% through strategic initiatives.
• Free cash flow is expected to range from $7.5 billion to $10 billion, supporting a target margin of 8% to 10% in North America.
• Capital expenditures are projected to be between $10 billion and $12 billion over the next few years.

Operational Updates

• GM is employing a three-pillar strategy to counter tariff costs, including manufacturing changes and cost reductions.
• A $4 billion investment will expand U.S. production capacity by nearly 2 million vehicles.
• The company is optimizing its fixed cost structure to enhance profitability.
• In China, GM’s restructuring efforts have led to increased profitability and market share.

Future Outlook

• GM expects potential reductions in tariff rates due to ongoing trade negotiations.
• The company is focused on maintaining its 30% offset strategy’s effectiveness.
• EV strategy adjustments are underway, with a focus on reducing losses and driving profitability.
• Investments in charging infrastructure are ongoing, supporting future EV growth.

Q&A Highlights

• GM is confident in producing vehicles profitably in Korea, even with a 15% tariff.
• Emissions credits cost approximately $1 billion in 2024, split between CAFE and GHG.
• The product portfolio is expected to drive growth through mix, pricing power, and market share gains.
• Autonomous vehicle efforts continue, with improvements to Super Cruise and a focus on personal autonomy.

In conclusion, GM’s strategic initiatives and financial resilience were key themes at the J.P. Morgan Auto Conference 2025. For a more detailed understanding, refer to the full transcript below.

Full transcript - J.P. Morgan Auto Conference 2025:

Ryan Brinkman, U. S. Automotive equity research analyst, JPMorgan: Recall you saying that last year. Okay. So once again, I’m Ryan Brinkman, U. S. Automotive equity research analyst at JPMorgan.

Very happy to get going with our next presentation. Highlight of the conference, General Motors. Back again this year, Paul Jacobson, Executive Vice President and Chief Financial Officer. I’m going turn it over to Paul for some introductory remarks, and then we’ll engage in a fireside chat.

Paul Jacobson, Executive Vice President and Chief Financial Officer, General Motors: Thanks, Ryan, and thanks, everybody. Are we on? Are we good? Thank you. Thanks everybody for taking the time and come in and for those that are on the webcast today.

As always, we appreciate that. So far so good. As we look in the quarter, July, I think was month that was generally in line with our expectations pricing wise. We continue to make sort of incremental strides on our relative pricing. I think we saw a little bit of slight uptick in industry incentive levels while we were down.

But overall, very much in line with what we talked about for the quarter. We are seeing, I think, as others have probably reported, a little bit of pull ahead to activity in EV sales No surprise there as consumers who might be contemplating an EV purchase obviously have an incentive to do so before October 1 with the elimination of the $7,500 consumer tax credit. But generally very much in line with, where we sit. We’ve seen the administration make, progress, on trade deals and including Korea, and we’re eager to see that get finalized.

As we’ve talked about, Korea is one of the important, three, if you will, to us in particular. So while it’s too soon to tell based on where and when that deal ultimately gets finalized, there’s potentially hundreds of millions of dollars of savings there on our tariff bill for 2025 and certainly what we expect to be a pretty meaningful contributor to 2026 and beyond. We have seen a little bit of noise in steel tariffs, aluminum, semiconductors, etcetera. So we’re still generally consistent with that $4,000,000,000 to $5,000,000,000 And the company is making really good progress on its 30% offset that we’ve committed to for 2025. As we think about what 2026 is and beyond, it’s too early to provide any meaningful commentary as to where it is because we still obviously, the administration is still working with Mexico and Canada and we’re looking for other trade deals get finalized and so on.

But what I would say is the administration as they’ve said publicly very committed to The U. S. Auto industry and we look forward to continued productive conversations with them about making sure that we can remain very, very competitive however the tariff landscape gets resolved, and, we’re eagerly anticipating that. So as we think about 2026, you know, vision ultimately is that, as tariffs normalize at or potentially below where they’ve been for 2025 and we can keep our offset. So when we look at that 30% offset, a lot of self help in there including fixed cost reductions, manufacturing footprint changes as well as go to market strategies.

We want that to be sticky. So ultimately, we can work our way back up to that 8% to 10% margin level as quickly as we can in a new world where we expect some tariffs to be permanent going forward. So I think the team is making good progress on that. We’ll obviously provide updated 2026 guidance and initial guidance as we get to the end of the year and with our fourth quarter performance. But overall, I would say the year is trending very much in line with what we expected.

