General Motors Co ($GM) Q1 2026 Earnings Call

Morning, and welcome to the General Motors Company first quarter 2026 earnings conference call. During the opening remarks, all participants will be in listen-only mode. After the opening remarks, we will conduct a question and answer session. We are asking analysts to limit their questions to one and a brief follow-up. To ask a question, press star then one on your telephone keypad to join the queue. To withdraw your question, please press star then two. As a reminder, this call is being recorded on Tuesday, April the 28th, 2026. I would now turn the call over to Ashish Kohli, GM's Vice President of Investor Relations.

Thanks, Denise, and good morning, everyone. We appreciate you joining us as we review GM's financial results for the first quarter of 2026. 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, along with Paul Jacobson, GM's Executive Vice President and CFO. Susan Sheffield, 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.

Thank you, Mary, and we appreciate everyone joining us this morning. The GM team delivered another outstanding quarter. Thanks to their hard work and strong execution, Q1 EBIT-adjusted was $4.3 billion, surpassing expectations even after excluding the $0.5 billion tariff adjustment. Once again, we demonstrated discipline in our approach to both pricing and inventory. In the first quarter, our US incentive spend per vehicle as a percentage of MSRP remained more than two points below the industry average. US dealer inventory ended the quarter at 516,000 units, down 6% year-over-year overall, and down 9% for full-size pickups. Even against the difficult comparison created by outsize pre-tariff March deliveries last year. While we further strengthened our leadership in US full-size pickups this quarter, leaner inventory constrained retail sales. Looking ahead, we are working to increase inventory levels of key products and believe that we can take this higher over the next several quarters while being mindful of the broader demand environment. Let me now provide more details on our strong first quarter results. For the total company, revenue was down year-over-year by approximately $400 million in the first quarter. As expected, driven primarily by lower EV wholesale volumes. ICE wholesales were flat year-over-year with higher GMI volumes being offset by lower North American volumes, which were constrained by the end of production of certain Cadillac crossovers, lower imported volumes from Korea, and full-size pickup downtime. As I mentioned earlier, our Q1 EBIT adjusted came in better than our expectations driven by solid execution across all of the businesses and good expense management. Year-over-year, Q1 EBIT adjusted was up approximately $750 million driven by the IEPA tariff adjustment, lower EV losses, an FX benefit, lower warranty expense, and emissions-related regulatory savings. These tailwinds were partially offset by a full quarter of tariffs. Let's expand on a couple of these items. In the first quarter, we incurred $200 million of incremental gross tariff costs including the tariff adjustment compared to minimal tariff costs last year. EV losses were down several hundred million dollars year-over-year in the first quarter driven by lower volumes, manufacturing efficiencies, and lower fixed costs. On warranty, we continue to expect a year-over-year tailwind of $1 billion with first quarter results improving roughly $200 million versus the prior year. Q1 results included $400 million of lower warranty liability reserve adjustments, partially offset by higher warranty rate accruals on new vehicle sales. We continue to pursue a comprehensive, multi-pronged approach to reduce our warranty expenses from product development and current production all the way to repairs at our dealers. Let's turn next to an update on our EV charges. Last year, as you know, we reassessed our EV capacity and manufacturing footprint to better align with softer demand and elimination of US tax incentives. As previously indicated, we are transitioning Orion assembly from EV to ICE production and resolving associated supplier contracts. With the exception of the BrightDrop EV van, we have not recorded impairments to our current EV portfolio. Our focus remains on improving EV profitability and scaling our business as market adoption grows, albeit at a slower expected pace than we had previously seen. In the second half of 2025, GM recorded a total of $7.6 billion in EV-related charges. This breaks down into $4.6 billion of estimated cash charges and $3 billion in non-cash impairments. In the first quarter, we took an additional $1.1 billion in EV charges, driven mainly by contract cancellations and supplier commercial claims. We expect about $1 billion of this will have a future impact. We're moving quickly to finalize claims. To date, we've already recorded around 90% of the expected total supplier commercial claim costs, and we anticipate reaching agreements in principle on most of the remainder during the second quarter. Separately, we continue to work expeditiously through right-sizing our battery supply chain with our joint venture partners. Of the total $5.6 billion EV-related cash charges recorded since the second half of 2025, $2.6 billion has been paid as of March 31. In April, we've already paid an additional $600 million, and we continue to expect most of the remaining cash flows to occur in 2026. We remain steadfast in our desire to get these claims resolved quickly and fairly for our business partners and our shareholders. Now, let's turn to a regional perspective. In North America, Q1 EBIT-adjusted was $3.7 billion with a 10.1% margin, including an approximately 1.5 point benefit from the tariff adjustment, which nets to 8.6%. We're off to a terrific start to deliver a North American margin in the 8 to 10% range for the full year. Excluding the plant sale gain, China equity income was $100 million. This shows ongoing resiliency from our prior restructuring, as well as discipline in production and inventory management in the face of softer macroeconomic conditions. GM International, excluding China equity