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General Motors Reports Strong Q3 Performance, Boosted by EV Initiatives

In a time of shifting market dynamics, General Motors is capitalizing on lower commodity prices and achieving significant manufacturing efficiencies in both cell and module production. This advantage sets the company apart from competitors who may take years to reach similar performance levels.

Expanding Electric Vehicle Education

To increase sales in electric vehicles (EVs), GM brands are engaging in comprehensive training and outreach. For instance, Chevrolet has conducted sessions with over 7,000 dealership sales staff, focusing on EV technology, charging infrastructure, and competitive advantages like affordability, range, and overall ownership costs.

Feedback from these training sessions has been positive; attendees are leaving the meetings well-informed and confident in GM’s EV offerings, as well as its traditional internal combustion engine (ICE) products. These efforts are expected to bolster sales particularly in 2025 when the expanded Silverado EV lineup, including lower-cost options and models with nearly 500 miles of range, is introduced. The most competitively priced work truck will start at roughly $57,000, allowing many buyers to qualify for a full $7,500 federal tax credit.

New EV Offerings on the Horizon

Beginning in the first quarter, GM will roll out a full range of Equinox EV and Blazer EV models, featuring a more affordable Blazer and an expanded GMC Sierra EV selection. The Cadillac lineup, which includes models like the LYRIQ, OPTIQ, VISTIQ, and Escalade IQ, is anticipated to attract customers seeking luxury and performance—a market where EV consideration exceeds that of the mainstream sector by approximately 9 percentage points.

Positive Sales Growth in Key Markets

Turning to China, GM is aligning production with demand more effectively. In the third quarter, sales through GM and its joint ventures increased by 14% compared to the second quarter—the best performance since Q3 2022, aided by a growing portfolio of EVs and plug-in hybrids. Notably, for the first time, new energy vehicles outranked ICE models in sales.

Dealer inventory has been slashed by over 50% since the beginning of the year, improving pricing control and cost management. However, challenges remain in the Chinese market, prompting ongoing collaboration with local partners for restructuring initiatives aimed at sustainable profitability.

Looking ahead, fourth-quarter board meetings are planned to discuss the next steps in restructuring efforts. Updates regarding the Cruise brand, along with their future funding strategy, will be delivered when more information is available. Meanwhile, Cruise continues to enhance technology and maintain a lean cost structure.

Improving Operational Efficiency

As Kurt Kelty noted, GM remains focused on refining its sales strategy by incorporating prismatic cells and exploring new chemistries. Efforts to streamline operations are yielding enterprise-wide benefits. The company is methodically increasing EV capacity by repurposing existing plants while also collaborating with Hyundai on various initiatives, with a definitive agreement nearing completion.

Steady Financial Performance Amid Market Challenges

To conclude, Mary Barra emphasized GM’s commitment to building on its competitive strengths and delivering results that meet investor expectations. Paul A. Jacobson, GM’s CFO, followed with an update on the company’s financial health, reporting strong operational discipline and continued success in the market. GM has maintained solid pricing on its ICE portfolio, with full-sized pickups and SUVs capturing larger market shares while offering lower incentives compared to the competition. In Q3, GM’s U.S. incentives sat about 2.4 percentage points below the industry average, improving from 1 percentage point lower last year.

This savvy positioning has bolstered GM’s financial targets, keeping them on track to meet their $2 billion net fixed cost goal by year’s end. The company bought back $1 billion in stock in the last quarter, lowering its diluted share count by 19% from the same period last year. With revenues up 10% to $49 billion, GM has effectively leveraged its diverse product lineup to enhance market presence in both ICE and EV segments.

In summary, reflecting on their recent performance, GM achieved a Q3 EBIT adjusted of $4.1 billion, with margins at 8.4%, and diluted adjusted EPS of $2.96, representing a 30% year-over-year increase. The company also noted that adjusted automotive free cash flow rose to $5.8 billion this quarter, attributed to improved EBIT, lower capital expenses, and better working capital management.

