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Ashish Kohli; Vice President of RI; General Engine Company
Maria T. Barra; Chief Officer; General Engine Company
Paul A. Jacobson; Executive Vice President and Chief Financial Officer; General Engine Company
Alexander Eugene Potter; MD and Senior Research Analyst; Piper Sandler
Christopher Patrick McNally; Senior Medical Officer; Evercore ISI Institutional Equities, Research Division
Daniel Harlan Ives; Director General of Stock Research; Wedbush Securities Inc. , Research Division
Gautam Narayan; Assistant Vice President; RBC Capital Markets, Research Division
Itay Michaeli; Global Director & Head of Automotive; Citigroup Inc. , Research Division
James Alberto Picariello; Senior Automotive Analyst; BNP Paribas Exane, Head of Research
Juan José Murphy; MD & Senior Automotive Analyst in the U. S. U. S. Citizenship and Drug BofA Securities, Research Division
Joseph Robert Spak; Analyst; UBS Investment Banking, Research Division
Mark Trevor Delaney; Equity Analyst; Goldman Sachs Group, Inc. , Research Division
Ryan Joseph Brinkman; Senior Equity Research Analyst; JPMorgan Chase
Unidentified Analyst
Operator
Hello and welcome to General Motors’ first quarter 2024 earnings conference call. (Operator Instructions) As a reminder, this telephone convention was recorded on Tuesday, April 23, 2024. Now I’d like to turn the floor over to Ashish Kohli, GM’s vice president of investor relations.
Ashish Kohli
Thank you and hello everyone. Thank you for signing up as we review GM’s currency effects for the first quarter of 2024. Our convention call documents were released this morning and can be found on GM’s investor relations website. We are also streaming this call online. We signed up today through Mary Barra, GM president and CEO; and Paul Jacobson, GM’s executive vice president and chief financial officer. Dan Berce, president and CEO of GM Financial, will also sign up for the Q&A portion of the call. During today’s call, Control will make forward-looking statements about our expectations. These statements are subject to dangers and uncertainties that may cause our actual effects to differ materially. These dangers and uncertainties come with the points made known in our SEC filings. Please refer to the Safe Harbor Statement on the first page of our presentation, as the content of our call will be governed through this language. And with that, I’m excited to give it to Mary.
Maria T. Barra
Thank you Ashish and hello to you both. In January, we set transparent priorities for 2024, designed to leverage our strengths and stay informed of the challenging situations we face in 2023. I’m pleased to report that the team is handling this well. to both one of them. Around the world, we are very focused on expansion and profitability, which means taking full advantage of our winning product portfolio to increase our market share without chasing unprofitable businesses. In North America, in fact, the strengths of Chevrolet, Buick, GMC and Cadillac stand out. The team generated an EBIT margin of 10. 6% in the quarter, driven by our industry-leading full-size pickup trucks, the momentum we are generating in the midsize truck business, the expansion we are seeing in our SUV business and obtaining better profits. of our electric vehicle portfolio and our general operating field. We further increased our retail market share and US retail market share during the quarter thanks to incentives that remained well below the industry average, namely in our trucking business. We increased our combined sales of Chevrolet and GMC full-size pickup trucks by 3% year over year and the construction sector increased our retail market share by 1. 8 points to 43. 8%, with incentives well below of our main competitive competitors. closer whose sales were declining. In March, we doubled GMC Canyon sales year over year. And the Chevrolet Colorado is the fastest-growing truck in the midsize truck segment, thanks to its purity of functionality, undeniable elegance, execution and value. These are MotorTrfinish’s words, not mine. We also continue to gain market share and increase our EBIT with our new small SUVs, adding the Chevrolet Trax and Buick Envista. These vehicles help us gain new consumers and we will continue to excel in visitor retention. During the quarter, S&P Global Mobility announced that GM now enjoys the highest loyalty of any OEM for nine consecutive years. This is a difficult competitive merit. In our electric vehicle sector, we are gaining momentum in terms of production and profitability. For example, we have increased battery module production by 300% in the last 6 months. The quality is very smart and continues to improve. And the installation and validation of our new high-speed module assembly lines is underway. We plan to double our existing capacity until the end of summer. Electric vehicle production volume increased significantly during the quarter, and our dealers translated this into a 21% year-over-year increase in deliveries to electric vehicle retail consumers. For example, the Cadillac LYRIQ outperformed all European luxury lopass electric cars in the first quarter. And since mid-March, we have been delivering Chevrolet Blazer electric vehicles with updated and improved software. All of our product formulations take advantage of the end-to-end software improvements we’ve made, adding the construction improvement we’ve instilled in our quality and validation processes. Most importantly, the talented executives and engineers we have hired from the technology industry are raising the bar in software design and execution, which will help us differentiate our visitors’ experience with the suite of products and software installations we we will offer. We are also moving forward on Cruise. The team is back on the road in