income, delivered approximately $40 million in EBIT-adjusted despite the Iran conflict disruptions in the latter part of the quarter. We have been and will continue to divert some full-size SUVs and pickups from the Middle East back to North America, helping to alleviate low domestic inventory levels. GM Financial continued its stable performance, delivering EBT-adjusted of $700 million for the quarter. Now, let's look ahead to 2026 guidance. While the US economy has been resilient, we haven't seen any material changes to demand or mix thus far. There remains considerable uncertainty, and therefore we want to be prudent as we think about the future. Based on what we know today, and assuming the SAAR remains in the low 16 million unit range, we are raising our overall EBIT adjusted guidance to $13.5 to $15.5 billion, up from $13 to $15 billion. Likewise, we are raising our EPS diluted adjusted guidance to $11.50 to $13.50 per share, up from $11 to $13. While our execution and discipline helped drive first quarter outperformance, we now expect incremental commodity and freight costs versus our original guidance. At the same time, our FX outlook is improved from a small headwind to neutral for the full year. As a result of these changes, we are increasing our full year guidance for year-over-year commodity inflation, including logistics and higher DRAM costs to $1.5 to $2 billion. The incremental $500 million is expected to be more or less equally weighted across the remaining three quarters. In light of that, we're continuing to take proactive steps to ensure that we are efficiently allocating our resources and are ready to quickly adjust as needed. Meanwhile, our gross tariff costs are now expected to be $2.5 to $3.5 billion for the year, down from our original guidance of $3 to $4 billion because of the tariff adjustment we took in Q1. We expect 2025 self-help offsets to continue in 2026 and are pursuing additional opportunities to further mitigate these costs. Relative to our international regions, we expect China to remain profitable and to deliver results consistent with 2025. However, we anticipate some softness in our international operations outside of China due to the impact of the conflict in Iran on Middle East wholesales in particular. There is no change to our other 2026 key guidance assumptions. On price, we continue to expect to be flat to up half a percent benefiting from model year 2026 price increases. ICE volumes are expected to be flat to modestly up, though production is constrained due to the major refresh on full-size pickups, as well as the end of production of the Cadillac XT6. For EVs, we expect volumes to be lower as the market shows early signs of stabilizing around 6% of US industry sales. We continue to expect a benefit of $1 to $1.5 billion for the calendar year as we right-size our EV capacity and run at substantially lower EV wholesale volumes. The production pause at Ultium Cells means lower benefits from production tax credits flowing through material costs, but this is largely offset by positive inventory adjustments from lower cell inventory levels. On regulatory costs, we continue to expect a $500 to $750 million tailwind year-over-year. The endangerment finding repeal in February was already assumed in our plan. GM Financial continues to expect EBT adjusted in the $2.5 to $3 billion range, including accelerated depreciation on its EV lease portfolio. As part of our disciplined risk management, GM Financial regularly evaluates the estimated residual values and proactively adjusts depreciation accordingly. We're maintaining our adjusted auto free cash flow guide of $9 to $11 billion with a heavier weighting to the second half. Note that this guidance excludes the IEPA tariff refund given uncertainty around payment timing. Our capital allocation policy remains unchanged. We are committed to investing in the business, maintaining a robust balance sheet, and returning the remainder to shareholders. We believe that repurchasing GM stock at the current valuation remains one of the most effective ways to deploy capital and create long-term value for our shareholders. In Q1, in addition to distributing $164 million in dividends, we made $800 million in open market stock repurchases, retiring approximately 11 million additional shares at an average price of $75.02 per share. We ended Q1 with $19 billion of cash and $5.5 billion remaining on our share repurchase authorization. Before I open the call for Q&A, I want to highlight our OnStar digital service business. This includes Super Cruise, but also a broader suite of connected services that we highlighted earlier in the quarter. It's an under-appreciated asset that is growing and margin accretive. In Q1, we saw recognized revenue of over $750 million, up over 20% year-over-year. For the calendar year, we expect $3.1 billion of recognized revenue, up 15% year-over-year. We are on track to reach 13 million subscribers by the end of 2026, up by 1 million year-over-year, with a monthly average revenue per subscriber of around $20. Those subscribers are driving ongoing deferred revenue growth as well. In Q1, the deferred revenue balance ended at $5.8 billion, up $2 billion or over 50% year-over-year. For the calendar year, we expect deferred revenue to approach $7.5 billion, up more than 35% year-over-year. In conclusion, I have tremendous confidence in the GM team's ability to successfully navigate the evolving geopolitical landscape. Our broad ICE and EV portfolios remain key competitive advantages versus our peers, and our disciplined approach to inventory and incentives keep us agile. Just like we've done with other macro headwinds, we are proactively planning for a range of potential outcomes. We are working to identify additional profit improvement opportunities and have begun taking initial no-regret steps to moderate spending. As events continue to unfold, we will remain flexible and execute the right playbook to optimize profitability, maximize free cash flow, and continue to deliver strong returns for our shareholders. Thank you for your continued support, and with that, we can now begin our Q&A portion of the call.