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GM Reports Strong Financial Performance Amid Warranty and Inventory Challenges

General Motors (GM) addresses warranty costs and inventory status during an earnings call, demonstrating resilience in the face of inflation and market fluctuations.

In the third quarter, GM faced significant inflationary pressures, leading to an adjustment of $700 million in warranty costs compared to the previous year. This increase stems from higher claims related to several of its high-volume vehicles. Fortunately, issues contributing to these warranty costs were identified and rectified earlier in the year. Despite these additional expenses, GM’s financial results for the quarter remained robust. The company continues to prioritize quality and customer satisfaction.

At the end of the quarter, dealer inventory for internal combustion engine (ICE) vehicles stood at 68 days, with approximately 10 to 12 electric vehicles (EVs) per dealer to boost customer awareness. As the strong sales period of the fourth quarter approaches, GM aims to maintain ICE inventory within the targeted range of 50 to 60 days while keeping an appropriate number of EVs available. GM International’s third-quarter adjusted EBIT was $50 million, a decrease of $300 million compared to last year, primarily due to ongoing challenges in the China market. Excluding China, stability and steady results were reported in GM’s international operations.

Efforts in South America and the Middle East are driving margin growth, offsetting competitive pressures and foreign exchange challenges. GM Financial’s third-quarter adjusted earnings before tax stood at $700 million, a decline of $50 million from a year ago, mainly due to expected credit reserves. The company maintained its prediction of generating between $2.75 billion to $3 billion for the full year. Additionally, GM Financial paid a $450 million dividend to GM during the quarter, reflecting ongoing portfolio growth. Cruise, GM’s autonomous vehicle unit, reported expenses of $400 million for the quarter, a significant decrease of $350 million year-over-year, due to reduced operational activities.

As we look toward the end of the year, GM is confident in its performance and has narrowed its full-year 2024 guidance. The adjusted EBIT is expected to fall between $14 billion and $15 billion, with diluted adjusted EPS anticipated in the range of $10 to $10.50. This places expectations at the higher end of prior forecasts. The company’s adjusted automotive free cash flow is now projected to be between $12.5 billion and $13.5 billion, driven by the timing of certain accruals such as warranties.

Looking to the fourth quarter, GM expects lower earnings partly due to the earlier mentioned warranty costs and decreased ICE wholesale volumes. Factors such as supply chain disruptions caused by recent hurricanes and the ramp-up of production for refreshed full-size SUVs—GM’s most profitable vehicles—are critical to understanding these shifts. Additionally, the holiday season typically leads to fewer production days in Q4.

GM is also factoring in increased EV volumes along with lower pricing influenced by seasonal industry incentives. It’s important to note that the expected Q4 results should not tarnish the outlook for the company’s overall earnings. The forecasts for 2025 are anticipated to be on par with strong performance seen in 2024.

GM targets to produce and sell approximately 200,000 EVs this year and aims to achieve profitable variable profit margins in Q4. The company continues to invest in products that resonate with customers while finding cost efficiencies to boost profitability.

GM remains committed to returning excess capital to shareholders and is on track to reduce the number of outstanding shares to below 1 billion by early 2025. This reduction is viewed as a key milestone in GM’s long-term strategy. With that, we conclude our opening remarks and welcome your questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from Joe Spak with UBS. Your line is open.

Joseph Spak — Analyst

Thank you. Good morning, everyone. Paul, could you clarify the warranty situation again? Specifically, how much was related to the one-time reserve release you mentioned alongside the rate adjustment? Are you implying that the accrual rate will carry forward into the first half of ’25?

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

Good morning, Joe. You are correct; it involved both aspects.

We’ve consistently highlighted inflation in parts and labor affecting warranty claims. Despite improvements in quality—with warranty events decreasing about 25% over the last two years—costs remain elevated due to ongoing inflation. During our third-quarter review of warranty accruals, we found significant data. Some quality problems identified in prior model years have been resolved, and we don’t foresee ongoing issues.

Joseph Spak — Analyst

Understood. Just one other clarification: Last quarter, you indicated that inventory expected for the second half would be around $600 million, roughly $300 million per quarter, yet it reached $600 million this quarter. Is this a matter of timing? The previous year was about a $1.7 billion headwind. I’m trying to understand how you see the rest of the inventory evolving.