Phoenix, updating maps and gathering more road information. This is a very important step to validate our improved autonomous driving formula and take advantage of the more than five million driverless miles we drove before the break. We maintain normal interaction with regulators and stakeholders to build buy-in as we regain momentum. Safety will continue to be at the forefront and our progress will continue. I am pleased with our ICE functionality, our progress in EV implementation and expansion, the functionality of our new software organization, and the steps we are taking to regain momentum at Cruise. Additionally, I am very proud of the GM team and all of our stakeholders who have really stepped up to keep our momentum going. Their commitment and tenacity gave us the confidence to increase our EBIT, EPS and adjusted cash flow direction by the full year 2024. In our ICE segment, the redesigned Chevrolet TraverseArray, GMC Acadia and Chevrolet Equinox will be launched in segments of high volume starting this year. room. The same happens with the Chevrolet Spin and S10 in South America, and their margins are higher than those of the models that surpass them. Then the sunny new Buick Enclave will arrive this summer. This is the first Enclave to offer Super Cruise. Later this year, we will bring significant design and generation enhancements to our top-selling and productive GMC Yukon, Chevrolet Tahoe and Chevrolet Suburban full-size SUVs. They come with redesigned, technology-oriented interiors, safety and security features, adding a set of connected cameras, ride and handling improvements, styling upgrades and much more. In addition to marking our functionality team, the incredible Corvette ZR1 is coming and we can’t wait to put consumers behind the wheel. And we’ve already begun installing fixtures at our Fort Wayne assembly plant to produce our next-generation full-size ICE vans. In our electric vehicle business, the Ultium Cell factory in Spring Hill ships sales and construction ramps up production throughout the year. The Chevrolet Equinox EV will hit showrooms this quarter and we are very excited because it will be the most affordable long-range electric vehicle on the market. It will also offer Super Cruise like all of our Chevrolet, GMC and Cadillac electric cars on the Ultium platform. Then, we will introduce more affordable trim series for Chevrolet Equinox EV, Blazer EV and Silverado EV in the second part of the year, which will help increase volume and market share. Also at this time, Cadillac will expand its line of electric vehicles with OPTIQ and Escalade IQ. This is important because EV adoption in luxury segments is higher and more resilient than in the broader market. Two of our most anticipated launches are the GMC Sierra EV Denali and the Chevrolet Silverado EV RST. They are maximally productive in elegance in spaces that really matter to truck users. By optimizing the battery, aerodynamics and other formulas, we were able to increase the range of the RST and Denali by 10% to about 440 miles, about 40 miles more than the average range of ICE cars on the roads today. No electric van on the road today comes close, and it is possible to overtake even further. A few weeks passed, two road testers took the RST for a vacation from Las Vegas to Phoenix. And they drove it like consumers do: unpaved and gravel roads, at highway speeds, at other temperatures and other altitudes. In the end, they managed to travel 460 miles on a single charge. The same story happens with the trailer. A journalist drove a Silverado EV paint truck and three competing battery-electric pickup trucks on a 500-mile tour of the Rocky Mountains while towing trailers. It wasn’t even a competition. The Silverado EV prevented recharging once, while all other trucks had to do so four to five times. Chevrolet and GMC are also the only pickup trucks that allow drivers to tow while employing Super Cruise, our generation of hands-free driving. This is just one of the many features that uniquely distinguish our products. This is precisely the type of design and engineering feature that excites people, motivates them, and converts them into consumers. It’s the same formula that Chevrolet and GMC have come up with with ICE trucks, and those effects speak for themselves. Based on the feedback we’re receiving from consumers and dealers and the initial sales momentum we’re seeing, we’re confident that continuing electric vehicle production is the right decision. We know that transparency is vital in both one and both transformations. So Paul and I will give you normal updates throughout the year, and we’ll add at our investor day that we’re making plans this fall, as we hit our electric vehicle production, sales and profitability milestones. Array All those wonderful ICE products and EV are made possible by the investments we have made to drive transformation and expansion. As a result, our finish has exceeded historical levels for several years. Now that the foundation is largely established and we are starting to see the effects, we are refocusing on generating free cash flow through increased profitability and capital field, looking for strategies to spend less to achieve the same effects and incessantly focusing on the visitor. . Array You already see some examples of this. Our Win with Simplicity field is a wonderful example of how we improve capital power and reduce costs. The next-generation Ultium-based Chevrolet Bolt EV is another. This is a profitable and capital efficient program that will produce one of the most affordable electric vehicles on the market when it arrives in late 2025. There will be many more examples as we progress. With that said, I would now like to turn the call over to Paul to provide our effects and our new top direction for the year of calfinishar.