Thank you. As a reminder to analysts, we are asking that you limit your questions to one and a brief follow-up so that we may get to everyone on the call. To ask a question, press star, then one on your telephone keypad to join the queue. To withdraw your question, press star, then two. Our first question comes from Itay Michaeli with TD Cowen. Your line is open.

Great. Thank you. Good morning, everybody. Maybe just to start, Paul, just a clarification on the guidance. Can you talk about the offsets from a cost perspective or otherwise to the higher commodity inflation that's allowing you to kind of raise the guidance outside of the IEPA, of course?

Hey, good morning, Itay. Thanks for kicking us off today. So, I think when you look at the inflation, the pressures that we're seeing, the offsets come in a couple different forms. Number one, we put a little bit in the bank in Q1 from our outperformance from what we've seen. Some of that was timing, but there was some good core movement on many of the staples that we've talked about, whether it's warranty or EV profitability, regulatory costs, et cetera. But then there was also the playbook that we referenced in our comments, which is similar to what we've done, whether it was tariffs or chip shortage or COVID, et cetera. That's worked really well for us. So, we're looking at doing that. What we don't want to do, we don't want to rush into a lot of things that are going to jeopardize or otherwise put at risk longer-term strategic initiatives by overreacting to what's going around us. So, we have sort of degrees of freedom in terms of what we're going to do starting with relative low-hanging fruit, maybe deferring some hiring or things like that. But overall, I think we're going to be measured about it. So, while we have this uncertainty, I think holding our numbers consistent net of EBITDA, I think is the prudent thing to do with all this uncertainty. And if things abate, then we could potentially see upside in the future.

