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Good morning, and welcome to the General Motors Company Fourth Quarter and Calendar Year 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded Tuesday, January 28, 2025. I would now like to turn the conference over to Ashish Kohli, GM's Vice President of Investor Relations.

Thanks, Amanda, and good morning, everyone. We appreciate you joining us as we review GM's financial results for the fourth quarter and calendar year 2024. Our conference call materials were issued this morning and are available on GM's Investor Relations website. We are also broadcasting this call via webcast.

Joining us today are Mary Barra, GM's Chair and CEO; and Paul Jacobson, GM's Executive Vice President and CFO. Dan Berce, President and CEO of GM Financial, will also be joining us for the Q&A portion.

On today's call, management will make forward-looking statements about our expectations. These statements are subject to risks and uncertainties that could cause our actual results to differ materially. These risks and uncertainties include the factors identified in our filings with the SEC. Please review the safe harbor statement on the first page of our presentation as the content of our call will be governed by this language.

And with that, I'm delighted to turn the call over to Mary.

Thanks, Ashish, and good morning. I'd like to begin by thanking our employees, dealers and suppliers for helping us deliver another outstanding year.

A year ago on this call, I said that we were optimistic about 2024, given the choice we would offer customers, including industry-leading full-size pickups, new and redesigned SUVs and an expanding portfolio of EVs. And I stressed that we will be focused on execution and profitability.

I'm proud to say that our full year revenue grew by 9% last year. We were #1 in the U.S. in retail, fleet and total sales. We grew our market share, and we distanced ourselves from the industry's pricing incentives and inventory pressures.

In our growing EV business, we produced and wholesaled 189,000 vehicles in North America. We doubled our market share over the course of the year as we scaled production. And our portfolio became variable profit positive in the fourth quarter. This combination of compelling vehicles and high volume and growing segments, strong execution and discipline led to record EBIT-adjusted, record adjusted automotive free cash flow and record EPS diluted adjusted.

At the same time, we continue to allocate capital consistently and in a balanced manner. We invested to drive the business forward, and we improved our balance sheet.

Our employees and owners are all sharing in our success. I'm pleased to share that our global salary team earned strong performance bonuses, and our U.S. hourly employees once again earned the industry's highest profit sharing totaling more than $640 million. That's a record payout of up to $14,500 per person, equal to more than 2 months of extra pay for average UAW-represented team member. Investors in GM also earned a 50% total return, and we ended the year with fewer than 1 billion shares outstanding, a goal we reached ahead of plan.

Throughout the year, we also addressed challenges with resolve. In China, we have been working with our JV partners to drive better performance in the market by rightsizing the businesses, launching new products, reducing dealer inventory and building to demand. We are making good progress and reported positive equity income for the fourth quarter before restructuring costs.

To improve year-over-year results and make SGM sustainably profitable, they will be implementing a wide range of restructuring initiatives this year that include reducing capacity to operate within utilization levels of about 80% or better. We are in the process of finalizing details with our partner. Importantly, we believe SGM has the resources to complete its restructuring without additional capital from GM.

As you know, we also stopped funding robotaxi development at Cruise. We have a proposed restructuring plan that will refocus our autonomous driving strategy on personal vehicles. We expect to see a run rate savings of about $1 billion on an annualized basis by ending robotaxi development. And we look forward to acquiring the small number of Cruise shares we don't own in finalizing the restructuring plan later this quarter.

The momentum we have in both ICE vehicles and EVs will drive our [indiscernible] once again in 2025. For example, the redesigned Chevrolet and GMC full-size SUVs that we launched late last year are supporting even stronger ATPs than the outgoing models, thanks to the refined exteriors, all-new interiors and new models like our GMC Yukon AT4 Ultimate.

We also have a full year of our new compact and midsized ICE SUVs, which include some of our highest volume nameplates like the Chevrolet Equinox, Chevrolet Traverse and GMC Acadia. They are great examples of our strategy to pair bold designs to drive higher ATPs with discipline and capital efficiency to drive better profitability.

As Mark shared at Investor Day, we're seeing EBIT improvements in the 10 percentage point range on some of these vehicles. Cadillac is also very well positioned. Last year, Cadillac had its best full year sales since 2016, thanks to the ongoing success of the Escalade with its refined exterior and stunning new interior, our high-performance V Series and Blackwing models and the LYRIQ, which is now the country's best-selling midsized luxury electric SUV according to S&P Global Mobility.

This year, we expect the Escalade IQ, OPTIQ and VISTIQ to further grow GM share of the luxury EV market. EV adoption has been higher in luxury segments. We are being guided by the customer, and we'll continue to be. And these new Cadillacs stand out with their beautiful designs, advanced technology and customer-focused innovation.

Here are just a few examples. The OPTIQ, which is scaling now and the 7-passenger VISTIQ, which launches in the spring, will be the first Cadillacs to offer AKG audio systems with Dolby Atmos that reveal more depth, detail and clarity in the customer's favorite music. All Cadillac EVs now come equipped with vehicle-to-home capability, allowing them to power a home during outages using a GM energy powershift charger and our vehicle-to-home equipment package.

And with the VISTIQ, Cadillac will be the first GM brand to roll out a new ADAS feature that builds on adaptive cruise control and lane centering. The new feature allows an attentive driver to engage the system and travel on millions of miles of roads with a light hand on the wheel.

Then there's the Cadillac Escalade IQ. With its presence, range, performance, comfort and technology, it's really in a class of its own. One of our New York area Cadillac dealers, who has decades of experience with other luxury franchises, says it's the most impressive vehicle he has ever driven. Customers are noticing. Since production began late last year, we've sold more than 1,500 Escalade IQs.