Paul A. Jacobson
Thank you, Mary, and I appreciate everyone joining us this morning. We have had a good start to the year and I would like to thank our team for all their hard work in achieving another set of strong monetary results. We delivered consistent pricing results during the quarter, less than the 2% to 2. 5% headwinds we had built into our full-year guidance. During the first quarter, values alone decreased approximately $200 million year over year, driven by demand for our products and a disciplined go-to-market strategy that prioritizes viability and margins. And so far in April, we have noticed that values remain relatively consistent. That said, our comparisons become more complicated as we track the value increases recorded in the second quarter of last year. The U. S. retail sector saw a slight composition change relative to the full-size truck segment during the quarter. However, we have greater volume and market position commensurate with a percentage with lower incentives than our competition, a testament to the strength of our trucking franchises and visitor loyalty. Retail sales increased 6%, while fleet sales decreased more than 20%, driven by two main points. First, we encountered some production limitations that affected the delivery schedule of our fleet of advertising vans and midsize vans. We expect to recover the maximum of this volume in the current component. Secondly, we made a strategic decision to produce more full-size SUVs at retail compared to last year to meet strong visitor demand. Retail sales of our full-size SUVs are increasing consistently with trim mix, which has allowed us to generate more coin depending on the vehicle. We are committed to building our strong and virtuous fleet business, but will continue to balance the demands of fleet and retail consumers with a focus on virtility. We generated healthy cash flow during the quarter, helping to generate $600 million in online open market with year-to-date percentage buybacks as well as ongoing ASR, generating additional $14 million in moves since inception of the year. We now have approximately $800 million remaining on our existing consistent percentage repurchase authorization. Additionally, we completed the first tranche of the $10 billion ASR last fall, withdrawing four million consistent with the percentages in the first quarter. Our fully diluted consistent percentage count at the end of the quarter was 1. 16 billion, down 17% from just a year ago. Given the strong momentum we’ve seen so far and our confidence in the outlook for 2024, we are raising our full-year guidance: Diversity-adjusted EBIT to $14. 0 billion from $12. 5 billion, EPS to $5 billion Diversity adjusted diluted $9-$10 and automatic loose cash flow adjusted. a flow of between 8. 5 and 10. 5 billion dollars. Now let’s move on to the first quarter results. We increased overall corporate currencies by 8% to $43 billion, driven by a consistent increase with wholesale volumes in North America. Over the past two four months, we have achieved a steady coin expansion, resulting in a CAGR of over 15% during this steady period. We also achieved adjusted EBIT of $3. 9 billion, adjusted EBIT margin of 9. 0% and adjusted diluted EPS of $2. 62. Adjusted EBIT was higher year-over-year and well above consensus, driven by our continued strong ICE execution, increased EV strength and strategic charge moves, mitigating the effect of emerging hard-work charges . We achieved adjusted free cash flow in the automotive sector of $1. 1 billion, compared to the stable level in the first quarter of 2023, driven by improved working capital benefiting from stock control and production scheduling. North America reported adjusted EBIT margins of 10. 6% in the first quarter, generating $3. 8 billion in adjusted EBIT, an increase of $300 million year over year, primarily due to greater consistency with wholesale volumes combined with values solid and continuous charge control. During the quarter, we continued to realize benefits from our ongoing fee relief program, realizing an additional $300 million in revenue through engineering and go-to-market expense discounts. Our constant rate base is at its lowest point since the first quarter of 2022. And we are on track to reach the full $2 billion, net of depreciation and amortization, through the end of 2024. Dealer stock levels ended the quarter slightly above our consistent trailing period of 50 to 60 days. purpose of the year at 63 days. However, we believe we are well positioned from a stock standpoint as we approach a seasonally stronger part of the year and go through a few weeks of planned downtime in the second quarter on our full-size pickups to prepare long-term releases and install. New equipment. GM International’s adjusted EBIT in the first quarter broke even, declining $350 million year over year. China stock’s upside was a $100 million loss, down $200 million year over year as we cut production to balance broker stock grades. This result was slightly higher than expected due to the continued focus on virtue. After making progress in reducing inventory levels, production is normalizing and we expect to return to profitability in the second quarter. GM International’s adjusted EBIT, excluding China stock results, was $100 million, down $150 million year-over-year due to declining volumes in North America. The South and strategic resolutions aimed at protective margins. We expect new product launches and additional cost savings to help improve functionality and begin work in the second quarter. GM Financial continues to perform well with adjusted EBT of $700 million in the first quarter, in line with last year and well within the range of guidance of $2. 5 billion to $3 billion total for the year. They continue to drive portfolio expansion and paid a $450 million dividend to GM during the quarter. Cruise finish was $400 million in the quarter, compared to $800 million in Q4’23, reflecting our charge relief activities and a more targeted or consistent domestic plan. As Mary mentioned, Cruise is resuming consistent relationships in Phoenix, as well as testing in simulated environments and closed courses, while working to gain acceptance and build partnerships with regulators and consumers. We expect full-year cruise revenue to be around $1. 