That's very helpful. And then a bigger picture question. Great to see the progress on software and services. And how should we think about the ARPU opportunity for the company on the upcoming SDV platform in 2028 as the opportunity continues to grow from here?

Well, I think Itai, you look at the momentum we have and I appreciate you pointing it out. We've started to lean more into disclosing a lot of what's going on here and I think what we're really focused on right now is the attachment rates and delivering value to the customer. As we roll out SDV 2.0, the number of opportunities out there starts to magnify pretty significantly in terms of what the digital offerings that we can put out there. You'll hear more information about that over the coming months as we lean into when SDV 2.0 comes. But clearly, when you look at, we might have a lower average revenue per unit today than say Tesla does, but we already have significantly higher volumes, higher deferred revenue, more realized revenue. And that's where the real scale benefit comes across the portfolio. So, we think that this is a growing and soon to be really influential piece of the business going forward.

That's all very helpful. Thank you.

Thank you. Our next question comes from Joe Spak with UBS. Your line is open.

Thanks. Good morning, everyone. Paul, I know you're on TV this morning and think you mentioned some industry discounting. I'm just wondering if you could expand on that a little bit because it doesn't really sound like you changed your own sort of volume or pricing assumption. So, is what you're seeing sort of in line with what you expected, call it 90 days ago? And then, just given some of these cost pressures, if competitors do start to maybe try to price for some of these cost pressures, does that give you a little bit of leeway to do the same to cover some of those higher costs you mentioned?

Yeah, thanks, Joe. I would say it's largely in line with what our expectations have been. There have been some really unique things that I think have played out this year among the competitive set that we haven't seen historically. But we continue to be very disciplined in our approach. I think a lot of the share data that people saw during the quarter was probably more a result of some of the challenges we had with inventory on lots. We came into the quarter light on our targeted inventory levels primarily because we'd had such a really strong December, for example. And then, with the storm and some other challenges that we had, we weren't really able to catch up. Wholesales caught up towards the end of the quarter, but that really didn't show up in showrooms. So, we're optimistic that as we get more product out to the dealers in Q2 that we can help to reverse some of the share losses that we saw without getting into heavy discounting across the board. So, I think nothing has changed in our playbook. We're going to continue to be tactical and we're going to continue to be disciplined.

Makes sense. And maybe just one on the cost side then. Obviously some good management here in the quarter and I think you sort of mentioned maybe some cost timing or phasing. I guess the one I'm curious about is I think you mentioned, call it a billion to billion and a half in onshoring and software costs. Like how's that tracking? And is that something that really started to come in this quarter or is that sort of more weighted to the remainder of the year? And then one clarification on IEPA, this is just the receivable for your overpayment, right? You're not assuming that you're not paying this in or I guess the 122 replacements like that those stay in place. It's not that there's like a benefit in assuming your guidance that you don't have paying that in the back half, correct?

Yeah, so let me cover the tariff question first. So, all we've done here is taken the IEPA direct tariff that we paid last year that was subject to the Supreme Court decision and credited that back as a receivable and as we said we haven't changed our free cash flow guidance because we don't know when the refunds are going to be received how that window might work going forward, but that's all we've assumed. Now, keep in mind most of our tariff burden comes from 232. So, IEPA versus our size is relatively small, but because of that entry, that's why we took the guidance down. We're not projecting any other changes to our tariff bill. When I said guidance down, I meant the tariff bill guidance down. And then on the cost side, I think it's a couple of things, FX was obviously a benefit for us, primarily the peso, Canadian dollar and then also Korea and some of our imports getting better treatment there. We think that will hold. When you look at other cost items, we made progress on warranty, a couple hundred million dollars of warranty in line with what we said we're going to do for the year. EV profitability improved, largely as a result of better, more efficient use of the capacity as the write-offs that we took took hold. And then also on the regulatory side, around GHG. So, I think many of those are going to hold on when you look at the cost pressures, as we've talked about pretty much the onshoring costs are going to be really heavily weighted towards the back half of the year, as expected and we start to hire people to get the plants running in early '27.