2025 will also be a year of rapid growth for Super Cruise across all of our brands. Our customer-focused strategy with Super Cruise is to continuously refine and expand its capabilities to make it indispensable. This is how we are setting the stage for a recurring high-margin revenue streams from subscriptions.

Since we launched Super Cruise, we have added hundreds of thousands of miles of new roads to its network and introduced features like automatic lane change and hands-free towing. This has helped make about 60% of our roughly 360,000 Super Cruise customers regular users. This year, we expect our Super Cruise equipped fleet to roughly double in size.

Subscription revenue is becoming an increasingly important part of the Super Cruise opportunity, now that our first customers have completed their 3-year trial. Last year, we saw subscription attach rates of about 20% off of a base of roughly 18,000 vehicles.

This year, an additional 33,000 vehicles will end their trial period, and we target to more than double subscription revenue. Within 5 years, we expect to approach about $2 billion in total annual revenue from Super Cruise.

These are just a few of the many exciting opportunities ahead of us, and we look forward to sharing more details with you as we go forward. Before I turn the call over to Paul, I'd like to mention the projects we're pursuing with Hyundai. As Hyundai has shared, our teams are moving quickly to finalize the first of several product and purchasing agreements that are designed to help us move faster, lower cost and become more capital efficient. The collaborations will be global in nature, targeting specific segments and areas of the business, and we'll be sharing more details very soon.

I would also like to address the uncertainty around public policy, trade and regulation. It remains to be seen how things will evolve. So our 2025 guidance Paul will share in his remarks does not take into account future policy changes.

We have been both proactive with Congress and the administration. And in our conversations, we have stressed the importance of a strong manufacturing sector and American leadership in advanced technologies.

It's clear that we share a lot of common ground, and we have appreciated the dialogue. We believe the President wants to use policy and regulations in ways that will strengthen, not harm domestic manufacturers like GM. We look forward to continuing to work with the President and his team as they consider how to strike the right balance on these important issues.

With respect to possible tariffs, we are working across our supply chain logistics network and assembly plants so that we are prepared to mitigate near-term impacts. Many of these actions are no cost or low cost. What we won't do is spend a large amount of capital without clarity. Whatever happens on these fronts, we have a very broad and deep portfolio of ICE vehicles and EVs that are both growing market share. And we'll be agile and execute as efficiently as possible.

With that, I'd like to invite Paul to walk you through our results and 2025 financial guidance, and then we'll move to Q&A. Thank you.

Thank you, Mary, and I appreciate you all joining us this morning as we summarize another year of strong financial results for GM. Our full year EBIT-adjusted of $14.9 billion was at the high end of the range we guided to in October driven by a particularly strong November and December. This resulted in $10.60 of EPS diluted adjusted, up 38% year-over-year and partially aided by a significantly lower share count as we continue to return excess capital to shareholders.

We increased our full year revenue by 9% to $187 billion with a 6% rise in wholesale volumes and ATPs above $50,000. Throughout the year, our incentives as a percentage of ATP steadily improved, starting the first quarter nearly 1 percentage point below the industry average and ending the year at the lowest incentive levels in the industry and more than 3 points below average.

Our strategy of disciplined pricing and incentives continues to separate us from most of our peers. And at the same time, we are growing market share. Our U.S. market share for the full year was up 30 basis points to 16.5%, and we ended the year on a positive note at 17.5% in the fourth quarter, the highest since the fourth quarter of 2018, excluding the impacts of the pandemic in 2020.

Our performance was fueled by strong EV growth and a refreshed ICE portfolio. ICE dealer inventory ended at 53 days, at the low end of our 50- to 60-day year-end target driven by strong sales and appropriately balancing our production to demand.

And we are also making significant progress on EVs. In 2024, we wholesaled 189,000 EVs and delivered more than 146,000 units. Recall at the end of the third quarter, we had around 100 days of EV dealer inventory so that customers would have the opportunity to see and experience our products. This strategy paid off, and we successfully reduced this to 70 days by year-end as our EV deliveries rose.

As Mary highlighted, a big focus of the company has been improving EV profitability. We achieved variable profit positive on our EVs in the fourth quarter through continued manufacturing scale and efficiencies from higher production, improved material costs, including lower cell costs from scale and performance and expansion of our EV portfolio with the launch of the Cadillac Escalade IQ and Sierra EV.

There's more work to achieve our goal of a positive EBIT margin, but we believe in good progress. For instance, the Equinox EV has seen a $1,000 improvement in variable profit since its launch in just the second quarter of last year.

Next, I'd like to discuss capital allocation. We continue to balance 3 key elements: investing in our business, maintaining a strong balance sheet and returning excess capital to our shareholders.

First, we believe that the amount of capital we are investing back into the business is appropriate to efficiently support long-term profitable growth. Our forecasted capital spend in 2025, including battery JV investments, remained similar year-over-year at $10 billion to $11 billion.

Second, we paid off $750 million of senior notes in the fourth quarter ahead of their maturity in 2025. We have another $1.75 billion maturing later this year. We will assess refinancing opportunities or debt extinguishment as we progress throughout the year.

Third, we returned a substantial amount of capital to our shareholders during 2024. We generated full year adjusted auto free cash flow of $14 billion and returned nearly 55% of this free cash flow or approximately $7.6 billion.

In the fourth quarter, we completed the ASR retiring an additional 25 million shares. We also repurchased 87 million shares in the open market during the quarter at an average of $53.84 a share. This resulted in us ending the year with an outstanding share count of 995 million, achieving our goal from early last year to reduce our share count below of 1 billion shares earlier than scheduled.