And to look at a 4,000,000,000 to $5,000,000,000 impact with sort of very short notice in 2025 and still to be able to produce 7,500,000,000.0 to $10,000,000,000 of free cash flow, I think, is a real strong demonstration of what the resiliency is of the General Motors team. And one of the things that our team has talked about for a future investor presentation is to really shape that landscape of how different we are today than where we were, say, five or ten years ago almost pre COVID, because the changes that we’ve made, I think, in the business and the way we run the business, much more stable GM, much more resilient General Motors, and much more flexible to be able to adapt to changes like this, whether it was COVID, whether it was a semiconductor shortage, tariffs, etcetera, or potentially a future downturn, we think we’re much, much less exposed than what we’ve been historically and continue to want to drive home the point for investors and prospective investor that the risk return for trade off for General Motors with the current performance as well as the lower risk going forward, we think, is a really good value play for others.

So appreciate you all being here. Ryan, look forward to answering your questions.

Ryan Brinkman, U. S. Automotive equity research analyst, JPMorgan: Great. Thanks for the introduction. I thought to ask first on tariffs, specifically from the perspective of the gap between the industry wide cost of tariffs and the associated pricing recovery so far. The cost of tariffs stepped down a few times now. First, we thought that they might run high single digit percentage of the retail price after the exemption for USMCA compliant parts, relief for other parts and as these individual country deals have been reached.

Maybe now it’s tracking more in the mid single digits as a percentage of retail price. But automakers still have not raised price anywhere near that much. How have industry prices tracked relative to your own expectation? And how do you see the burden sharing maybe evolving over time between the automakers, the consumer, etcetera? Well, I mean,

Paul Jacobson, Executive Vice President and Chief Financial Officer, General Motors: think we have adopted from day one a view where we need to take it upon ourselves to figure out the strategy to help the company continue to perform. And we pretty early on had developed what I would say is a three pillar strategy, go to market initiatives, manufacturing footprint changes, and then the third is fixed cost reductions across the board. And we highlighted those three buckets as getting to our 30% offset. As we said in our I believe it was our second quarter call, our first quarter call, we didn’t necessarily need to see any incremental price changes to be able to fill up that bucket, if you will, of our offset strategy. We went into the year thinking that pricing was going to be flat to down slightly for the year and we revised that up 05% to 1% for the full year.

So we have seen some price certainly at General Motors and that’s evidenced through our relative incentive performance as well as what you see in our average transaction prices. So we feel good about where we are and we don’t want to be in a position where we are dependent on what the industry can or can’t do. We have adopted, I think, a very independent pricing strategy and we’re going to continue to do that because what you’ve seen with lower incentives, and generally sort of higher average transaction prices is that we’re still picking up share. And that really goes to the heart of the quality of the vehicle portfolio that we have right now. That puts us in a position of relative strength because I can achieve some of that offset either by taking price where we can or, more importantly, by even picking up volume.

Not the traditional ways in the auto industry where typically share gains were purchased by higher incentives or by heavy discounting. We’re not seeing that. We’ve been picking up share fairly consistently over the past few years despite the fact that we have lower incentives in the market. So lots of different levers that are available to us in that whole net revenue equation and the team has done a tremendous job of working at the customer level to make sure that we’re able to take advantage of that portfolio and where it sits. The second leg of that stool is manufacturing footprint changes.

We announced earlier this year $4,000,000,000 of investment that will raise our capacity in U. S. Vehicle production almost 2,000,000 units, including some incremental full size SUV production that will help take some of the burden off of Arlington and also give us additional flex capacity that we really don’t have today with the Arlington plant running as efficiently as it does today. So that’s going to ultimately result in fewer incentive or lower tariffs for us going forward. And then the third is making sure that we’re not making excuses because if the pricing isn’t there, I don’t want to come to the investor base and say, couldn’t offset it.

It’s just a reduction in earnings power is go drive, more lean behavior in the fixed cost structure, which I think we can continue to do. And I think there are opportunities for us to trim that even further going forward as well. So overall, we need to get to back to that 8% to 10% margin level in North America as quickly as we can. And I think we’ve got a roadmap to be able to do that. It may not happen overnight.

But like I said in my opening comments, if we can earn 7,500,000,000.0 to $10,000,000,000 of free cash flow in the meantime while we’re dealing with the maximum impact. That’s still not a bad situation to be in and commensurate with our capital allocation strategy, one that I think benefits the shareholders.