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

Indeed, we are seeing some seasonal impacts here. We advanced some production from the fourth to the third quarter in anticipation of anticipated production downtime, which accounts for that $400 million difference.

By year-end, we expect to align with our goal of achieving 50- to 60-day inventory levels, which explains the differences in our figures between the third and fourth quarters at the revised guidance midpoint.

Joseph Spak — Analyst

To clarify, I was asking about the inventory unwind regarding the EV side.

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

I’m sorry for the confusion. You’re referring to the lower cost or market…

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GM CFO Addresses EV Strategy and Market Challenges in 2025 Outlook

Analyst

Exactly, yeah.

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

My apologies, I mistakenly interpreted that as an inventory inquiry. The adjustment involves both the inventory of finished cells and products on hand, as well as our ongoing profitability improvements. We expect this growth to decelerate slightly as the year concludes, but we will continue monitoring it closely. While it might provide some support in the upcoming year, we anticipate it won’t contribute as significantly as it did in 2024.

I apologize for the earlier confusion.

Joseph Spak — Analyst

Thank you. Got it.

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

I appreciate your understanding on that point.

Operator

Thank you. Our next question comes from John Murphy with Bank of America. Your line is open.

John Murphy — Analyst

Good morning, everyone. I would like to delve into the 2025 outlook. You mentioned a potential $2 billion to $4 billion reduction in EV losses that could improve EBIT; however, it appears you expect total EBIT to remain roughly the same year-over-year. This suggests a significant decline in the ICE business, which may not align with current volume and pricing trends. This raises skepticism about such a drastic decline occurring.

From an optimistic perspective, there could be an upside of $2 billion to $4 billion based on your forecasts. Conversely, a more cautious view might predict a $2 billion to $4 billion drop in EV contributions. Given this, I’m interested in your thoughts regarding potential deterioration in the core business outside of EVs.

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

Certainly, John. During Investor Day, we outlined some key headwinds and tailwinds, with our strides in EVs being a significant focus. We will share official guidance for 2025 in the fourth quarter, as we usually do. It’s essential to consider multiple factors, including labor cost inflation next year and our traditional pricing strategies. However, these discussions are still preliminary as we are currently finalizing our budget for 2025.

John Murphy — Analyst

Understood. I have a follow-up regarding your comments on Cruise capitalization discussed at Investor Day. It seems you’re seeking to raise capital, despite having sufficient resources. What’s driving this decision? Are you looking for a strategic partnership or perhaps lower-cost capital specifically for Cruise?

Mary Teresa Barra — Chairman and Chief Executive Officer

As we look to the future, we recognize the importance of investing efficiently in autonomy. We are engaging in discussions with various partners to optimize our investment strategy. This approach allows us to share the financial burden and enhance operational efficiency.

John Murphy — Analyst

So, it seems a partnership with access to lower-cost capital is part of your strategy?

Mary Teresa Barra — Chairman and Chief Executive Officer

I won’t speculate about specific partners, but we are actively exploring all avenues to enhance efficiency. The auto industry often involves a multitude of tasks, and we can better leverage our strengths by collaborating with other OEMs and firms. We aim to employ this collaborative approach, especially in our ventures with Hyundai and Honda, and extend it to our investments in Cruise and autonomy.

John Murphy — Analyst

Thank you for the clarification.

Operator

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

Dan Levy — Analyst

Good morning. Thank you for taking my questions. I’d like to start with pricing, which showed a rise of $900 million. This appears to have surprised some analysts, especially with third-party data indicating a negative trend. You are currently seeing more than $1 billion in positive pricing despite industry-wide price normalization. Could you elaborate on the factors contributing to this resilience and explain why this discrepancy exists compared to third-party data?