On a diluted basis, this represents 1.02 billion shares, a decrease of 28% since the end of 2022 and a decrease of 12% compared to the end of 2023. Moving forward, we expect to continue returning excess capital to our shareholders and further reducing the share.

Getting into the fourth quarter results. Total company revenue was $48 billion, up 11% year-over-year driven by higher wholesales and consistent pricing. We achieved $2.5 billion in EBIT-adjusted, 5.3% EBIT-adjusted margins and $1.92 in an EPS diluted adjusted.

Completed the net $2 billion fixed cost reduction program. Compared to the end of 2022, we realized $900 million in lower marketing spend and $700 million in lower automotive engineering costs. The remainder was realized through rationalization across some of our earlier-stage initiatives, which was partially offset by higher depreciation and amortization.

A quick update on our EV inventory valuation allowances. We ended the year with a balance of $1.4 billion, which includes a small reduction in the fourth quarter. We expect further reductions as we move through 2025, but the pace and magnitude will be dependent on EV demand.

We achieved adjusted automotive free cash flow of $1.8 billion during the fourth quarter, up $500 million year-over-year primarily driven by EBIT performance. North America delivered fourth quarter EBIT-adjusted of $2.3 billion, up $300 million year-over-year. We benefited from the absence of 2023's fourth quarter spike in inventory adjustments. Additionally, the fixed cost program contributed to offsetting higher labor and warranty costs. While we remain disciplined on pricing, we faced a slight headwind from full-size truck incentives.

I want to take a moment to emphasize the strong full year North American margin of 9.2%, well within our targeted 8% to 10% range. We are executing well on our product launches, along with being disciplined on cost, pricing and inventory levels. Our broad and refreshed product portfolio is a key factor driving these strong results.

In the fourth quarter, we achieved a margin of 5.8%. This included certain discrete items, including breach of warranty and legal reserves, which roughly impacted margin by 1.3 percentage points.

I'd now like to discuss the continued higher warranty costs, which include the initial product warranty accrual, recall campaigns and breach of warranty exposure. Despite our success, we know we have an opportunity to improve our results by aggressively targeting our warranty expense.

The first priority is always our customers focusing on parts availability. At the same time, the team is actively working to tackle the root cause of issues as they arise. Our commitment starts with the initial quality of our products, an area where we are a leader in the industry.

We've achieved a significant reduction in claims with a decrease in the U.S. of over 30% since 2018. However, this benefit has been more than offset by a 100% increase in the cost of repair driven by both parts and labor inflation over the same period.

Rest assured, we remain committed to finding ways to mitigate inflationary pressures and navigate the strict regulatory and legal landscape. We are optimistic that our intense focus on driving down repair costs and improving quality will reduce our warranty costs over time.

GM International delivered fourth quarter EBIT-adjusted of $200 million driven by strong execution and tight cost controls in South America and the Middle East along with positive China equity income of $17 million, excluding the restructuring charge. The team in China has done a great job of reducing inventory with SGM's inventories down over 60% from the end of 2023. They have implemented effective cost reductions and have been focusing on enhancing product competitiveness, which helped fourth quarter sales increased 40% sequentially versus the third quarter.

We recorded a $4.1 billion special item in our auto China [indiscernible] income, approximately half of this related to an impairment while the rest is connected to various restructuring actions we have taken so far in China. It's important to note that these charges are not expected to require any capital from GM as the joint venture has sufficient cash to cover these costs.

We believe these actions, along with a comprehensive product launch plan in 2025 that ensures at least one NEV option per product program, will help us achieve our target of the China business returning to profitability in 2025.

GM Financial also had a strong year of profitability and capital return [indiscernible] GM. Fourth quarter EBT-adjusted was consistent year-over-year at $700 million. Higher net financing revenue offset lower lease termination gains and higher provision expense driven by increased loan origination volume. GM Financial's full year EBT-adjusted was $3.0 billion at the top of their guidance range, and they pay dividends of $1.8 billion to GM.

Cruise expenses, excluding the special items for the restructuring charge, were $400 million in the quarter, down from $800 million in 2023. As Mary said, we believe our refocused autonomous driving strategy will lead to efficiencies and a $1 billion annual run rate savings in our investment relative to the $1.7 billion we spent on Cruise in 2024. These decisions led to a $500 million restructuring charge in the fourth quarter, which was classified as a special item with approximately 2/3 being cash based.

Additionally, later this year, we plan to include the expenditures for the Cruise employees in our North America segment. This will impact our North America margin by around 50 basis points this year. However, we still expect to remain within our 8% to 10% range. It will also increase our auto fixed costs and reduce our adjusted automotive cash flow as the cash used by Cruise was excluded previously.

Moving to our 2025 guidance. We expect EBIT-adjusted in the $13.7 billion to $15.7 billion range, EPS diluted adjusted to be in the $11 to $12 per share range and adjusted automotive free cash flow in the $11 billion to $13 billion range.

It's important to note that our guidance does not account for the impact of future policy changes by the new administration, including tariffs, tax reform or other regulation changes. We do anticipate some headwinds in both volume and mix, stemming from a modest decline in ICE wholesale volume in North America as we appropriately balance [indiscernible] inventory levels. However, this will be partially offset by higher EV volume. We're optimistic in our robust product portfolio and our ability to drive market share expansion through strong ICE sales complemented by a strategically diverse lineup of EVs.

Additionally, we are planning for a similar U.S. industry year-over-year to 2024. In terms of pricing, we're assuming a decline in North America of 1% to 1.5% year-over-year to capture potentially higher incentives or a moderation in ATPs. While we are not seeing this at the moment, we believe it's a prudent way to plan our budget as we have in years past.