7 billion. Let’s now move on to one of the most important metrics we focus on: the viability of electric vehicles. We continue to see sequential and year-over-year improvements in variable currency inputs and EBIT margins as we take advantage of scale improvements, dramatically consistent with charges and mix. Since last year we have reduced mobile phone charges, one of the main points being the alleviation of battery consumption in relation to charges, specifically lithium. Last year we launched our first joint battery factory. And as they increased production and achieved other efficiencies, the load on cell phones decreased. And Tennessee Cell Plant #2 is progressing even faster thanks to lessons learned at Plant 1 and is expected to reach full installed capacity through the end of the year. Together, these assistance points improve the performance of the vehicle. For example, we saw over $12,000 in year-over-year savings for LYRIQ alone. As we continue to grow, we expect to see Production Tax Credit benefits continue to grow and our ongoing charge absorption improve. We wholesaled 22,000 Ultium-founded electric cars in the first quarter, compared to less than 2,000 in the first quarter of last year and remain on track to meet our production target of 200,000 to 300,000 units and wholesale volume by 2024. We will focus more on the functionality of electric vehicles as we move through the year. I would also like to address the pricing of electric vehicles, which we recently adjusted on the 202four Blazer EV. This action was well earned through our brokers and consumers. And as Mary mentioned, the vehicle is being developed. We assume some pressure on ICE and EV pricing in our 2024 business plan and forecast, but continue to work to find additional offsets through charging realization and other market gains. ‘efficiency. Importantly, this price action does not replace our expectations of positive variable earnings for our EV portfolio in the current component or our mid-single-digit margin target in 2025. We are very confident that when consumers see our new electric cars and, if you have the opportunity to drive them, you will appreciate the unique combination of design, performance, diversity and charging that we offer at multiple price points. And thanks to our supply chain efforts, consumers are well positioned to take advantage of the $7,500 clean energy tax credit. In conclusion, I must reiterate our capital allocation frameworks, as well as our goal to be much more consistent in the way we use capital. We generate significant cash flow, which budgets for our EV transformation and expansion opportunities. These efforts are accompanied by investment in long-term products, the transition of production capacity to electric cars and the deployment of resources in next-generation battery technology. At the same time, they have seen that we are adapting to the dynamic market, specifically that of electric cars, and making ambitious decisions to be more efficient in our capital investment, something we will continue to do in the long term. Our balance sheet remains strong. And in terms of consistent pullbacks with shareholders, we ran the ASR last November. And the reaction has been overwhelmingly positive, with GM stock outperforming its peers and up only about 50% since the announcement. We have seen an improvement in our P/E multiple since ASR, but we are still undervalued relative to our previous average, as well as relative to our competition and other advertising companies. It is clear that we are not happy and we know that we have a lot of work to do on our rating and we are very committed to improving it. As we move forward, we believe the strong liquidity generated through our ICE portfolio, improved execution of our electric vehicle strategy, and tangible progress at Cruise will help drive significant returns for all GM stakeholders. That concludes our opening remarks and we will now move on to the question and answer portion of the call.
Operator
(Operator Instructions) The first comes from Joe Spak’s lineage at UBS.
Joseph Robert Spak
First of all, with regard to advice, Paul, I just need to perceive the assumption of pricing. Is it now only negative 2-2. 5% for the remaining 3 quarters?And then you discussed a few things about the combination. So, you have higher sales of EVs and smaller crossovers. It seems very likely that any of them will continue the year. And then I think he also discussed some potential headwinds in the pickup trucks. But on the other hand, EV variable earnings turn positive in the second half of the year. So, I guess I just need to understand a little bit better how all of those things intersect. And do we deserve that we actually see an improvement, perhaps a marked improvement, in the combine as the year progresses?
Paul A. Jacobson
You are right: in the end our hypotheses are between 2 and 2. 5% for the rest of the year. So necessarily what we did with management was take the outperformance that we saw in the first quarter and carry it over to the full year. So actually, not much has been replaced compared to the hypothesis that is coming. So when you look at seasonality and trend lines, keep in mind that in the second part of the year, we have more EV volumes. And we also have some of those price hurdles that we have. That’s why we think it was smart to move on and pick up where we left off. But we are still guided by the same principles as when we launched our first guide for next year. When it comes to the combine, we talk about it a lot. Obviously we had a pretty strong tendency. We are reversing some value increases we took last year. As I said, the competitions get a little more difficult from year to year. But overall I think the market is holding up quite well. And as we have said before, if we see that the values continue like this, we believe that we will be able to resume our forecast.
Joseph Robert Spak
It is ok. As a momentary query about Cruise, with the relaunch, I perceive manual control and mapping. But Mary, you insisted on an advanced system. So, maybe you can give us a little bit more detail about what part of the existing technology And then from a monetary standpoint, do the rules provide for other steps towards this recovery?And what about capital needs, as liquidity rebounds to $700 million?