Ryan Brinkman, U. S. Automotive equity research analyst, JPMorgan: Yeah. And that does lead into my next question, which is, is there a residual impact? I mean, you haven’t quantified how you get all the way back there. You’ve given us a lot of the pieces of the puzzle. Mean, is it 4,000,000,000 to $5,000,000,000 gross headwind over three quarters in 2025?

And you haven’t said we can really annualize this. But if you were to sort of simplistically annualize, comes to like 5,300,000,000.0 to $6,700,000,000 with at least 30% offset would mean the headwind on a net base would fall to less than 3,700,000,000.0 to $4,700,000,000 You said Korea was $2,000,000,000 I know you haven’t updated for that just yet, but so $2,000,000,000 in three quarters annualized, that’s $2,700,000,000 You got 40% relief there from 25% tariff 15%. So that would seem to help 1,100,000,000 annualized. Now we’re down to like 2,600,000,000.0 to $3,600,000,000 Still some wood to chop. You’ve announced these actions though that you haven’t quantified like the spending the $5,000,000,000 to $4,000,000,000 on the plants, 1,000,000,000 on Tonawanda.

How much is that going to save you? How much can that further whittle down this residual sort of 2.6 to 3.6 I’m kind of penciling in? And then I’m sure there are other things that you’re so you’ve got the plans. You’ve announced it. You haven’t quantified it.

There’s probably other things you haven’t even announced yet, but you’re working on, right? So how much further improvement do you think you can make over what type of time frame? What would be a good outcome for GM?

Paul Jacobson, Executive Vice President and Chief Financial Officer, General Motors: Well, unlike our budget meetings, I’m not going to check your math. I’ll trust you on that for the sake of time. But as a general rule, I mean if you look at Korea going from 25% to 15% directionally, you’re correct on that. We don’t know yet Mexico, Canada. We don’t know what the future of MSRP offset or other provisions that the administration has done.

So that’s why it’s too early to start to triangulate on what a number for 2026 might be. But like I said, what we’ve been setting the business up for is to get that 30% offset. That’s kind of just putting a stake in the ground of saying, what can we do really quickly to do this? But over time, irrespective of whether the tariff level is 4,000,000,000 to $5,000,000,000 5,000,000,000 to $6,000,000,000 3,000,000,000 to $4,000,000,000 the idea is, okay, I’ve got that stake in the ground. Now let’s go from there and readjust the business to what we need to do in order to be able to deliver that 8% to 10% margin that we’ve seen over time.

So that is all taking shape. We’ll begin our budget process really kind of starting now for 2026. There’s obviously a lot of uncertainty there with the with the different trade deals that are that are, taking hold, but we’ll have a plan and we’ll put a plan together that I think does what it takes. And and that’s one of the things that I hope the the market understands and appreciates about GM is we may not have all the answers today, but what we’ve got a team is it’s proven the resiliency and the ability to create plans very tactically to go execute and to hit our numbers going forward. So while it’s too early to commit as to whether we can get to an 8% to 10% margin next year, I certainly think that there is a roadmap that can get us back there over the short to intermediate term.

Ryan Brinkman, U. S. Automotive equity research analyst, JPMorgan: Yes. And I think that your whole attitude to all of these unforeseen headwinds in recent years, it’s the pandemic or is it the chip shortage or it’s tariffs is like, it’s not an excuse. We’re going to find a way to make our numbers get as darn close to it as we can. It’s very refreshing. At the same time, would be a reasonable estimate of how it might shake out those things that are outside your control?

I heard you say in the opening remarks that you expected tariff rates to be down next year. Mean, well, yes, of course, with Korea being down for the whole year, is that you’re just making an estimate sort of the anniversaryizing of that? Or do you think that the rates applied Canada and Mexico, which are now higher than Japan Korea and you, that those could come down? Kevin Clark from Aptiv yesterday predicted that they’d be 15%. The rating agency panel yesterday, S and P Moody’s Fitch, were saying that they thought USMCA would continue without huge changes.

Treatment for copper tariffs, they’re stackable now unlike the steel and aluminum. That doesn’t seem consistent. They’re all metals. And maybe there’s some speculation automakers could get credit for the vehicles that they export against what they bring in. I mean, that would seem to make a lot of sense.

So curious your outlook there, whether it implies incremental changes versus what’s already been announced or just kind of the roll forward.