Thank you, appreciate it.

Thanks for your question.

Thank you. Well, the next question comes from Emmanuel Rosner with Wolfe Research. Your line is open.

Great, thank you so much. Good morning. So, quite an uncertain environment as you saw me indicated. I was curious in terms of the factors you're monitoring. You indicated you need a little bit more clarity on some of those before making any additional changes to the outlook. In terms of things that could move the needle for this year that you're monitoring, is it more on the demand side, vehicle mix, input cost? I'm curious which are the ones that can still move up or down the most and impact you?

Yeah, that's very fair and great color. And I guess just as a follow-up on this then in terms of the

Can you tell us what you have assumed in this updated guidance, which has been where the inflation cost has been increased by another half a billion dollars? What are you assuming for commodities in the back half or for how long they stay high as a base case scenario?

Yeah, Emmanuel, what we've done is essentially taken the kind of the curve where it sits today, net of our hedges. And remember, it's not all direct and linear because we've got, for example, steel contracts. If you'll recall, we have about a third at spot, a third expiring within a year, and a third kind of over two years. So, that's helped us quite a bit. During times when prices go down, we pay a little bit more, but we pay a little bit less when prices go up. So, we're really looking at the current environment kind of persisting for the year. And to Mary's point, if we see conflict end and commodity prices and oil prices returning back down to pre-conflict levels, then we could potentially see upside in that scenario.

Great. Thank you very much.

Yeah, thanks for the questions.

Thank you. The next question is from Mark Delaney with Goldman Sachs. Your line is open.

Yes, good morning, and thank you for taking the questions. You mentioned the downtime that GM had for tooling in the first quarter related to the next-gen full-size pickup. I'm hoping to better understand if investors should expect more downtime for the upcoming full-size pickup launch and that's a potential incremental headwind, or is that now behind and higher full-size pickup truck production should be a tailwind for the volume and share plans that you articulated in your prepared remarks?

Yeah, good morning, Mark. Thanks for that. We had some significant downtime in the quarter primarily related to heavy duty trucks. I think a lot of that is behind us. There may be some selective downtime, but I think a lot of it can be done during shutdown, etc. So, we're not anticipating any material downtime at this point. But that's what we're going to need to lean into a little bit to try to get our inventory levels back into the targeted range from where they've been because even when we ended the quarter, we were still down below our target levels. So, we're hoping that we can get that back. And the team's done a really good job of managing through all of the logistical challenges.

Thanks for that, Paul. My other question was on Super Cruise and the digital services for the strong growth that GM has been seen in Super Cruise and the willingness for consumers to subscribe after the prepaid subscriptions last. Can you speak a bit more on the breadth of that consumer demand and is it concentrated in the higher end parts of the portfolio like Cadillac or has GM seen consumer demand for those solutions more broadly?

So, what I would say, Mark, we're continuing to trend at about that 40% attachment rate after the subscription period. And we do it differently, right? Other competitors that put the hardware on every vehicle and they're bearing that cost. For us, it's consumers who have purchased Super Cruise. They prepaid for a 3-year period and we see that in terms of the hardware cost. So, we have the deferred revenue that comes with the vehicle and then we have the subscription afterwards. So, we're starting to see escalation in terms of the number of vehicles that are coming off of that 3-year prepaid period and we're still holding attachment rates in that 40% range. So, we're very optimistic about what that means and I think that's what I was hearing to in the earlier question of, you know, you look at the ARPU, you've got to really take into account the scale advantage that we have, especially as we start growing into SDV 2.0 and expanding that across the portfolio. But, Super Cruise is a really strong leading indicator, and we're continuing to invest in delivering more value to customers that we think are going to make that even more attractive in the future.

Thank you.

Thank you. With the next question comes from James Picariello with BNP Paribas. Your line is open.