Maria T. Barra
Of course. Well, first of all, Cruise, we are very pleased that you are back on the roads of Phoenix. As we said it is manual, but then we went to supervised and then unsupervised. And the core generation stack, what we’ve been doing since we made the resolution to pause, is continuing to run and improve it. So we’ve really strengthened the security of the formula by proceeding to make sure that we understand, I would say, low probability but higher severity issues. Because what we identified in October, although I think it was basically a challenge of not having built the right relationships with regulatory agencies at all levels as well as with the public and then being transparent, we also realized, although externally demonstrated and validated that generation was safer than an average human driver, we want to do more. And that’s what we focus on. That’s why. . . when we get back to Phoenix, we make sure we’re up to date. But I’m really excited to see where the generation is right now and I’m literally in it. As for what we plan to do this year, which is to get back on the road and prove that the style works in a city, as I’ve said in the past, and then expand it from there, we think that gets the point across. of the budget we have. And then when you take a look at how we plan to finance the business, lately we are exploring several options, potentially adding outside transfer and also removing outside investment. So we’ll have more to say about this as the year goes on. But I’m really excited to get back on the road. Us in generation. We do it even better. This has not stopped during this entire era since last October.
Operator
The next one comes from Citi’s Itay Michaeli.
Itay Michaeli
Just 2 questions for me. Maybe first for Paul. Can you just remind us how we think about the volume breakdown of your new refurbished ICE crossovers over the next few quarters and how you see the past past margin improvement that you talked about, I think it was the last quarter?So, maybe for Mary, I hope to go back to the software strategy and maybe tell us about some of the advancements that we expect for the Ultifi software and platform over the next 6-12 months.
Paul A. Jacobson
Thanks for the question. Regarding our crossover, we are talking about the new Chevrolet Trax and Buick Envista, both of which have significantly improved their previous profitability, prior to the updates. And we’ve noticed that, especially the Chevrolet Trax, it really took off. Sales were up 500% in the quarter, and the effects are really smart for us. So, I think some trends in average transaction costs are blurred due to the fact that the volume of those crossovers is expanding dramatically. But we’ve noticed a strength in the costos. de our trucks and SUVs. So, we continue to believe that this increases and adds to the portfolio, and that’s part of our strong guidance that we’re updating today.
Maria T. Barra
And then when it comes to software strategy throughout the year and beyond, first of all, when Mike took a step back in the previous year, he did an incredible job of reevaluating and converting our software progression procedure, so as our validation. procedure. and we’ve assembled an incredibly strong team, probably more than a dozen senior people, to focus on getting the software strategy right as we move forward. So I have a lot of confidence. We took a break earlier this year with the Blazer because we found that a limited number of consumers had a challenge and now we’re past that point. And this has allowed us to have the software for all our long-term vehicles. Therefore, the goals for the next few months are to launch quality products on time and we are on track to achieve that. And then as we move forward, as new software rolls out to more vehicles, it gives us the opportunity to focus more on subscription and service growth. But I’m very pleased with where we are, the team we have and the progress they’ve made. And it shows in our ability to launch quality products.
Operator
Next up is John Murphy of Bank of America.
Juan José Murphy
Mary, I just wanted to do a strategic consultation on China. At this point, it’s not a source of income for you. And there’s obviously a lot of noise about a geopolitical basis and something like that about our appointments or the quotes. I’m just curious: is it time to start thinking about strategic opportunities to finalize or potentially promote the business?How do you see this in the context of a broader portfolio over the next few years?
Maria T. Barra
Yes. Generally speaking, with everything that’s happened in the last few years with COVID and then the supply chain issues with the chip shortage and then the broader supply chain issues, we have worked and in fact , built the resilience of our supply chain, and we will do it. keep doing that. But in the long term we are committed to China. We are facing a market that, in the medium term, will experience truly extensive growth. We continue to expand not only our global responses, but also, in some cases, local responses as we move forward with our electrification strategy. Currently, NAVs constitute approximately 30% of GM’s total deliveries in China from a first quarter perspective. And we’re going to take advantage of that throughout this year, as we have an intense NAV release cadence. Starting in the second quarter, we will launch several PHEVs and also offer them as full electric vehicles. That’s why we also created Durant Guild, which allows us to focus on some niche segments in China that are higher-end and more lifestyle-oriented. And, for example, the Tahoe and Yukon will be available for reservation later this year. So we definitely think that this market has replaced and the landscape has replaced in terms of the functions of the Chinese OEMs. But we still think GM has a role to play in high-end luxury. And again, as I mentioned, leveraging not only our global responses but also our local responses. That is our goal, but we have achieved it by also focusing on the resilience of the source chain.
Juan José Murphy
Alright. And then I just have a little tracking of the values. By saying between 2% and 2. 5%, I understand that is your most productive estimate at this time. But [current] pricing is difficult. So I’m just curious, Paul, if you could tell us what you think about pricing, because there’s a lot of crosscurrents. I mean there’s a drop in the value of EVs, but it turns out there’s resilience on the ICE side. When you look at your limit, you’re at one hundred percent capacity utilization, which means you’re pretty limited in terms of your structural source type. If you look at cars aged between 0 and 6 years, they will probably continue to decline over the next 2 years. Therefore, the used vehicle market will remain relatively tight. I mean, I think other people are looking at brokerage stocks and saying, hey, things are getting a little tough. There is a risk that is worth it. When we take a look at some of the structural facets of the fountain, we see that they are quite limited. And it turns out that even at a Tier 2 and Tier 3 home base, they are limited and dependent on manpower. I mean, it’s just. . . it turns out that his resistance might last a little longer than other people fear. I mean the Canyon and your trucks, you said you were missing some things that you would move to fleets that you would make up for later in the year. So there are, and all those types of scarcity portfolios that persist. And it turns out this is going to last longer than other people fear. How is that 2% to 2. 5% estimate made or arrived at? And where do you think things will evolve in the next two years?