Paul Jacobson, Executive Vice President and Chief Financial Officer, General Motors: Well, mean, I’ll let others be in the prediction game, and we can talk about their estimates and so on. But I think if you just listen to what the administration has said, it’s clear they’re going out and dealing with countries on a sort of one by one basis. And they’ve ascribed importance to getting a lot of these deals done. And I think Mexico and Canada are both very important trade partners and deals that want to get done. I think they are kind of setting a road map for how they want to think about that.

But, you know, that that still has a long way to go on it. I don’t I don’t want to imply that that we know anything more than than what others do. But what we what we have publicly is that the administration is very committed to The U. S. Auto industry and wants it to remain competitive.

I think a lot of the actions have worked in terms of creating incentives to move to The US as we’ve announced with $4,000,000,000 of capital investment into The US plus another almost billion dollars for next generation V eight engines in Tonawanda. That is working. It’s taking hold. And it’s one that I think we can make sure we adjust the business to. As to what the actual rates are going to be, again, the administration’s going to decide that, we’ll figure it out.

But I take them at their word, and certainly at the conversations that we’ve had that they’re committed to making sure that we remain competitive. So whether that is through constructs like the MSRP offset that they’ve implemented or its absolute lower tariff rates, I think at the end of the day, we’ll be in a situation where we’ll be more in line with where the global landscape is, if not potentially slightly better than that, given some of the economic disadvantages that we might have producing here versus in other low cost jurisdictions throughout the world. So I think that portends for a brighter future down the road, but it’s going to take time to implement these things going forward. And that’s a road map where if you say, at the end of the day, the the industry is valued by the administration, and we’re not going to be disadvantaged by all these other deals implies that it’s going to be lower, than than what it is today. So when we do that and we keep the stickiness of our offset strategy going forward, you start to narrow that gap of what the net tariff impact is.

Whether that’s full year 2026 or not is gonna be a function of how quickly these deals get done. So that’s why we’re being somewhat cautious about 2026. But I would say I remain relatively optimistic vis a vis 2025 as to where we’re going to go and how much certainty we’ll have. Great.

Ryan Brinkman, U. S. Automotive equity research analyst, JPMorgan: Thank you. And what more can you tell us about the $4,000,000,000 $5,000,000,000 investment to reassure the full size pickup trucks and SUV production as well as the Blazer and Equinox of Mexico to invest in the new generation of V8s? It’s an important part of reducing the headwind from tariffs, but does it potentially go beyond that? Will you maintain the ability to produce trucks in Saleo and Oshawa such that overall capacity goes up? Where Arlington and Fort Wayne, I think they were running pretty much flat out such that maybe your straight time labor costs go up, but you can pay less overtime or you can sell more trucks.

How much can the onshoring help you or what is the payback period on that $5,000,000,000

Paul Jacobson, Executive Vice President and Chief Financial Officer, General Motors: I got to give you credit, Ryan. I’ve been here almost five years. That’s the first time anybody’s asked me if the industry could benefit from more capacity. But it gives us flexibility, what I would say going forward, particularly as it relates to full size SUVs. We know we have demand that outstrips supply for our full size SUVs.

We know we put a strain on our people in Arlington, and this is going to be a little bit of a relief valve and a potential option. But I think what we’ve got to do is absolutely maintain our discipline. As it relates to Salau, obviously, you know, we’ll have some capacity there. I think the question will be, does that become, principally export capacity, or, you know, can it be flexed? But to go in and start to build expectations that we’re going to use all this capacity to to overbuild really goes against all the disciplined strategy that we’ve really taken on over the last four years that I think has provided a real benefit to GM and ultimately speaks to that was close ultimately speaks to some of that resiliency that we talked about in the face of a downturn because we don’t expect when we see in the next economic cycle, whenever that might be, we don’t expect to have nearly the working capital drain that we’ve had historically because we’ll have less inventory and significantly less incentives leading into it.

And it won’t perpetuate itself the way that past cycles have done. So there’s no reason to abandon that because we might have the option for more capacity. I think that that can be something that we really don’t want to get addicted to. So when we look at the footprint changes, we’re really thinking about how do we onshore it to mitigate tariffs. But also, there’s another wildcard here too, which was in the recent One Big Beautiful Bill Act that was passed.

There’s a tax deduction for consumers for U. S. Purchased vehicles. And increasingly over time, that could be a question that people ask their dealers going forward, where was this vehicle built, etcetera. So we think that there’s some incremental demand attached to these moves as well and not just pure tariff avoidance versus potentially higher labor and supply chain costs.