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

Absolutely, Dan. We’re proud of our pricing performance, which is primarily driven by our product portfolio. We have maintained a consistent refresh cycle for our vehicles and are still benefiting from price hikes implemented last year. We anticipate some stabilization heading into Q4 as we fully lap those prior increases; however, we aim to retain this pricing strength. Our disciplined approach to inventory management has also furthered this advantage, and we’ve recently seen our pricing gap relative to the industry average widen, nearly doubling to over 100 basis points in the September quarter. We’re committed to this strategy and optimistic about the demand for our vehicles.

Dan Levy — Analyst

Could you remind us if the upcoming SUV refreshes typically coincide with a price increase?

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

Yes, typically, when we launch new full-size SUV refreshes—expected either late this year or early next year—price adjustments usually come into play. We expect this momentum to continue as we release these exciting products.

Dan Levy — Analyst

Thank you. My second question pertains to cash flow, specifically regarding the free cash flow midpoint, which was increased by $3 billion.

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GM Financial Reports Strong Performance Amidst Strategic Adjustments

Analyzing Free Cash Flow Trends and Future Projections

Although EBIT was increased by $500 million, there was a notable decline in free cash flow. Analyst Dan Levy sought further clarity on this development, diving into the company’s cash position that now stands at $27 billion, surpassing previous target discussions.

Insight from Paul A. Jacobson, CFO

Paul A. Jacobson, Executive Vice President and Chief Financial Officer, addressed Levy’s question regarding free cash flow. He explained that the earnings trajectory this year shows that the pricing strategy in the market has outperformed initial expectations. He pointed out that cash deferred costs, such as warranty expenses, do not impact cash flow immediately because they are accrued for expected future payouts. This factor plays a significant role in understanding current cash performance.

As Jacobson noted, the company ended the last quarter with over $26 billion in cash. The capital allocation process remains on track, with both capital expenditures and the balance sheet in strong condition. However, share repurchases have been limited due to ongoing processes related to an accelerated share buyback from the previous year. Jacobson anticipated those buybacks would conclude this month, allowing for a renewed focus on the capital allocation strategy.

2025 Forecasts Remain Uncertain

Ryan Brinkman from J.P. Morgan inquired about the outlook for 2025 and asked if the company could provide any preliminary insights into GM’s pricing assumptions for the upcoming year. With the unpredictability of the industry’s trajectory, Jacobson reiterated that no specifics would be disclosed at this time. Detailed guidance will come in the fourth quarter update, reflecting on performance as 2024 draws to a close.

Brinkman further questioned how GM would manage profit improvements despite the unpredictability in pricing. Jacobson affirmed that the company’s management has demonstrated resilience and adaptability over recent years, successfully managing shifts in market conditions through cost-cutting and revenue-generating strategies. He expressed confidence that these qualities would continue to guide the company in navigating the challenges of 2025.

Adequate Free Cash Flow Management

Emmanuel Rosner from Wolfe Research sought further details on free cash flow projections, especially considering the strong performance this year. Jacobson acknowledged that while favorable elements impacted this year’s cash flow, such as warranty accruals and inventory management, the firm prioritizes discipline in managing inventory to avoid short-term thinking. He stressed that the company remains committed to ensuring robust free cash flow moving forward.

Rosner also noted the company’s goal to reduce share count to 1 billion shares by early 2025. Jacobson confirmed that this would require approximately 120 million shares to be repurchased in a short time frame, which translates to roughly $5 billion in buybacks. He affirmed the company’s commitment to returning capital to shareholders, though specific timelines and plans for share buybacks remain to be finalized.

Monitoring Credit Performance at GM Financial

Adam Jonas from Morgan Stanley raised concerns regarding the credit performance at GM Financial, noting a slight increase in net charge-offs to 1.2%. Jacobson clarified that while credit performance has moderated, the current levels are still manageable. He suggested that the 39% penetration rate at GM Financial could serve as a baseline for future projections, but acknowledged the potential for increased competition in 2025 that could enhance market dynamics.

In conclusion, GM continues to adjust operational strategies and financial practices in response to market changes, while maintaining a focus on capital management and shareholder returns. The company’s outlook for 2025 remains cautious yet optimistic as it seeks to navigate an unpredictable industry landscape.