Paul A. Jacobson
Well, as we’ve talked about, 2% to 2. 5%, I have to be very clear, it’s not an expectation. This is an assumption we included in the guide and provided to users so that they can run their models from this perspective. But, as we saw with the outperformance in the first quarter, we were there. And April is doing pretty well for us, with slightly higher ATPs than at the end of the quarter. So this is not literally an expectation, but rather an assumption that there may be headwinds on a macroeconomic scale. We know that our pay is getting tighter and tighter as we catch up on the value increases we took on over the summer of last year. But overall, the business environment remains resilient. And I think that’s a very common theme that we’ve had for over a year and quarters: there’s a lot of downward bias, but we continue to manage commercially on a month-to-month basis and produce according to demand. And I think that with this balance it has been very favorable for us both in terms of value and margins.
Operator
Next up is from Goldman Sachs’ Mark Delaney.
Mark Trevor Delaney
EBIT in the first quarter is strong and annualized at approximately $15. 5 billion. I think EBIT for the full year is now between $12. 5 billion and $14. 5 billion for the year. So I hope to get a better sense of some of the points that are moderating EBIT for the rest of the year. compared to the execution rate in the first quarter.
Paul A. Jacobson
So I would say it all comes down to a couple of things. The first is that a decrease of 2 to 2. 5 per cent is assumed. And as we expand electric cars and continue to move towards positive variable profit, their margins are clearly not as strong as ICE’s, so we’re seeing a little bit of tension at the rear because of that, but overall, we’ll continue to be consistent. And like I said, if we don’t see that weakness in prices, I would expect that there’s an opportunity to beat those numbers.
Mark Trevor Delaney
That’s helpful, Paul. Another question about electric vehicles and the issue of pricing. The company has reported intelligent demands and feedback about its EVs, but the overall market has been competitive for EVs in terms of price. Do you think GM will want to take more pricing action this year to succeed with the 200,000 to 300,000 customers it has in North America?Or does the call for signals you’ve gotten from the market recommend that you can achieve those kinds of volumes this year?year with relatively corporate costs in the future?
Paul A. Jacobson
Of course. Well, evidently the early effects here, as we expand Ultium, are quite strong, with retail sales up around 20% year over year, despite the fact that the Bolt, which puts the finish on the last generation, fell around 60%. % during the year. the neighborhood. Therefore, retail demand remained strong. We have clearly noted many weaknesses in the fleet, specifically on the EV rental side, but we are seeing consumers respond. Now it’s actually low volumes as we grow our business, but we’re building that momentum that I think we want with the products to be able to show consumers what our features are. When you look at the statistics that Mary cited in the diversity script and what’s in our presentation of the effects, you see that purpose-built electric cars are greater in terms of performance, diversity, charging speed, towing capacity, etc. than many other products available on the market. And I think as consumers continue to see that, we’ll be well placed as demand for electric cars in the retail sector continues to evolve. So clearly I will be watching it closely, although the early indications are strong.
Operator
The following is from Wedbush’s Dan Ives.
Daniel Harlan Ives
And for Mary and Paul, is the UAW now in the rearview mirror, with much of the EV strategy paying off, and that the company is simply in a strong position, which means less uncertainty?I mean, can you compare today between 6 and 9 months ago internally?
Maria T. Barra
No, I think you make a very smart point, Dan. We’re making it. I feel a lot better about where we are, as I mentioned. Now we have done it, we are moving forward and the challenge of the module is behind us. All the future lines that we were following are on the way. So we feel really smart about it. We are very pleased to have been able to reach an agreement with the UAW. We continue to work with them on several fronts and build relationships with the new control team, as they were appointed relatively before negotiations began last year. So I feel like we continue to talk, challenge each other, and solve challenges where we have challenges. I feel much better about it. And as Paul said, we are seeing smart progress with our LTM-based electric cars because they are purpose-built and the visitor makes no compromises. And we also see that charging infrastructure is improving in both one and both quarters. So I feel very aware of where we are and I think we have momentum. And I, we have a very aligned team within GM that will take advantage of all those opportunities. I would also add, Dan, that I feel very smart, as I mentioned earlier, about the current state of the software. The work and skill that exists in the company and the progress we have made gives me confidence that we will be in a good position there too. From last year to today, it is much greater, much more positive.
Operator
Next up is that of James Picariello of BNP Paribas.