Ryan Brinkman, U. S. Automotive equity research analyst, JPMorgan: You’re talking about the auto loan interest Yes. I wanted to ask about the implications for GM profit from those shifting regulatory framework with regard to EVs in particular, such as the expiration the early expiration of the $7,500 federal consumer tax credit as well as the removal of the penalties for noncompliance on greenhouse gas and corporate average fuel economy. Seems like some things are helping you, some things are hurting you. Quite a few moving pieces with tailwinds from needing to pay fewer fines and credits, potentially a richer mix of vehicles sold, maybe more vehicles sold. But then the headwinds also from the less pricing support.

Wonder too less maybe irrational pricing activity on the part of some people selling vehicles under cost so they can just get a credit. So a lot of moving pieces. There was even discussion on the last earnings call of yet another layer of nuance. I think you said the math gets complicated very quickly, right, relating to needing to maybe write off some of the credits maybe already purchased. So can you just help us dimension all of these headwinds and tailwinds?

Or maybe just wrap them all up and say what the net impact you think for GM might be?

Paul Jacobson, Executive Vice President and Chief Financial Officer, General Motors: Suffice it to say, it gets really complicated really fast. But just trying sort through that. What we already know today is that the administration has handled CAFE. So CAFE penalties were zeroed out. So any credits that we had will have to be written off, any credits that we purchased, but any forward liabilities that we’d already accrued also get written down.

We think that those two things are essentially a wash and will be somewhat immaterial on 2025 going forward. It will save us money in 2026 and beyond for sure. We haven’t disclosed exactly what that is because we’re waiting to really do it all kind of at once. GHD is not resolved yet. There are commitments from the administration to do that, but it’s important that we let them run their process and get done what they need to do.

But suffice it to say, we do think that this is net accretive for the enterprise for the long haul going forward. And a lot of it has to do with where EVs are. So first of all, if GHG penalties are eliminated, and that’s just for discussion purposes, I don’t know that that’s where it’s going to go, then that means that electric vehicles are going to be less profitable than they are today because everybody, including us, takes value of the credits that are created, which is a couple of thousand dollars plus per vehicle, that you see for those GHD credits. So the burden to get to EV profitability goes up, but it’s a net positive for the enterprise. And that net positive for the enterprise versus the status quo is quite a bit better when you think about where we were trying to go for 2030 because what was really creating the irrational behavior was the steepness of the stringency curves going up to expected 50% or mandated 50% adoption by 02/1930, in a market that’s sitting at about 7% to eight percent right now.

So that was leading to a lot of heavy discounting behavior, people trying to jive volume because they weren’t interested in selling EVs as much as they were interested in creating credits that were otherwise gonna potentially be short, going forward. So we think a lot of that is probably gonna go by the wayside. In fact, I would be surprised if there aren’t fewer EV retailers or EV sellers in the next four to five years assuming GHG is relaxed than there are today because many people were selling EVs just so they could continue to sell their ICE franchise that they’ve done quite well with. So I think the market becomes more rational from that standpoint. The enterprise gets net better immediately from that standpoint.

So when you look at what EVs are to us, we think that there’s still continued opportunity for us to significantly reduce our losses and ultimately drive that portfolio to profitability. It might take a little bit longer in the face of lower demand, but when you look at the structural changes that we’ve announced with LMR battery technology going to prismatic cans, the new agreement with LGES as well as with Samsung SDI, We think there are a lot there’s a lot of room for improvement on our structural costs while we continue to put product out there that is actually accreting quite a bit faster than the rest of the market. So we know we’ve got a winning portfolio, but structurally we’ve got to get there to where the costs are lower overall. But in the meantime, it’s net, like I said, immediately better for the enterprise if GHG gets resolved. And given these changes, how are

Ryan Brinkman, U. S. Automotive equity research analyst, JPMorgan: you thinking about are you thinking any differently about allocating capital within the automotive business? How should we think about overall CapEx moving with the incremental $5,000,000,000 I know you haven’t really increased it for the year so much, although those investments extend into next year too, of course. But does the investment to produce gas trucks in Orion Township, does that just replace what you were going to spend there to produce the electric trucks? Does the investment in Spring Hill Fairfax mean you now spend less at Ramos or East Bay? And then with respect to the capital left over after what you do reinvest in the business, does the regulatory backdrop make you want to operate with any different levels of cash or leverage?