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GM Financial’s Strategic Outlook: Managing Credit and Capital Investments

Investments and Credit Performance Align With Expectations

To date, GM Financial’s performance is closely mirroring our expectations for the year. We anticipated a slight moderation in credit year over year, and that’s precisely what we’re witnessing. Our portfolio remains predominantly prime, and these prime credits are holding up exceptionally well, supported by strong employment levels, solid household incomes, and stable household balance sheets. Overall, the credit situation is developing as we expected.

Regarding penetration levels, we coordinate closely with the OEM to target these figures, with many results stemming from leasing or subsidized loans. Our goal is to achieve a penetration target of 40% to 45%. While we are slightly below this target now, we have recently been operating within that range for October.

Adam Jonas — Analyst

Finally, in terms of capital expenditures, it appears you are aiming for stability around the $11 billion range. Mary or Paul, can you discuss how the composition of this capital expenditure has shifted over the past 12 months among EV, AV, ICE, and new products? How do you see these proportions changing in the coming year, especially concerning AI-related infrastructure? Is this a significant factor already? When might it become more relevant?

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

Thank you, Adam. Over the last few years, our capital expenditures have shifted more towards our product portfolio rather than infrastructure. We previously undertook significant investments to repurpose plants, ensuring we were prepared for an increase in EV production, which has proven beneficial. Currently, we continue to balance spending between EV and ICE technologies, with nearly a third of our capital program still invested in ICE vehicles. This strategy has become evident in the strong performance of our recent refreshes, including midsize trucks and SUVs.

We’re also dedicating increasing capital to broad efficiency improvements designed to lower production costs across all aspects of our operations. The ongoing allocation of $11 billion in capital spending, relative to our earnings, remains manageable and reflects a disciplined strategy.

Mary Teresa Barra — Chairman and Chief Executive Officer

To expand on that, maintaining a consistent capital expenditure level leads to better execution quality. It allows us to avoid fluctuations in product engineering and manufacturing processes. We are now more responsive to market demands, enabling us to make informed decisions about our next-generation ICE and EV vehicles—an approach made possible by our robust infrastructure.

Adam Jonas — Analyst

Thank you, Mary, and Paul.

Operator

Next, we have a question from Tom Narayan with RBC. Your line is open.

Tom Narayan — Analyst

Hi, thanks for taking my questions. Paul, in Q3, the price mix reported a positive $300 million for North America on the EBIT bridge, with price contributing $900 million, but the mix was a loss of $600 million. With EV sales expecting a lower mix as you reach the 200,000 target in Q4, should we brace for a negative price mix in North America next quarter?

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

Thanks, Tom. That’s correct; we may not see the benefits in Q4 like we did in Q3. Fluctuations in vehicle pricing and a less favorable mix could result in a net negative for the quarter. However, it is essential to note that this is more about timing, influenced by previous year’s performance, and should not be viewed as indicative of our long-term trajectory heading into 2025.

Tom Narayan — Analyst

Understood. Mary, regarding China, we are hearing that even premium brands are struggling against domestic competitors. Considering your strong market position in the U.S., how committed is GM to maintaining market presence in China if these performance declines continue?

Mary Teresa Barra — Chairman and Chief Executive Officer

We are confident we can reverse our losses in China. We are actively working with our partners to make necessary changes to ensure the business becomes sustainable and profitable. The recent success of our GLA vehicle, which is comparable to our full-size truck line in China, signals positive momentum. We have also shifted to a mix that is now more weighted towards new energy vehicles than traditional ICE models, a transition we believe is crucial.

The premium import channel allows us to maintain a capital-light presence in China, offering unique products such as the Chevrolet Tahoe, which we are about to start taking orders for. We see significant long-term growth opportunities in this vast market despite challenges posed by many domestic competitors. Strategic adjustments will enable us to participate profitably in the market, which remains our primary focus.

Tom Narayan — Analyst

Thank you.

Operator

Our next question comes from Edison Yu with Deutsche Bank. Your line is open.

Edison Yu
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General Motors Discusses Future Strategies Amid EV Transition

Deutsche Bank — Analyst

Good morning. Thank you for your time. First, I want to talk about Cruise.