Offsetting these headwinds, we anticipate EV profitability improvements at the low end of our $2 billion to $4 billion EBIT year-over-year target. This improvement is based on wholesales of around 300,000 units and is predicted to come from scale, fixed cost absorption and a continued focus on cell and vehicle cost reductions.

Regarding Cruise, our guidance includes around $500 million of the $1 billion annual savings we previously discussed. This is based on our assumption that Cruise employees will be fully integrated into GM by midyear.

We anticipate other costs outside of Cruise and the EV profitability improvements to be favorable. This is mainly due to variable costs such as commodities and logistics, which are expected to more than offset headwinds from depreciation and amortization and higher labor costs.

For GM International, we expect a tailwind from restructuring the China business and are targeting profitable equity income for the full year. GM International outside of China should be similar to what was delivered in 2024.

For GM Financial, we expect EBT-adjusted to be in the $2.5 billion to $3 billion range, reflecting the targeted return for the credit risk profile and asset mix in a largely stable economic environment. We expect an increase in earning assets driven by both loan and lease portfolios.

We are forecasting another year of robust adjusted automotive free cash flow. However, we anticipate year-over-year headwinds in the range of $1 billion to $3 billion from the nonrepeat of working capital benefits realized in 2024 and primarily from dealer inventory restocking, the timing of payments for previously accrued liabilities, notably warranty and the inclusion of Cruise spend.

Capital spending is expected to be similar year-over-year and in the $10 billion to $11 billion range, including battery JV investments. We continue to strategically spend on our ICE portfolio and build flexibility into our manufacturing capabilities to maintain agility to adapt to consumer preferences between ICE and EV powertrains. Our full year EPS guidance assumes weighted average diluted share count of approximately 1 billion shares, which excludes the impact of any future open market purchases.

In closing, I want to express my sincere attitude to every GM team member. Their hard work and dedication have been pivotal in driving our strong financial performance in 2024. A relentless focus on execution, discipline and adaptability enabled us to successfully navigate a dynamic and challenging landscape. And we believe these key success factors are going to continue to support our efforts towards another promising year in 2025.

This concludes our opening comments, and we'll now move to the Q&A portion of the call.

[Operator Instructions] Our first question will come from the line of Dan Levy with Barclays.

I wanted to start with the question on the guidance. And specifically, if we could double-click on the volume assumptions. I know you're talking about headwind. But I'm wondering if we could maybe get a sense of the magnitude.

The third-party data forecasters have your North America production down 9% for 2025. I know a lot of that is just a nonrepeat of inventory build. Maybe you can just give us a sense of what type of SAAR or share assumptions you have. And then maybe if you could just comment specifically on the share. It was really strong in the fourth quarter. Is there any sustainability to that?

So Dan, thanks for the question. You are getting a little garbled at the end. I think that's the connection, but I think you were asking about SAAR assumptions for '25 and then the share uplift that we saw at the back half of the year, particularly in the fourth quarter, how sustainable is that.

So we're looking at 2025 on a SAAR basis to be fairly similar to Q -- or to 2024. I think the -- there is some speculation out there that we saw a big pull ahead in demand in the month of December, whether that was EV-driven or just consumer-driven ahead of inauguration.

I think one of the things is we're adopting a little bit of a wait and see on that. January has been really noisy as Mary had mentioned in comments this morning about both the weather, the fires in California, et cetera. So it's tough to glean whether there was a big pull forward. So we've got of projected demand to be pretty similar to last year.

On the share side, I think really proud of the team. They have done a tremendous job. And as we've said for a few years, as we have been able to ramp up EVs, we saw the opportunity to grow share in EVs and ICE, and it was not mutually exclusive.

And I think the team has been doing that. We are at a share level that we haven't seen if you exclude COVID since 2018. I think that's tremendous results. I think the team is not going to stop there. But we're going to continue to work towards that.

Going forward, I think we had -- we were projecting an opportunity or some pretty big ICE impacts from not having as much restocking. I think we're going to kind of wait and see to where demand is. We obviously do have an opportunity to build a little bit of inventory within the 50- to 60-day window that we've outlined at year-end as a result of that demand surge that we saw in 4Q. But we're going to kind of watch that. But other than that, I think a pretty similar environment in '25 than what we experienced in '24.

Great. As a follow-up, a bit of a policy question. I know you're waiting to see how everything plays out. But President Trump has said he's reversing the EV mandate as we all expect some reversal in the tax credits, perhaps some change in EPA. In this environment, can you give us a sense of how you're thinking about resource allocation toward how much overhead spend can you pull back on, just how the strategy shifts amid a potential change in EV policy?

Well, I think you've seen us over the last few years be very mindful of what consumer demand is for EVs and make decisions like we did with Orion and like the third plant that we're in the process of selling our share to LG. So we're going to continue to make decisions like that to be appropriate with our capital as we look at how EVs are going to grow. We never expect it would be a straight line.

We're also going to deploy capital appropriately to our ICE portfolio. I think we have the strongest portfolio General Motors has had in decades. We have a little bias there. But I think we're seeing that with the response in the market as well. So we're going to continue to be very efficient as we deploy capital to both ICE and EV, again, guided by consumer demand.

Our next question comes from Emmanuel Rosner with Wolfe Research.

My first question on the -- this margin exit rate in 2024. Were that sort of at the large LC and RV charges like you had last year or the strike and ATPs in the quarter, I think some investors may have expected a bit of a higher exit rate in terms of margin. I know you mentioned about 130 basis points of onetime-type items. Can you just come back and comment on the quarter performance and to what extent, I guess, what would the bridge look like towards 8% to 10% in 2025?