James Albert Picariello
I’m just thinking about expanding sales for the whole year. Global volumes increased approximately 4% in the quarter. Can you help us assess the effect of large truck downtime this quarter?The split look between the first part of the year and the second part of the year for LTM volumes compared to the 200,000 to 300,000 target games?
Maria T. Barra
Well, I can. . . Let me comment on full-size pickup trucks. We’ve taken. . . We announced that we will have a couple of weeks of downtime, so we are starting to install the device so that we can have a sleek launch as we get the next model. And we’re going to continue to focus on visitor demand. We think we have some solid products that, as Paul mentioned, we’re expanding their market share. We increased our market share in the first part of the year. thanks to solid pricing. So I think it’s a testament to the strength of our product. But we’re going to meet the demands of visitors and make sure that we don’t overbuild because I think it’s vital to manage tailings and make sure that we’re managing our inventory. I think that’s one of the things we’ve done that allows us to remain strong in terms of pricing and products. And in terms of the general expansion of wholesale trade, I don’t know. , Paul, if you need to communicate it from an EV perspective.
Paul A. Jacobson
So in terms of EV expansion, obviously, the source is going to increase over the course of the year as we get to the 200,000 to 300,000 production sets that we’ve been talking about. Spring Hill will be commissioned in the first quarter and we are ramping up production fairly steadily at the Ultium 2 mobile plant. And as module production begins, we see a particularly high production rate. Now, of course, we’re all going to be guided: we’re going to be guided through the consumer’s position from this point of view. Early indications are that the ramp is going well and we deserve to expect a stable expansion during the year.
James Albert Picariello
They gave it to me. And then simply report the losses of the Chinese joint venture during the quarter. Do you expect profitability for the rest of the year, or maybe you need another quarter or two?And then, for consolidated GMI, can you enlighten us on the profitability moves that are being made in South America?
Paul A. Jacobson
Yes, right. As far as China is concerned, I think the scenario is progressing as we indicated in the initial guidance range. Our trend has been slightly higher than we expected, however, we foreshadow a loss in the first quarter. We expect this trend to be the opposite and to be successful for the rest of the year. And we’ve talked about similar or slightly smaller effects than last year in China. So the rest of the year we’re going to have to deal with that. But like I said, the first quarter was a little bit ahead of expectations, but it delivered overall, so we’re going to be successful. For the rest of GMI, we had some downtime in South America in particular. But overall, we’re seeing an improvement from where we were and we’re not too worried about that right now, but it’s a position in the market that we continue to monitor.
Operator
Our next query comes from Alex Potter with Piper Sandler. Alex, you might want to reactivate your line.
Alexander Eugene Potter
Yes. Can you hear me?
Maria T. Barra
I do.
Paul A. Jacobson
I get you, Alex.
Alexander Eugene Potter
It is ok. Very well. So, the first question is about Ultium. You talked about the forecast of 200,000 to 300,000 people producing, which is smart to see. But at the same time, he’s talking about how he’s going to use customer calls as a kind of trigger. Would you say that 200,000 to 300,000 is something you’re going to stick to against all odds and then assess customer demands from there?Or is it something that could reduce, towards the middle of the year, towards What is the second part of the year if it doesn’t seem that customer demand is materializing?
Maria T. Barra
We will never build, we will simply build products that buck all odds, because the numbers are there. We will be receptive to the visitor. But we think we’ll be in the range of $200,000 to $300,000 with the number of electric cars we launch from Ultium. We are seeing strength with HUMMER as we expand it. We’re seeing some strength with LYRIQ and Blazer is just getting better. The equinox is approaching and there are several more. So I think when you take into consideration the fact that all of those products will respond to consumers with precisely the functionality and features they need, we think we’re well placed there. So, I would also say that when you look at our entire portfolio, we are well placed, whether it is ICE or EV, because of the strength of our ICE portfolio. Therefore, we are in a good position to respond to the visitor. As I said, we are careful not to build too much and maintain our costs and margins. And we believe we have the strength to do it. And specifically, if you look at Spring Hill, we can build electric cars or combustion engines in this factory. So I think we’re in a smart place. We think we’ll be between 200,000 and 300,000 depending on visitor demand, and we’re just going to keep climbing.
Alexander Eugene Potter
It is ok. Below, we talk a little bit about the festival in China. I’m interested in your up-to-date perspectives on the Chinese festival outside of China. What, I suppose, is GM’s position on this?Are they more of a free-market philosophy from a business perspective, competing with the Chinese on a global scale, especially in countries like South America?Yes, he comments on China.
Maria T. Barra
Yes, that’s a wonderful question. And first of all, I think that, in general, we need to have our products more productive. And if there is a point of play, then we need to be competitive in terms of the basis of the products. I think we have to ask ourselves where the games of chance are. But a lot of things can happen from a regulatory or business standpoint, but our goal is to make sure we have great cars at the right price, so what will help us is that GM maintains its market share around the world. When you look at South America, the Chevrolet logo is incredibly strong. And we’re going to continue to concentrate on wonderful designs with a wonderful portfolio of products with the right features and functions, and they’re racing to reduce system prices. So there’s a price there too. And that’s how we’re going to be competitive around the world. But I think the concentrate wants to be in a specific playing box.