Hey, good morning, everyone. My first question, just as we think about adjusted auto free cash flow, how should we be thinking about the GM Financial dividends? That was a pretty notable step up at 650 million for the first quarter. And then just to clarify regarding the EV cash restructuring of 4 billion or so for the full year, the majority, the remainder of that gets achieved in the second quarter. Is that right?

Yeah, James, a couple of things. First on GMF, yeah, we saw an opportunity in the first quarter largely as a result of GMF cash position to step up the dividend from our traditional level. We're not changing the full year expectation of the dividend. So, pretty consistent there for the full year, but from a timing perspective, we saw that opportunity and we took it. On the EV cash charges, as we laid out, we're going very hard and aggressively at the sort of commercial relationships. We're approximately 90% done with those. And we expect to have substantially all of that cash paid out before the end of this quarter, this quarter being the second quarter. We still have a couple of battery raw material negotiations that we're working through. They're obviously more complex, but those will come in over time as well as we continue to work with our partners. But our goal here is to try to put as much of this behind us as quickly as we can so that we can be focused with our supply chain partners on tomorrow and stop having conversations about yesterday, which I think is way ahead of the expectations that many of our competitors have placed. So, we're focused on that. We also don't want it to be an overhang for cash flow. Despite that significant cash outflow that we've seen as a result of those restructuring charges, we were still able to repurchase $800 million of shares in the quarter and we remain committed to our capital allocation going forward. So, I think the team's done a really good job of managing through those challenges and through those conflicts.

Yes, for sure. You're very helpful. And then just on the GMI downside within the guide now, just how should we be thinking about, I mean, is that order of magnitude like 300 million of incremental downside and just how to think about volumes for GMI the remainder of the year relative to the first quarter and that thought just like high-level cadence for adjusted EBIT for the year. Typically, the second and third quarters are the strongest like for GM.

Yeah, I would say that a lot of that is, the impact is really being driven by the Middle East. In the quarter, we actually reallocated about 7,500 full-size SUVs that were originally slated to deliver to Middle East operation under GMI. We reallocated them to North America partly because of the conflict and the logistical challenges of getting them to market, but also partly to help bolster some of our lower inventory levels here in the US. So, I think from an enterprise perspective, we're largely mitigating that impact as we've said, but depending on how long the conflict goes and how long we see challenges in the Middle East, that's what's going to really ultimately determine the pressure on GMI.

Thanks.

Thank you. With the next question comes from Michael Ward with Citigroup. Your line is open.

Thank you. Good morning, everyone. Just to follow up on the truck changeover. So, your planned downtime for the tooling and the actual change takes place in the second half, 4Q specifically, is that right? And is there an impact on the volume in 4Q, or is that all largely behind you?

Okay. And then, just going back to the digital services, I think you said that you expect margins to be in line with other software companies. When will we see those types of margins? I don't know if we're there yet now or not, or if there upfront costs you take. How does that off/revenue curve look out over the next two to three years?

Yeah, so Mike, this gets a little bit technical. I'll try to summarize it best I can, but when we sell a vehicle with Super Cruise, all the hardware gets expensed right away, and then the revenue associated with that gets deferred over the three-year trial period. So, that's coming on at a very sizable margin because we've already recognized the costs in that going forward. And then when you look at the other digital services and OnStar, there are some hardware costs, etc., that are expensed with the vehicle. There's some service costs that go in. So, the margins aren't quite as robust as if you expense everything because there are service costs associated with it, but they're still pretty sizable. So, as we ramp up that deferred revenue base, and it starts to amortize into the P&L at increasing rates, that's where you start to see the impact and what we talked about if you go back to Investor Day several years ago, we talked about that having an impact and growing to a point where it has an impact on the overall margins of the company, and we're starting to see that. We're starting to see that take hold, and we see a lot, we've got a lot of excitement about the potential of what SDV 2.0 and the future improvements to Super Cruise and ultimately autonomy can do for us when you look at it across scale.

Interesting. Thank you very much. Really appreciate it.