We’ve noticed that the miles driven have increased threefold. Can you share a rough estimate of when unsupervised testing might resume as it was previously?

Mary Teresa Barra — Chairman and Chief Executive Officer

Our primary focus is on safety, but we are actively working towards resuming unsupervised testing by the end of this year. We aim to meet a higher standard, making sure we perform better than the average human driver. This is a key objective for our team every day.

Edison Yu — Deutsche Bank — Analyst

Understood. Moving on to China, given the losses, will we possibly need to provide substantial funding for the joint venture (JV)? Or will the restructuring we discussed help avoid that?

Mary Teresa Barra — Chairman and Chief Executive Officer

We are focused on creating a sustainable business model in the country. We’ve held several meetings with our partner regarding the future direction, and I prefer not to outline any specifics just yet. We’ll share more information as these discussions progress.

Edison Yu — Deutsche Bank — Analyst

Thank you for clarifying.

Operator

Next, we have James Picariello from BNP Paribas. Your line is open.

James Picariello — Analyst

Hello. I realize it can be complex, but with the midpoint of the year-end guidance suggesting a $1.5 billion decline in adjusted EBIT for the fourth quarter, could you outline the main factors behind this decrease? Specifically, how might reduced ICE volume and increased EV production influence pricing? Also, are competitor actions impacting GM’s fourth-quarter expectations?

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

Thank you, James. While I won’t get into every detail, we identified roughly $400 million linked to timing issues. The fourth quarter has about eight fewer production days compared to the third quarter, due to holidays and events like Thanksgiving and Christmas. We also face a model year transition for our full-size SUVs, which adds to this situation. However, we expect some of these issues to be unique to this quarter. On pricing, we’ve effectively maintained competitive pricing strategies despite varying competitor incentive levels.

James Picariello — Analyst

Understood. Regarding competitor actions, have you noted any significant changes? Additionally, could you clarify the impact of the ASR on the share count?

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

We’re witnessing increased competition manifesting through higher incentives. We’ve successfully managed our response to this, similar to past instances. Regarding share count, we previously mentioned 250 million shares. The final 25 million shares will be issued upon completion of the ASR this month, which will lower our diluted EPS denominator.

James Picariello — Analyst

Thank you for the updates.

Operator

Our next question comes from Daniel Roeska with Bernstein Research. Your line is open.

Daniel Roeska — AllianceBernstein — Analyst

Thank you for taking my question. Good morning. I’d like to discuss the R&D budget, particularly if the $10 billion run rate from last year is a suitable target moving forward. Have any allocations shifted between EV and other product launches, especially with the current EV market slow down?

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

Examining our total product development budget, including autonomy initiatives, we believe we have balanced funding effectively. Although several electric vehicles have launched, our focus remains on enhancing operational efficiencies. Our ongoing projects aim to streamline production and minimize complexity, supporting our long-term strategy to build a winning product portfolio.

Daniel Roeska — AllianceBernstein — Analyst

Thanks for the insight. I have a follow-up for Mary: You recently reaffirmed your 2035 target to phase out ICE vehicles. In the meantime, do you believe a new BEV platform is necessary before the decade ends, or can existing platforms be improved to stay competitive?

Mary Teresa Barra — Chairman and Chief Executive Officer

We’re confident that our current dedicated EV platform can continue to evolve with advancements aimed at enhancing efficiency. Our commitment to continuous improvement remains a cornerstone of our strategy, ensuring we stay competitive without needing an entirely new platform immediately.

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GM Leadership Discusses EV Strategy and Profitability Amid 2025 Forecasts

Daniel Roeska — AllianceBernstein — Analyst

Thanks for the insights. It seems like the approach is evolutionary rather than revolutionary in terms of cost reductions.

Operator

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

Chris McNally — Analyst

Thank you, team. Paul, following up on earlier questions, could you clarify the two main factors affecting 2025? Specifically, how do costs and pricing impact projections?

