General Motors Company J.P. Morgan Automotive Conference

Yeah. Thanks for having me, and it's great to see such a great crowd here and a beautiful building. First time in the building. I was telling Rajat, I missed that little auditorium with the tables and the microphones on there. Spent a lot of time in that room, but it's great to be here with everybody today. Just a couple of opening comments. Coming off our, Paul, as you know, the first half of the year has gone remarkably well for us. We were able to raise our guidance for the full year. That, I would say, is fairly consistent with what we expected going into the year, aside from the IEPA refund and then a little bit of the outperformance.

But I think when you look seasonally between the first half and the second half, as we've talked about, there's some pressures that are adversely affecting the second half of the year. But I think everything really is pretty much in line with where we thought coming into. Consumer's held up remarkably well across the board. That's true for our GM Financial captive, and we have some of our GM Financial colleagues here in the room today. But also on the new purchase side, and the trucks, the SUVs have held up, despite a lot of public affordability concerns and reports of affordability concerns. I think the consumer's been pretty strong for the year for us, and that's led to what I would say is just more consistent results across the board.

We have had a few announcements in the last couple of weeks, and wanted to just touch on those really quickly. First, you saw that we were able to reach an agreement to extend our joint venture in China with SAIC. We're very pleased with how that restructuring has talked about, and while China may not get back to the $2 billion annually, I hope it does, but if it doesn't, it's okay. The effect of the restructuring has made it so that we can self-fund and can be consistent profitability. We've applied a lot of the inventory discipline and a lot of the lessons that we've learned over here to that business over there, and it's performed well.

I will tell you with China having some internal struggles economically with the consumer there, we're really, really grateful that we did the restructuring when we did. I think it really good position relative to a lot of the other foreign automakers that are operating in China and really pleased and really proud of the team there, both on the GM side, but also on the SAIC side, for the hard work that they put into that. I think the business is relatively healthy considering where it was. That's the foundation for us to be able to extend that partnership and move forward together. We're excited about what the next 20 years can bring together and capitalize on what we've done.

The second announcement, you may have seen that we reached an agreement with Samsung SDI, to work on future development, but most importantly, take that battery plant in Indiana and let them have that. It's really important to note that this was factored into our second half accruals and our charges. The deal was sub at that point, which allowed us to go ahead and take that charge. There's nothing new coming out of that and very, very consistent with what we've said, which is reduce our capacity, make sure we maintain a lot of our partnerships and our relationships so that we can be there as EV demand grows, and we continue to see EV penetration grow, albeit probably much more slowly than what the market thought four or five years ago, given the changes in the government support, et cetera.

I would say no real news there from that standpoint, but it is a big step forward. What it allows us to do is consistently think about the EV restructuring as we've said from day one, which is get it behind us so that we can focus that entire value chain on tomorrow rather than thinking about yesterday. I think where you look at where we stand competitively, I think we're way ahead of all of our major competitors that are out there in terms of putting our best foot forward and looking ahead to where we can make the improvements in EV profitability and grow as the market grows. That discipline, I think, is evident in everything that we've done on the EV front. Then lastly, the purchasing commitment or a purchasing facility that we announced last night or this morning.

A $4.5 billion facility allows us to strategically, throughout the world, ramp up some inventory. What you've seen over the last several years has been disruption after disruption, whether it's geopolitical, it's act of God, acts of nature, or you've seen supply shortages, et cetera. What this does is it really gives us in an effective way, an ability to get supply chain continuity over the next few years. We think this is going to be a really important step. It'll add a little bit of cost to us on the interest line, but as you look at the facility overall, it was a really well-structured facility led by JP Morgan and Santander. We're appreciative of their partnership in working through it.

But what it will allow us to do is essentially maintain that continuity of cash flow despite the fact that we are going to build up a fairly sizable inventory, allow us to maintain production, even in the midst of some of the global disruptions that we have seen over the past few years. Really excited about that. More to come on it, but I thought that was a really well-done structure by our treasury team, our supply chain team, and through our banking. We are excited about that, and I think it is just more evidence of the forward-thinking sort of risk mitigation of the past to try to get consistently more profitability and continuity and margin performance, more stable than what we have seen it in decades past. I think more the story of what is exciting to come about General Motors. Really looking forward to the conversation.

Sorry those remarks were long, but we had a lot to cover.

Yeah, I think a lot of this gets caught up into what 6-month period are you measuring when you think about the business over a long trend. We have got a lot of transition costs, as you said, as we cut over to the new truck, which will ramp up through 2027, until we get to full capacity. But those costs as you are transferring, you are losing some volume and cut over. You are hiring people, for Orion and the onshoring work that we are doing there. There is a little bit of structural inefficiency in the short run to get to the longer run answers. So, I think everything is on track.

I think especially when you look at, and again, not looking at 6 months, 6 months, 6 months, but looking over the long run, we are transitioning to a new truck at the same time that the existing trucks in their last year of production are doing extraordinarily well. I think if you look back historically and we have challenged the commercial team to look at their past heuristics and pricing models, et cetera, you would typically see this massive fall-off in realized price as you ramp up incentives on the outgoing model. I think the discipline, the inventory, everything that we have done is just evidence that you look at this program in its last year of production. It has just done amazingly well and continues to do so.

While we are excited about the new truck and we have started to slowly reveal it and we will start to see them in showroom floors in December, we are excited about the truck platform as a whole and what this can do for 2027. But 2026 has been remarkable considering where we are in the cycle.