Thank you. And the next question comes from Andrew Percoco with Morgan Stanley. Your line is open.

Great. Good morning, guys. Thanks so much for taking the question. I want to start on the digital services. I appreciate the added disclosure you guys have started to give here. But if I look at the 13 million or so subscribers that you're targeting by year end, you've also got I think 45 to 50 million vehicles on road. So I'm just curious like how do you tap into that 35 to 40 million other vehicles that don't currently have any subscriptions to these digital services? Is there a hardware limitation? I know there might be some limitations around supervision, but outside of supervision, what's the opportunity to get some of those customers into some of these higher value digital services?

Yeah, thanks, Andrew. Appreciate that. So, I think when we talk about the car park that's out there in the universe of GM vehicles, that really is meant to signal the opportunity that exists going forward. So, as we continue to put SDV 2.0 and other capabilities, many of the vehicles that are out there today don't have the hardware capabilities to be able to deliver that. So, we're looking at that as growth potential and really sizing the box for the future as we continue to expand that. So, we do have, like I said before in response to the other question, with Super Cruise, it really is a case where the hardware is on there for people that buy it. As we continue to get the cost down, we can look to potentially approach the market differently on that. But we see a ton of potential here because we're already driving approximately 7.5 billion dollars of deferred revenue by the end of this year with what we have. So, really speaks to the opportunity that's ahead of us.

Got it. That makes sense and that's super helpful. And I guess as a follow-up question to that, I think Super Cruise is available on I think 750,000 miles of roads in the US. What are some of the gating factors in expanding that? Is it regulatory? Is it your own kind of risk appetite? Just help us think through what some of the kind of gating factors are there. Thank you.

Awesome. Thanks so much for taking the questions.

Thank you. The next question comes from Dan Levy with Barclays. Your line is open.

Hi, good morning. Thanks for taking the questions. Paul, you mentioned earlier that some of these commodity costs are staggered and they hit on a lag. So presumably if costs hold, you'll be facing somewhat of an incremental headwind in 2027. Now I know you're probably not prepared to outline what the magnitude of that headwind might be, but I'd be curious to know, but I'm just wondering how much do you have in your back pocket on cost mitigation that even if the inflation on these commodities continues to rise into 2027, that can be neutralized?

Yeah, Dan, you're right. It is way too early to speculate on 2027. As we talked about, the pressure that we're seeing right now is a function of the forward curve. That forward curve is going to change 200 times between now and 2027. So, it's way too early, but if you think about where we are and we started to outline this at prior presentations, the momentum we have in '26 and what we're starting with warranty improvement, EV profitability improvement, regulatory cost improvement should all continue to be tailwinds in 2027 for us as well. And in addition, we've talked about, we basically have stopped production at many of our cell plants to work down our inventory levels, which means we're not capturing the production tax credits that we have in prior years. That when we get battery cell inventory to a normal level, that will get us to a point where we can start to collect those going forward as well as the improved profitability of EVs. And then you look at the product portfolio with the new pickups coming in 2027, end of this year and into 2027. You start to see some momentum, but way too early to speculate. We just, at the end of the day, we're executing on what we see and planning for future contingencies should we need to do that.

Great. Thank you. As a follow-up, wanted to double click on some of the competitive dynamics within large pickups because I think there's been some attention on one of your competitors that's trying to pick up share. So, I'm wondering if you can help just to double click within the share dynamics. We know that there is a large skew in the profitability within some of the sub segments within large pickups. Maybe you could just tell us, we see the overall data, but within some of the more profitable areas within large pickups, are you still holding your share and it's that some of the share gains from your competitor are coming at the less profitable areas and that doesn't matter as much to you?

Great. Thank you.

Thank you. The next question is from Alex Perry with Bank of America. Your line is open.

Hi, thanks for taking my questions here. I just wanted to follow up a bit on the input cost inflation that you guys are seeing. I guess what commodities in particular can you remind us, where you are hedged and then are you starting to see any shortages in any raw materials or are you concerned at all of shortages if the war sort of persists here?