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

Thanks for that, Chris. To address your question, we are focused on maintaining fixed cost discipline while managing depreciation. We aim to keep costs flat, aside from depreciation, as we develop our budget based on consistent pricing assumptions. We believe this strategy has been effective for us and will share more details when we present our fourth-quarter results and 2025 guidance.

Chris McNally — Analyst

That’s helpful, thanks. One more question regarding your projection of $2 billion to $4 billion in reduced EV losses. If EV sales are flat or decline in 2025, can you still attain that range?

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

That’s an interesting consideration. We have noticed a demand uptick recently, with our products gaining market share. We plan to continue growing in the EV space as we launch new models to meet rising consumer interests. For example, we’re providing access to the Tesla Supercharger network and enhancing charging infrastructure to alleviate range anxiety. So, while scale is crucial, flexibility in our offerings will also drive profitability in our EV sector.

Chris McNally — Analyst

Let me summarize: volume is key, but there are additional factors at play. Given you’re starting to see positive margins, could you elaborate on those other factors contributing to the projected improvement?

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

Absolutely. We’re focused on enhancing production efficiency and reducing parts complexity. The introduction of models like the Cadillac Escalade IQ should also yield benefits. Achieving positive contribution margins is our primary goal, and I believe our track record shows resilience even amid production challenges.

Chris McNally — Analyst

Thanks for the detailed response, Paul.

Paul A. Jacobson — Executive Vice President, Chief Financial Officer

Thank you, Chris.

Operator

Thank you. Our final question comes from Mark Delaney with Goldman Sachs. You may proceed.

Mark Delaney — Analyst

Good morning. I’d like to ask about the Equinox EV, which starts at $35,000 without IRA credits. If this model sells well, can GM still achieve its EV profit goals for 4Q and 2025?

Mary Teresa Barra — Chairman and Chief Executive Officer

We will evaluate the performance across all EV models, including the Equinox and Blazer EVs slated for release in 2025. We’re seeing strong interest in the current Equinox EV model, and we plan to adapt to customer preferences as we grow.

Mark Delaney — Analyst

Thank you, Mary. My next question concerns GM’s manufacturing flexibility. If tariffs on vehicle imports increase, how could GM adjust production or offset costs?

Mary Teresa Barra — Chairman and Chief Executive Officer

Cost reduction remains a priority for us. Our response would depend on the specifics of any new tariffs. We are closely monitoring the political landscape and engaging with policymakers to navigate these challenges. We recognize the complexity of the current situation, especially concerning U.S. jobs linked to both domestic and international partners, as highlighted by the USMCA agreements.

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General Motors Aiming for Growth Amid Industry Changes

CEO Mary Barra Outlines Future Strategies

In a recent conference call, General Motors (GM) leadership highlighted the company’s ongoing commitment to creating jobs, particularly in battery plants and other areas focused on electric vehicle (EV) technologies. “Our focus is on building great vehicles that customers truly want,” stated Mary Barra, GM’s Chairman and CEO. The dedication to quality and design remains a primary goal as they navigate changes in the automotive industry.

Financial Discipline Remains Key

Barra emphasized the importance of maintaining cost discipline and improving profitability in both internal combustion engines (ICE) and EVs. “We will be disciplined and resilient, making adjustments as necessary to drive growth,” she noted. GM demonstrates a firm commitment to refining capital efficiency moving forward.

Looking Ahead to 2025

As GM prepares for future growth, the company plans to utilize favorable industry conditions to boost its performance. Their aim is to deliver results in 2025 that are comparable to those expected in 2024. Additional insights regarding collaborations in Cruise and the Chinese market will be shared soon, with formal guidance to roll out in January 2025.

Conference Participants

The call featured a range of participants, including analysts and senior executives. Notable attendees included Paul A. Jacobson, CFO; Daniel Berce, CEO of GM Financial; and various analysts closely following GM’s progress.

This article is a transcript of the conference call produced for The Motley Fool. While we strive for accuracy, there may be errors. The Motley Fool strongly encourages conducting your own research, which includes listening to the call and reviewing the company’s SEC filings.

The Motley Fool recommends General Motors and has options for long January 2025 $25 calls on the company. Please see our disclosure policy for more information.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.