Yes. Emmanuel, I'm not surprised about this question. We did say in the remarks that there were 2 specific issues really around warranty and policy. One was a legal settlement on the oil consumption case, which we recorded in the fourth quarter. That will be in our 10-K.

And then the second is we've continued to see some breach of [indiscernible] as we talked about in the regulatory and legal environment. We're trying to get a little bit ahead of that just based on the trends that we see.

Those 2 items in and of themselves were a little bit more than 1 point as we talked about. That kind of puts us in line with normal seasonality. I'd also point out, remember that we had -- I think we disclosed about $300 million in 3Q. That was a pull forward of vehicles that we're expected to deliver in the fourth quarter. That benefited September and Q3 at the [indiscernible] of Q4.

And then lastly, normal seasonality. We've got 11 fewer production days just generally based on the holiday schedule. Remember, we lost a couple of days at Arlington because of the floods in North Carolina and the tragedy that impacted that community and a supplier that we had there.

So I'm not overly worked up about it. I think when you look at some of those one-off events, I think we're pretty good.

The one thing I do want to say because I know we've received some inbound questions. EV mix wasn't really a meaningful factor in that 4Q. It does have a downward impact, but it was really outweighed significantly by those pressures that I just highlighted. So that hopefully gives a little bit more confidence in the construct going forward for 2025.

I appreciate this color. Second question is around capital allocation. So it was good to hear you restate the capital allocation [indiscernible]. And it seems like based on the guided CapEx and sort of other actions, it would leave again some considerable amount of capital returned to shareholders. I think you're probably through most of your existing authorization for buybacks. So what would be the next step here?

Well, Emmanuel, thanks for the question. We're really proud of the strong free cash flow generation that we had in 2024, and we expect another year of very strong free cash flow.

We're going to continue to follow our capital allocation policy. So we'll be working with the Board on the next phase, and we'll provide updates as we move forward. But you can look to us following the capital allocation framework as we've done this year or I should say done in 2024.

Our next question comes from Joe Spak with UBS.

Just one quick one on the quarter and then a bigger picture one. GM pricing in the quarter, I think when you showed some of the pricing data and the sales release, it looked like things are really strong, accelerating through the quarter. Incentives are low yet -- and the factor was still a slight year-over-year headwind. Was there any incentive accrual or anything in the quarter that weighed on that?

And maybe related to pricing also, the 1% to 1.5% for 2025. Does that include -- is that overall like including the EV portfolio? And do you expect some pricing on -- pressure on EVs?

Yes. Joe, thanks for the question. What I would say is there is a little bit of noise in the sort of year-over-year interplay in the accrual on the inventory for incentives. But commercially, I think everything that you mentioned is right.

It was a strong year for pricing across the board and strong demand in the fourth quarter, and we expect that to continue going forward in pricing. For the 1% to 1.5%, you'll notice that, that's down a little bit from the way we've haircut in prior years. I think that's a statement that we expect a little bit more stability as our competitors have worked down some of their higher inventory balances. So we expect a year of a little bit more stability, but down 1% to 1.5%, I would remind you, is just kind of the way we look at a planning assumption. It's not necessarily in our expectations, but it's how we run the business and how we guide the business going forward so that we can adjust if we see that but not necessarily an indication of the commercial market.

Like I said, January, the pricing has been good. In fact, I think ATPs were up a little bit. Incentives were down a little bit. But there's just so much noise and we're just -- we're being cautious until we get a little bit more smooth data from the marketplace just because January was so noisy.

Okay. And just going back to policy. I know you're not going to do anything without prudence here. You're going to take some careful evaluation and have profitability and capital in your mind. I just was wondering if you could spend a minute talking about the flexibility you have in your footprint. I mean we know about the ICE, EV flexibility because you showed us that in Tennessee, but I'm curious a little bit more about just shifting mix of production between plants, especially on the full-size vehicles which are produced across North America if there are any sort of near-term actions on tariffs, et cetera?

Yes, Joe, it's a good question. And we've been studying multiple scenarios. But from a Mexico perspective, we do build trucks in Mexico and in Canada and in the United States. And so we have the capacity in the United States to shift some of that.

We also sell trucks globally, and so we can look at where the international markets are being sourced from. So there's plays that we can do on that perspective to minimize the impact if there are tariffs either on Canada or Mexico.

We're encouraged that President of Mexico has indicated that they are working and having conversations to take the steps necessary that the Trump administration is looking for, specifically around immigration and some other things to avoid the tariffs. But we're doing the planning and have several levers that we can pull.

Our next question comes from John Murphy with Bank of America.

Sorry to stay on the mundane topic of policy. But just trying to understand the baseline of where you're starting where you're assuming policy doesn't change. I mean Trump through the unleash American energy executive [indiscernible] essentially canceled CARB's waiver so they can't execute on the ACC2. Was your understanding that you do not have to comply with CARB's ACC2 and get to 35% of your volume is EVs in California and the other states? I mean just what is your interpretation there? And how are you going to operate going forward because obviously, that ratchets up to 45% next year and then 100% by 2035.

Yes. Our message to President Trump and the administration is that as EV requirements are changed, we've got to make sure that the stringency is as well. Frankly, even today's environment before anything changes, what's happening from a CARB perspective across multiple states is just not where the customer is at.

And we've been engaging at the state level. Our dealers have been engaging at the state level. And so there's a tremendous amount of work going on in that.

As it relates to what specifically has happened through executive order, I think there's still some more policy work that needs to be done. So we can comply and make sure we're not in a penalty situation, which we're watching carefully.

