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General Motors Co Earnings - Analysis & Highlights for Q4 2024
Overview
PositivesNegativesOutlook
- The company doubled its market share over the course of the year as it scaled production.
- The company increased its full-year revenue by 9% to $187 billion, with a 6% rise in wholesale volumes and ATPs above $50,000.
- The company invested to drive the business forward and improved its balance sheet.
- The company increased its full-year EBIT-adjusted of $14.9 billion, driven by a particularly strong November and December, resulting in $10.60 of EPS diluted adjusted, up 38% YoY, and partially aided by a significantly lower share count.
- The company achieved a variable profit positive portfolio in Q4.
- The company lost a couple of days at Arlington due to floods in North Carolina and the tragedy that impacted the community and a supplier.
- The company faced a slight headwind from full-size truck incentives.
- The company had a fairly sizable build going in and to be able to keep that 50- to 60-day target. However, wholesales would be down a little bit due to the absence of the opportunity to build.
- The company expects to continue returning excess capital to shareholders and further reducing the share.
- The company is forecasting another year of robust adjusted automotive free cash flow.
- The company expects a tailwind from restructuring the China business and is targeting profitable equity income for the full year.
- The company expects to approach $2 billion in total annual revenue from Super Cruise within five years.
- The company expects to double subscription revenue this year as an additional 33,000 vehicles will end their trial period.
Q&A Highlights from General Motors Co Earnings Call Q4 2024
- Analyst asked about the sustainability of the strong share performance in the fourth quarter of 2024.
- The company expects 2025 to be similar to 2024 in terms of SAAR, and the share uplift in the fourth quarter is not expected to be sustainable. The team has done a great job in growing share in EVs and ICE, and they will continue to work towards that goal. However, the company is waiting to see how demand develops in 2025 before making any decisions.
- The company expects 2025 to be similar to 2024 in terms of SAAR, and the share uplift in the fourth quarter is not expected to be sustainable. The team has done a great job in growing share in EVs and ICE, and they will continue to work towards that goal. However, the company is waiting to see how demand develops in 2025 before making any decisions.
- Analyst asked about how the company is thinking about resource allocation towards EVs and how much overhead spend can be pulled back on in the current environment.
- The company has been mindful of consumer demand for EVs and has made decisions such as selling their share of the third plant to LG. They will continue to make decisions based on consumer demand and deploy capital appropriately to both ICE and EV portfolios. The company has a strong portfolio of ICE vehicles and expects to continue to be efficient as they deploy capital.
- The company has been mindful of consumer demand for EVs and has made decisions such as selling their share of the third plant to LG. They will continue to make decisions based on consumer demand and deploy capital appropriately to both ICE and EV portfolios. The company has a strong portfolio of ICE vehicles and expects to continue to be efficient as they deploy capital.
- Analyst asked about the flexibility General Motors Co has in its footprint, specifically regarding the production of full-size vehicles across North America.
- GM has capacity in the United States to ship trucks produced in Mexico and Canada, and they also sell trucks globally. They are encouraged by the Mexican government's efforts to avoid tariffs, but they are planning for multiple scenarios and have several levers to pull, including shifting production between plants.
- GM has capacity in the United States to ship trucks produced in Mexico and Canada, and they also sell trucks globally. They are encouraged by the Mexican government's efforts to avoid tariffs, but they are planning for multiple scenarios and have several levers to pull, including shifting production between plants.
- Analyst asked about the current status of the 35% requirement for electric vehicles.
- GM's understanding is that the requirement is still in place, despite the executive order, and they are waiting for legislative or legal changes to align with the policy.
- GM's understanding is that the requirement is still in place, despite the executive order, and they are waiting for legislative or legal changes to align with the policy.
- Analyst asked about GM's internal commitment to developing Level 4 and 5 autonomy and whether the company might need to go out and buy technology to achieve its goals.
- GM has built the capability to develop Level 4 and 5 autonomy internally, but they may also work with strategic partners and evaluate the landscape to execute their plan efficiently. They want to maintain a leadership position in Level 4 autonomy and have a strong relationship with customers, who they believe will be game-changing for the industry.
- GM has built the capability to develop Level 4 and 5 autonomy internally, but they may also work with strategic partners and evaluate the landscape to execute their plan efficiently. They want to maintain a leadership position in Level 4 autonomy and have a strong relationship with customers, who they believe will be game-changing for the industry.
- Analyst asked about GM's potential to help existing or new Chinese partners gain access to the US market using their existing onshore capacity and distribution capability.
- GM believes in a level playing field and wants to compete and win based on the strength of their products, technology, design, loyalty, etc. They have grown both ICE and EV share and are focused on leveraging their capacity in North America. They believe that the industry needs to consider not only where vehicle final assembly occurs, but also where the supply chain comes from for parts and battery raw materials, as well as where research and development is done. They are focused on leveraging their capacity with General Motors and their opportunities to grow.
- GM believes in a level playing field and wants to compete and win based on the strength of their products, technology, design, loyalty, etc. They have grown both ICE and EV share and are focused on leveraging their capacity in North America. They believe that the industry needs to consider not only where vehicle final assembly occurs, but also where the supply chain comes from for parts and battery raw materials, as well as where research and development is done. They are focused on leveraging their capacity with General Motors and their opportunities to grow.
- Analyst asked about the discrepancy between wholesale growth and production in the second half of 2023.
- The company had a large inventory build in the second half of 2023, which led to a higher wholesale growth rate. However, the company is being cautious about building inventory until it sees consistent demand in 2025.
- The company had a large inventory build in the second half of 2023, which led to a higher wholesale growth rate. However, the company is being cautious about building inventory until it sees consistent demand in 2025.
- Analyst asked about the role of regulatory systems in the adoption of Level 2-plus and Level 3 technologies, specifically in relation to Super Cruise.
- The company sees the adoption of Level 2-plus and Level 3 technologies as being consumer-driven, rather than relying on regulatory systems. The company's customers are using Super Cruise on a regular basis, and the technology is standard on their EVs, making it a desirable feature for many consumers.
- The company sees the adoption of Level 2-plus and Level 3 technologies as being consumer-driven, rather than relying on regulatory systems. The company's customers are using Super Cruise on a regular basis, and the technology is standard on their EVs, making it a desirable feature for many consumers.
- Analyst asked about the baseline assumptions around EV pricing and the impact of policy changes on EV profitability.
- The company assumes fairly consistent pricing on EVs and there may be some changes in the market due to policy changes, but they are focused on building great products and their incentive discipline and go-to-market strategies are top-notch.
- The company assumes fairly consistent pricing on EVs and there may be some changes in the market due to policy changes, but they are focused on building great products and their incentive discipline and go-to-market strategies are top-notch.
- Analyst asked about the uncertainty surrounding regulation, particularly tariffs, and how it could affect capital allocation plans.
- The company has stated liquidity goals and revolving credit facilities as targets that include a host of risks, and they are not anticipating having to build cash in anticipation of a big draw. They will continue to execute their business as usual and allocate capital, but their free cash flow generation is strong, and they expect to continue to allocate that and ultimately share that with their investors.
- The company has stated liquidity goals and revolving credit facilities as targets that include a host of risks, and they are not anticipating having to build cash in anticipation of a big draw. They will continue to execute their business as usual and allocate capital, but their free cash flow generation is strong, and they expect to continue to allocate that and ultimately share that with their investors.