Yeah, good morning, Alex. Thanks for the question. We vary our hedge levels based on commodities. We're kind of seeing pressure a little bit across the board as you would expect, primarily driven by higher energy prices, etc. We're not projecting or worried about any shortages right now and think the supply chain team has continued to prove their resolve through yet another challenge as we've seen them do in years past. So, no shortages. On the commodity side, it depends, 25% hedged. That certainly helped us in the aluminum space this year, but overall, it's pretty manageable from that standpoint. We're just going to continue to watch it. I think the hedges and the staggered steel contracts buys a little bit of time to adjust the business, which is why we do it that way. But overall, no real concerns right now.

Perfect. And then, could you just remind us on the cadence of the wholesale volumes for the year with the refresh coming? Any change to seasonality? And I guess, as a follow-up to the inventory question, is the expectation that you'll be able to rebuild some of the depleted truck inventory? And then, just on pricing, are you sort of holding that flat to up 50 bips pricing guide for the year?

Yeah, no change to our pricing guide. I would say no change to the regular cadence on wholesale across the board. We do have the opportunity, I think, to get a little bit of made-up deficit on the inventory shortfalls that we've had. We saw some of that come in late in the quarter that are making their way into showrooms or have made their way into showrooms this month. But we're going to continue to work and try to manage it in that 50-to-60-day range. And the team's done a really good job of trying to make that up.

Perfect. That's very helpful. Best luck going forward.

Thanks, Alex.

Thank you. The next question comes from Chris McNally with Evercore. Your line is open.

Thanks so much, team. I guess as you know, hitting the end of the quad, I wanted to think a little bit further out. One of the discussions of, for the first time in a decade, GM is going to have the ability to have more capacity in pickups and SUVs, given, I think you guys saw it much earlier than everyone else about reshoring. So, you'll have both Orion plus Mexico that will still have capacity. Not numbers, but more strategic, where do you think GM could theoretically sell more of these higher value-add vehicles? Is it the upper end of the market, lower end of the market? Is it non-North America, where you can sell in Mexico and Latin America? But just a little bit about the strategy 2027, 2028, 2029 after Orion's done, where could you sort of increase the absolute number of pickups and SUVs that you could sell?

And I guess the follow-on is around USMCA. I mean, I imagine the determination of how much capacity you would want to keep in Mexico even after Orion is done is somewhat dependent upon sort of this next level of USMCA where, I think everyone believes at some point we'll have some logic where we get back from 25% to something closer to the global import average of 15%. Is that fair to say that some of the stuff is going to have to be live to see where USMCA final negotiations are, which is most likely second half if not even maybe early next year. So, we're going to have to wait and see on some of those numbers.

Great. Thanks so much, Mary.

Thank you. And our last question comes from Ryan Brinkman with J.P. Morgan. Your line is open.

All right, thanks for squeezing me in. Could you maybe comment on your operations in China? How far along you might be with regard to some of the product portfolio refresh initiatives you've talked about on some of these earlier calls, including the NEV push. And then also with regard to some of those operational restructuring initiatives you've talked about and in taking charges for in the past. Just trying to look at like the equity income that we see for the quarter, 165 million. The ability to annualize that. Is that sort of the run rate of profitability your operations are at, once they're done with these improving initiatives or where could they get to if you complete that path?

No, I think the team has done a really good job from that standpoint. There's still some final tugging and tying going on some of the actions that we've taken, but nothing material that we expect.

Okay, thanks. That's helpful. And just as a follow-up, given some of the weakness that you alluded to, Mary, and some of the other unhealthy aspects of the China market with the overcapacity, etc. I think exports have been an attractive release valve and just curious if you comment on your export business from China with regard to Wuling or what progress have you made there? Are those, is that a more profitable part of your business in China and how do you see that potential evolving?

All right, thank you.

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

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