But I don't disagree with you that I think there's directional change coming. It's just -- it's not completely done yet, but we're watching and providing our input at the state level and the federal level.

But your understanding, Mary, is right now that the 35% requirement that would have been put in place is actually not in place at the moment, right, because of that executive order? Is that how you guys are operating? I just want to make sure I understand that.

Actually, no, because I think there's legislative or legal changes or policy by different organizations that have to align with that. We're very clear on the direction. But I don't think we can as an auto manufacturer now can assume that, that is gone at this precise moment.

Yes, very uncertain. Just one last one, Mary, quickly on the [ 80 ] commitment. Obviously, there's a lot of costs that are being poured across from Cruise into the company, so you're getting some good savings, but you're still spending a lot of money on ADAS and level 3 to ultimately level 4 and 5 autonomy. Are you still having an internal commitment to developing level 4 and 5 on your own and sort of a build? Or is there the potential that you think might need to go out and buy just given the way that you're going after this at the moment?

Well, John, it's a great question. And I think even with what we saw yesterday, there's so much happening from an artificial intelligence perspective of how we move forward. We do and have built capability inside General Motors.

Obviously, our plan that we're working to execute with Cruise would strengthen that, much of what we can do. There may be strategic partners that we also work with on aspects of this. And so we want to be leaders in level 4 autonomy. And we think we're going to continue to evaluate the landscape to do that capital efficiently as possible, but still maintain a leadership position and also the strong relationship with the customer because we think that this is game-changing for our industry.

Our next question comes from Adam Jonas with Morgan Stanley.

I just wanted to follow up on line of questioning around autonomy. I think you said you had 360,000 enabled vehicles with Super Cruise on the road, and you expect to double that in 2025. And that you're moving to -- from a foundation or moving to a foundation and end-to-end approach training your massive data sets.

Can you tell us how moving to end-to-end might change your spending how you approach compute costs? You alluded to, Mary, working with strategic partners. I think that resonates too, but maybe elaborate a little further on what that might mean to the bottom line or how you're allocating capital over the next 12 or 24 months?

And then -- and also I assume most of those 360,000 units are ICE vehicles. So I'm wondering if in your answer you can include, is there any significance or difference, disadvantage, if you will, of collecting data from nonsoftware-defined ICE vehicles versus your completely new architecture kind of EV architecture vehicles for training?

Well, just -- thanks, Adam. And from the last question, we can collect information. Of course, we're following all the appropriate policy guidelines and rules that we have within General Motors to make sure that we treat customers' data appropriately.

But we can anonymize the data and leverage it to not only improve the performance but to improve the safety. And we're really proud of where we are with Super Cruise with our safety record and the fact that we have some features like [indiscernible] that no one else has.

We're going to continue to build on those. I mentioned something is coming as an improvement from a driver assist technology yet this year. And we're going to continue, and I think we can accelerate that if we are able to execute our plan to incorporate the great talent that we have at Cruise for getting Super Cruise in level 3, level 3 plus and beyond.

When we talk about -- in our forecast, you asked for the next 12 to 18 months. I think what we shared of savings that we'll see from not pursuing robotaxi of $1 billion on an annualized run rate, that kind of captures and within the spend that we have is what we think we need to spend from a compute perspective as kind of part of the operating budget.

So we're going to continue to evaluate it as we saw yesterday, and I mentioned that there's so much change that's happening in this space right now. Anything that we do to be more efficient with the spend, of course, we're going to seize that opportunity. But we remain committed to [indiscernible] because we do think it has such a dramatic impact from a customer experience perspective for the better and actually changes the margin profile of the business as well.

Just as a follow-up on China. Despite the recent challenges that you've addressed proactively, GM does have decades of experience in the market, and you have many billions of invested capital, lots of people and capacity still in place in IP with your JV partners.

President Trump has been open to foreign firms participating in the U.S. as long as they make products in America, if I'm paraphrasing accurately. Do you see scope for GM to help your existing or even new Chinese partners kind of gain access to the U.S. using your existing onshore capacity and distribution capability?

I want to see how you'd approach that maybe if not so relevant in the next 6 or 12 months, but longer term, just given your decades of experience in that market and the relationships that you've built there.

Yes. Adam, what I've always said broadly on [indiscernible] across the board is give us a level playing field and let us compete and win based on the strength of our products, the technology, design, loyalty, et cetera. I think what's happening right now with the overcapacity in China and what's happening around the globe and the subsidies that are occurring, we're not any close to a level playing field.

So I also think we have the opportunity, as we mentioned last year, we grew both ICE and EV share. And so I think we're doing a good job of leveraging our capacity that we have in North America. That's where we're going to stay focused because I think that's what's right for the long term of the industry.

I think we all have to get focused on not only where is the vehicle final assembly, where is the supply chain coming from for all the parts, including battery raw materials, but also where is the IP developed because understanding where that research and development is done, as I mentioned earlier today in some of my media spots, it's very important from an auto technology, not only for manufacturing in this country from an economic security perspective, but a lot of the technology as it relates to national security.

So I think you have to factor all those issues in. But right now, I'm focused on leveraging the capacity that we have with General Motors and our opportunities to grow.

Our next question comes from Chris McNally with Evercore.

Yes. Just the question's around it seems -- Paul, you made it clear that the guide for policy, particularly on the EV front, it's sort of status quo. That's clear. Could you just go through then if production is still 300,000 units or wholesale 200,000 units, what are the specific drivers to the low end of the range already? I mean $2 billion versus the $4 billion, assuming no change in policy.