Well,

Paul Jacobson, Executive Vice President and Chief Financial Officer, General Motors: the last question first. No change to our cash or leverage. In fact, I think it’s served us very well in terms of maintaining that 18,000,000,000 to $20,000,000,000 I think we have taken incremental opportunities to pay down debt. You’re seeing that this year with the $2,000,000,000 maturity. We refinanced some of it, but we’re paying cash down with the rest of it.

We did some refinancing earlier with a bond offering on taking out a Department of Energy loan and that was really to restructure the battery JV a little bit. So no changes to the overall balance sheet strategy. On capital, what we’ve said is with this incremental $4,000,000,000 the Tonawanda investment that goes from 4,000,000,000 to $5,000,000,000 was already in our forecast going forward. But the incremental $4,000,000,000 we’re going to take CapEx guidance from 10,000,000,000 to 11,000,000,000 this year to 10 to 12,000,000,000 over the next couple of years, which implies, number one, there is some overlap from money that we would have spent in Orient anyway. It’s just different capital.

And then number two, there’s also rebalancing things that we can do to make sure that we prioritize that discipline. So our job as a finance team and as a management team is to allocate capital effectively. That doesn’t mean when there’s an urgent need to do something that you weren’t planning five years ago, it doesn’t mean that you should just increase your spending. You’ve got to be proactive in reprioritizing and making sure that we allocate within that range. So I think 10,000,000 to 12,000,000 is still a very reasonable range for us.

It allows us to generate significant amounts of free cash flow. Within that CapEx, we’re we’ve still been investing pretty heavily in our ICE portfolio. I think there are potentially opportunities to expand, extend the life of some vehicles as you’ve seen us do, before. But within the EV portfolio, it’s less about creating new vehicle platforms the way we’ve been doing for the last three to four years as much as it is capital that is really focused on changing the architecture and driving in both manufacturing and engineering cost savings into producing those vehicles. So it’s money well spent unless you believe that EVs are going to completely go away.

And we don’t believe that to be the case and we certainly don’t see it in any consumer data or consumer behavior. And I think it’s worth noting that the administration is continuing to invest in charging infrastructure. That’s an important piece to help lay that groundwork, but we do see this as something that we can be successful in. And we’re setting non Tesla records today with our EV sales. And as we continue to get those more efficient and build scale, we think there’s a recipe there to be successful in that too.

Ryan Brinkman, U. S. Automotive equity research analyst, JPMorgan: Great. Thank you. And moving to China, at conference last year headlines were very gloomy. You just come off of a 2Q in which your sales had fallen 29% year over year resulting in the lowest share in twenty years. You went on to report three quarters of equity income loss in the 2024.

But actually the headlines now, they look a lot different, right? Your sales rose year over year in 2Q for the second straight quarter. They’re up 20% year over year driven by GM battery electric plug in hybrid and EREV sales up 50%, NEV sales. Year to date, GM is the only automaker to have gained market share, the only foreign automaker to have gained share in China. So three straight quarters of that period And of done it profitably.

And now three quarters of profitability. So pretty sharp turnaround. How have you managed it so far? What’s next?

Paul Jacobson, Executive Vice President and Chief Financial Officer, General Motors: Well, it was a year ago that we talked about outlining the need for restructuring plan. And I would never put you into this category, but there were many in your industry that didn’t believe that we could do it. And that was one that I think we’ve maintained steadfast confidence in the team. And my congratulations go out to the team in China in working collaboratively and also grateful for the cooperation of our partner there to do the things that were necessary because what we said was we need to learn to be successful in a smaller market share than what we’ve had historically. The years of generating $2,000,000,000 equity contribution, equity income contributions, probably not going to come without a lot of capital, and we’re not interested in putting capital into that highly competitive market.

So what do we do to fix it without a capital injection? And the team came through, really, really well with a with a plan to to right size the operation, but also put new vehicle programs out there that, while it didn’t require any capital from us, used some of the cash internally to do that. Now we’ve got a product portfolio that is gaining share, but is gaining share on a much more responsible footprint than what we’ve had historically. And those are tough decisions to make in a bilateral multinational partnership that I’m just so incredibly proud of what the team has done there. And the results speak for themselves.