Yes. Thanks, Chris. So we -- when we talked about the journey towards profitability, we first highlighted that back in November of '23, we talked about scale being the most important driver in the short to medium term and then battery cost improvements and other vehicle cost improvements starting to kick in after that.

Since that disclosure and certainly what we saw throughout 2024, where we were talking about 200,000 to 300,000 units and came in just a touch below 200,000 but still achieved our variable profit positive. The volume trajectory and the growth and therefore the realization of the scale benefits is coming in a little bit slower so -- and lagged in there.

So with 300,000 units, we think that's a good trajectory based on what we've seen over the last, particularly, 6 months as we picked up share in EVs, and the vehicle mix is continuing to get a little bit richer with the Escalade IQ, et cetera. We think we can still deliver the low end of that $2 billion to $4 billion of savings improvement, even though it's on lower volume than where we thought we would be more than a year ago and certainly throughout last year.

So going forward, we're going to continue to watch that. As many people have asked here on the call, what happens to consumer tax credits, what happens to IRA, et cetera. There's a lot of moving parts out there.

What I would say is whether we're talking about IRA or tariffs, we've got multiple playbooks that we have been working on, make sure that we can respond or even anticipate some of those moves. Some of those are very low cost, and we can be very flexible with them. Some of them are bigger deals and bigger transactions like as Mary mentioned, the transaction with LGS and [indiscernible].

We've got ways to be able to respond to that. The reason that we guided to the status quo is because there are really infinite permutations on policy, and we didn't want to get into advocacy in our guidance. So this is why we've done it.

But rest assured, we've got plans in place. And we're continuing to work proactively with the administration and with Congress on what we think are the right things to do, which is preserve American jobs and preserve American innovation. And I think we're a good actor in that space.

Super clear. And then just the follow-up is on the composition of '25 wholesale growth. So it sounds like you're guiding wholesale slight down, obviously, EV wholesale up 100,000. You didn't give a specific number, but you mentioned ICE down.

One of the things I'm trying to reconcile is the wholesale growth last year was plus 10%. Sort of production mid-single-digit sales was plus 4. Was some of that wholesale growth actually EV or inventory in channel so that is one of the issues on the mix in Q4. Just anything you can add around the wholesale growth above production in the second half of the year?

Yes. So keep in mind, last year, I think we ended at about 49 days of inventory, if I remember correctly. So we've had a fairly sizable build going in and to be able to keep that 50- to 60-day target. As you know, coming into the third quarter, we were sitting at about 67 days, and we were able to work through that with the demand that we saw in the fourth quarter.

So that's the overall assumption is that wholesales would be down a little bit because we didn't have that opportunity to build. What I would say is we do have a little bit of an opportunity to build that's not reflected here. We're being cautious about that just until we see the demand outcome and what some of the market going into 2025 is going to be.

Like I said, I would have probably rather had a cleaner January month to be able to make some of those calls, but there's just been so much noise with the retail environment with everything going on weather-wise, inauguration, et cetera, that it's just a little bit too soon to call that build. But should we see consistent demand as we would expect, I think there's an opportunity to take some of that ICE wholesale volume up.

Our next question comes from Tom Narayan with RBC.

On the North American pricing guidance down 1% to 1.5%, you're guiding for ICE volumes down, higher EV volumes. I think EVs would come in at higher than ICE pricing. So it presumably means ICE pricing comes down below the 1% to 1.5% guidance. If so, what level of pricing do you see the ICE portfolio in your '25 guidance?

I mean thanks, Tom. I keep going back to this. When we talk about the pricing assumption, it's really a combination of ATP and the incentive environment. And what we found that has worked well for us in our internal planning and the setup is to assume that we see a little bit of pricing pressure going forward because it's easier for us to react.

So what I would say is, yes, we would expect a consistent ATP environment from what we've seen going forward. But we've modeled in the risk or the assumption that there's some incentive increases going forward, whether that's market-driven or demand-driven, et cetera. And if we don't see that, I would expect that we'll outperform that assumption as we have in years past.

Got it. And my follow-up on Super Cruise, I appreciate the comments on the adoption rate, et cetera. But wondering to what extent do you think the regulatory kind of system is a support mechanism for level 2 plus, level 3? Is this something that could ultimately be the real catalyst that pushes Super Cruise or level 2, level 3 down the road? Or do you see this as just being consumer demand-driven?

We see it being consumer demand-driven. I mean our customers -- the bulk of people who have Super Cruise on their vehicles use it on a regular basis. I think it's over 60%. And especially as we get newer and newer or I say new features, it is definitely something where when people arrive at their destination after using Super Cruise, they're more rested, which is why 80% of our customers say they either wouldn't buy a car without it or they strongly would desire it to be on their next vehicle.

And we're going to look at Super Cruise being standard on our EVs from a Cadillac perspective, the Cadillac or the Escalade IQ, VISTIQ, OPTIQ, LYRIQ. So this is all, I think, opportunity for us for more people to experience Super Cruise and the way we have safely deployed this technology. So I'd say it's very much consumer-driven.

Our next question comes from Mark Delaney with Goldman Sachs.

The $2 billion to $4 billion of EV savings year-over-year the company was initially targeting for 2025 was driven about half by volume-related drivers. So as you're thinking about the $2 billion and expecting some EV wholesale growth, can you give us a bit more of a sense of how much of that $2 billion is coming from volume and how much is from other factors like materials and battery savings? And then to the extent there are changes in the policy environment, any sense you can share around what that might do to your EV volumes going forward?

Yes. Mark, what I would say is it's probably about evenly split between scale benefits and other initiatives on cell cost efficiencies. We're continuing to ramp up cell side too as we talked about at Investor Day. And that's going to provide us some efficiencies going forward.