We said we were committed to delivering a profitable organization and investment in China without injecting new capital from The United States into it and the team has done just that. So I think it’s another example of the sort of tactical resiliency that the team is able to display, in the face of of changes and and one that, you know, I I if I if I had one wish with a stroke of a pen, I would get everybody to acknowledge how incredible the team is at really adapting to that change, and, you know, creating a little bit of a premium for for that level of resiliency because, again, I think it’s just another great example of what the team can do.

Ryan Brinkman, U. S. Automotive equity research analyst, JPMorgan: Yeah, absolutely. Let’s see if maybe there’s some questions in the audience. I see one in the side and one up front. Thank you.

Unidentified speaker: Thank

Unidentified speaker: you for taking the questions. Just on Korea, if the tariff rate is 15%, are you profitable in those operations? And then on the emission credit relief, how much cash was paid for those in ’twenty three and ’twenty four?

Paul Jacobson, Executive Vice President and Chief Financial Officer, General Motors: So we, in ’24, it was about a billion dollars on on credits. I think it was about evenly split between CAFE and and and GHG. But understand that the the timing of credit purchases with CAFE and GHG can be very different. GHG credit purchases tend to be really opportunistic as you saw from Ford and others in terms of when they’re available, you tend to do big deals and try to solve multi year problems. When they’re not available, you do smaller purchases, etcetera.

So it’s not necessarily indicative of what any single year was because there was a lot of volatility in those purchases. The way our accounting works on that is CAFE, because the penalties are estimable, We’ll expense that, so there will be an expense savings for us in 2025 and 2026 as I mentioned earlier. We expect the write off of the credits we purchased to roughly off offset with the liabilities that we’ve accrued this year. So I don’t think that’s going to be material, but it should be a big fairly sizable expense savings next year as it relates to CAFE. GHG, because the penalties aren’t really estimable, it really is you buy the credits and you amortize them over time.

So there’s no change to GHG accounting right now because we don’t have any framework for what GHG is going to look like going forward. But suffice it to say, there’s a pretty sizable amortization that will be affected by whatever happens with GHG. So we’re committed to providing information as soon as we get that and as soon as we get more clarity as to what that’s going to look like, and we’ll unpack that as we get into 2026 and get more knowledge. As it relates to Korea, we do believe that under 15%, assuming when it gets finalized because it hasn’t been yet, that we can produce vehicles profitably and that’s what we’re committed to doing. And if we need to figure out actions that need to be taken to ensure that we can produce vehicles there profitably, we’ll take those same as we did with China and making sure that that’s a successful enterprise for us going forward.

But we’ll see as that gets finalized going forward. Those vehicles we produce there are doing quite well, which is why we’ve said even when they were just contribution margin positive at 25% that it gave us the luxury of being able to continue to produce them because they are good vehicles. But we’ll see what that has to look like when we see the rules finalized.

Unidentified speaker: Paul, I wanted to I went back and looked at the October 24 Capital Markets Day. Great job executing in a world that’s radically changed. And most of Ryan’s questions were focused on that. But coming out of that, your product portfolio strength in North America, if the industry is just flattish over the next year or two, can you kind of share with us what you think the growth of that product portfolio can translate into in terms of relative growth through mix, the pricing power, the share gains? Can we think about maybe 1%

Ryan Brinkman, U. S. Automotive equity research analyst, JPMorgan: or 2%

Unidentified speaker: outperformance relative to the industry over the next couple of years, given your view of the product and the competition? And then two, I don’t want to forget the software services revenue side. And can you give us a quick update on how that is actually growing in this environment and what that can help?

Paul Jacobson, Executive Vice President and Chief Financial Officer, General Motors: Yeah. So first of all, the vehicle portfolio, it is, as Mary and Mark have said, and they’ve got far more experience in this space than I do or will ever have. I don’t think I’ll ever get to the point where I eclipse Mary in seniority. That’s maybe material non public information, but I’m probably not going to work for 50 But what I would say is that the vehicle portfolio is incredibly strong and we see that and incremental share gains. We’re not running this to drive a lot of share gains.

We’re taking the share gains as a function of our overall go to market strategy, which I think commands a bit of a revenue premium when you look at us against any of our closest competitors going forward. One of the things, you know, we’ve in the past couple of years for not being as rigorous or, aggressive on cost cutting as some of our competitors have. But you look at it and, you know, as I’ve said before, you can have the most efficiently produced vehicle in the world on a cost basis. And if nobody wants it, it doesn’t matter. And what really has to be noted here is the value that we’re giving to our consumers with the content and what they’re willing to pay for.