There are some material cost savings that we're starting to bake in, et cetera, but probably split about 50-50 between there. I think any policy changes -- as I said before, there are literally infinite iterations that you can go through in terms of demand, value of credits, where we are on production tax credits, et cetera.

So that's why we've built in the assumption that this is kind of status quo. We'll react to that which we can, but we're going to continue to watch this. But this is our best estimate on where we are.

And I think that's a good journey. Long term irrespective of what happens as Mary has reiterated many times, this is about providing choice to consumers. And many consumers as we've seen in the share data are opting for our EVs. As a matter of just corporate strategy, we've got to work, and we've got to be focused on making sure we get those to profitability. And we're on that journey.

And I think the team is making good progress for that. And it's going to require a little bit of time to get there depending on how quickly this scales up. But I think we've seen tremendous improvement already, and we're anticipating more of that in the future.

Well, and I would also just add that if there are factors that cause EV demand to lessen, we have a great ICE portfolio that we'd happily ramp up production beyond what we have in our current plans for this year. So again, that's, that flexibility that Paul talked about.

That's very helpful. And then can you just be a bit more specific around the assumptions for EV pricing? You spoke already around how you're expecting it for GM in total. But it'd be helpful to have a better sense of the baseline assumptions around EV pricing. And if the industry pricing does get more competitive to the extent there are policy changes that could help us to better think through what EV profitability year-over-year may move to you to the extent there is more difficult pricing.

Yes. I think we're assuming fairly consistent pricing on EVs from what we've seen. And there is a lot of, what I would say, irrational incentive behavior out there in the market. Depending on what policy changes happen around stringency regulations, et cetera, we might see some of that incentive behavior tamped down because it's clear that people are out there selling EVs really for the sole purpose of compliance.

So I think there are a lot of changes going forward. We're continuing to just keep our head down, focus on building great products. And as you've seen from the chart that we included in the earnings deck, I would put our incentive discipline and our go-to-market strategies up against anybody in the industry in terms of the type of performance that our team is driving.

Our last question comes from Ryan Brinkman with JPMorgan.

Thanks for taking my question, which is on China. It looks like you gained some pretty solid sequential traction there with sales rising 40% from 3Q driven by inexpensive EVs such as the Wuling [indiscernible]. What's just the profitability, though, of vehicles such as the [indiscernible] or the Hong Guang Mini EV look like?

I'm just curious, what are the ways you can capitalize upon these high-volume but low-priced and not presuming low-profit vehicles. You maybe benefit on the financing side or expect to benefit over time from aftermarket parts and services?

Some other automakers have mentioned similarly priced vehicles in China might be unprofitable, but they can then make money when exporting them to higher-cost markets. So it looks like some good commercial traction, but just curious your thoughts on the best way to take advantage of this brighter area of the China sales picture.

Sure. Well, Ryan, we don't talk about individual product profitability, but I would say that our joint venture with Wuling is -- Wuling is known to be an incredibly efficient and low-cost producer and to do that well. If you look at their whole portfolio, it kind of is in that space.

So I think there's -- they're one of the leaders, I think, in doing that well before some of the other growth. And those are vehicles that are very popular with consumers as well.

As you mentioned, there's all opportunities in addition to the profitability on the vehicle to continue to drive favorability. So beyond that, I can't comment on the specific profitability.

We do work with Wuling and source some vehicles from Wuling to other markets, international markets, working with us to make sure the product meets the standards for each of those different countries. And we've been successful doing that.

Okay. Maybe lastly, a quick follow-up on your comments regarding capital allocation. I'm curious how some of the uncertainty surrounding regulation, particularly tariffs, could affect your thinking there? Might you potentially want to operate with more than a targeted $18 billion of gross cash for a time? Or are you thinking any differently about the planned cadence of repurchases in 2025 until we gain greater clarity maybe as soon as April 1 as per one of the executive orders signed last Monday? Or how are you thinking about this?

Yes. Ryan, what I would say is that our stated liquidity goals alongside our revolving credit facilities are a target that includes a whole host of risks and things that might happen to us. And when you look at the liquidity we had going into COVID, for example, that was enough at the time to get us that time going forward.

So we're not anticipating having to build cash in anticipation of a big draw. And I would say it's going to be continued business as usual. We're going to have to execute going forward. As others mentioned, we do have still a little bit of capacity left under the buyback, and we're going to continue to work with the Board and allocate capital. But our free cash [indiscernible] is strong. And we expect to continue to allocate that and ultimately share that with our investors.

I'd now like to turn the call over to Mary Barra for her closing comments.

Thank you. And I want to close by thanking our team once again for their strong execution in 2024, which has set the business up for continued success in 2025.

If you step back and look, we have a broad, deep and compelling portfolio of internal combustion engine vehicles and EVs to meet customer demand. And it keeps getting stronger with the strength of our products.

We continue to innovate, and we're growing technologies like Super Cruise for today and L3 for the future even moving to L4. We're profit-focused, and we're capital disciplined with strong margins, cash flow and a healthy balance sheet.

And I want to remind everybody, we have demonstrated our agility many times over the last several years. And although there's a lot of uncertainty with some of the uncertainty, there's pluses in the column as what -- not just negatives. And we intend to capitalize on all of that. And that's why I believe that 2025 is a year that is full of promise for General Motors. And I look forward to sharing our progress with you and demonstrating once again how much the General Motors team is capable of delivering. So thank you again for joining, and I hope you all have a great day. Stay safe.

That concludes the conference call for today. Thank you for joining.