And that’s where you see it driving results. So whether that comes in the form of better pricing, because I’d love to be in a world where we can count on just a little bit of incremental pricing every year and just be consistent about that rather than the ebbs and flows of over cycling in the business. There is some upside potentially as we look into 2026 going forward because we’re continuing to invest to make sure that content is fresh and we can keep that advantage over our competitors that we’ve seen over the last couple of years. But also, I think structurally, there’s a lot of costs that potentially come out of the system, whether we talk about tariffs potentially being lower depending on how deals happen or the net tariff exposure being lower or what we were just talking about with GHD and Cafe. I mean, that could be potentially hundreds or thousands of dollars per vehicle where you could get some advantage.

But we’ve to let that settle out. We’ve got to figure that out. But we’re certainly thinking that, as I’ve said, as you get into 2026, 2027 and so on, producing a roadmap that’s going to get us back to that 8% to 10% margin range and vehicle portfolio is a big, big piece of that and serves as the foundation, not only for share gains but also for the software side. I’m really glad that you asked that. We talked on the last quarterly call about $4,000,000,000 of deferred revenue because I think and if I had it to do over again, might talk about it differently.

We’ve kind of been so fixated on the level of reattachment as people’s Super Cruise subscriptions expire after three years. And we’re doing really well in that space, but it’s still on relatively small numbers. We didn’t really probably pay as much attention or communicate as much as we should about that deferred revenue balance. So whether it’s OnStar, basic OnStar services that are included in the purchase that we charge customers for or announced new Super Cruise subscriptions. That $4,000,000,000 of deferred revenue is coming on at a significantly greater margin as it amortizes in.

So that balance is going to continue to grow. The ultimate revenue recognition is going to continue to grow and that’s coming in at for Super Cruise because we’ve essentially expensed all the hardware at the time of wholesale, that’s coming in at close to 100% margins outside of the additional R and D to make it better. So there’s an evolving story there that I think is accruing faster than a lot of people think and putting us on track not to necessarily get to the 2021 levels that we said by 02/1930, but certainly accruing to get relatively close to that and picking up a lot of steam in a way that I don’t think people appreciate. And there will be more disclosure on that as we get further along that journey.

Ryan Brinkman, U. S. Automotive equity research analyst, JPMorgan: We’ll now take our final question.

Unidentified speaker: Could you describe and I saw you outside, I shouldn’t have I’m embarrassed. Describe sort of the roadmap that you’re thinking about autonomous activities at General Motors.

Paul Jacobson, Executive Vice President and Chief Financial Officer, General Motors: Yeah, sure.

Ryan Brinkman, U. S. Automotive equity research analyst, JPMorgan: The article yesterday, you’re going to hire back Cruise employees?

Paul Jacobson, Executive Vice President and Chief Financial Officer, General Motors: Well, mean, look, at the yeah, thank you for asking it more tactfully than Ryan did. But look, when we made the decision that we made with Cruise, I think many people reported it as we were abandoning AV. That was never the intent. What we said we were doing is we were shelving Robotaxi. And we were shelving Robotaxi because the capital commitments that were required and from our conversations with the market weren’t going to be supported at a level without us putting a substantial majority of that required capital in.

And when you look at what our alternative uses are for capital, when you look at our cost of capital, we are not the most efficient program to go in and start and fund and build organically a Robotaxi business. So we said we were going to take those resources, fold them into GM and ultimately focus on improving personal autonomy and achieving personal autonomy. So whether it’s improving Super Cruise on the evolution to get to L4, That’s always been our commitment. So what I would say is Sterling has come in and done a great job and look forward to you all hearing more from Sterling as he continues to get his feet underneath him. But you know, there was a lot of sort of talent volatility in that play, and I think, you know, people are, getting behind their understanding division and where we’re going, and, and that’s resulted in a few people, potentially who have said, wasn’t going to stay and now I’m going to stay, etcetera.

That’s not uncommon. I don’t necessarily think it’s newsworthy. Perhaps it was because it was Cruise and GM, etcetera, but these things happen all the time. But what I will say is we’ve got a lot of momentum. We are absolutely committed to making sure that we continue to evolve personal technology in the vehicles and autonomy is one of those things that is going to be really important in the future.

Ryan Brinkman, U. S. Automotive equity research analyst, JPMorgan: Great. Thank you. We are out of time. So please join me in thanking Paul for the excellent presentation.

Paul Jacobson, Executive Vice President and Chief Financial Officer, General Motors: Thank you all.

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