Operator
Next up is Rod Lache of Wolfe Research.
Unidentified Analyst
I’m Bruno for Rod. Me would like to be consistent with the key assumptions you make in your EV margin outlook for positive contribution margins this year and positive overall margins next year. Based on the recommendation you’ve given us, we want to improve EV-consistent contribution margins to around 10,000 to 15,000 in 2025 compared to 2023. I think if I listened correctly, that’s pretty much in line with what you see in the LYRIQ from year to year. But if you can, just help us understand the major categories of lower prices and what drives them, as well as their underlying assumptions about prices and pricing.
Paul A. Jacobson
Yes. Thanks for the question. So if you go back to a presentation we made in November, we highlighted the roadmap for a 60-point improvement in EBIT in 2024, about 60% of which is due to ladder benefits. So if you think about where we are, we have invested a lot in infrastructure, battery factories and production facilities, supply chain, etc. , to increase production. So some of our EBIT losses are because we have to grow towards what we have built. That’s about 60% of that 60-point improvement. The remainder is split slightly between launches and launches, along with reductions in curtain charges. So we’re off to a good start as we’ve seen raw battery materials start to enter mobile charging this year. We have done a smart job by reducing mobile phone rates. And as we said, the cost of LYRIQ decreased by $12,000 year over year. So this is the kind of progress we are waiting for. And then as we get closer to 2025, scale becomes less of a factor and we focus more on reducing curtain costs on the cars we produce as they come out of their prime years and we start to take advantage of the savings in each vehicle. line in the second, third year of production, etc. So there’s a pretty smart roadmap there. Obviously, we will continue to monitor charges and see where the market is. As we talked about, what we did with the Blazer was what we expected. Therefore, we do not move away from those objectives. And we’re only a quarter of the way through the Ultium ramp, but early signs are positive.
Unidentified Analyst
It is ok. And then, taking a step back, we wonder if there are paths that lead to the EV losses that are being experienced lately and end up being reversed. Specifically, if the demand or pricing environment for those EVs is milder than expected, how much flexibility do you have?To reduce prices in the EV sector, adding when it comes to battery plans?I think their plans for 160 gigawatt hours will eventually exceed 2 million units. Is there flexibility to simplify this if demand differs from your expectations?
Paul A. Jacobson
Well, I think you’ve noticed that we took action before. We had a delay at the Orion plant and in a way we took advantage of some of the slowdown to make innovations at that plant that will help us reduce prices through some of the early learnings from production at the factory. ZERO and things we can do in the future. So I think you’re going to see us as very agile. And we’re looking to create as much flexibility as possible to navigate from here to particularly greater adoption of electric cars in the future. But when you take a look at our portfolio, whether it’s ICE and EV, it’s probably the most productive portfolio in our history and consumers are responding to it. So we are going to meet the visitor where they are and continue to try to exceed their expectations and actually praise them for their loyalty to us in the future. And we think that can also carry over to the EV market. But like Mary, we will continue to be driven by demand for our products and cars. And the first indications are that everything is going pretty well.
Operator
Next up comes from Chris McNally of Evercore.
Christopher Patrick McNally
I just wanted to address some of the questions about seasonality, following some of Mark’s previous questions. Paul, could you talk to us about seasonality in wholesale?I think you talked about an entire year emerging in single digits, which would mean a diversity of 800,000 to 800,000 for the rest of the year. But it does allow us to just get away with a bit of cadence, given the downtime you discussed in the second quarter.
Paul A. Jacobson
There has probably been a bit of progress between the first and second quarters, especially with the trucks as we prepare for this downtime and retrofit that will take place in a couple of weeks. But sometimes, we’re expecting seasonality. It’s very similar, with the first and fourth trimesters slightly lower than the second and third trimesters. Therefore, nothing has changed radically. But at the edges, maybe a little bit of progress between the second quarter and the first quarter. As we look ahead to the second half of the year, I just want to warn you that we want to continue to guide us through assumptions about pricing. , which obviously have a bigger impact in the second half of the year, given the functionality we’ve already achieved in the first quarter and, indeed, where April is looking at right now. And then with the increase in EV volume at the rear, this is where we see a bit of charging at the front in the tips we provided.
Christopher Patrick McNally
Perfect. It all makes sense. And then possibly, just on the actual production side, let’s think about some sort of T1 truck production, as it would have possibly been [increased] in the first quarter. Will we get back to that point in the fourth quarter, just looking for overall performance and stock build-up?
Paul A. Jacobson
I think, obviously, we’re going to continue to monitor demand to know where it is. The inventory that we built in March, we’re still, we came out of the quarter with about 63 days of system-wide stock. So, some of that was intentional, knowing that we were going to have this downtime. So once we get past that, I think we could see a slightly higher production trend in the third quarter, but we’re going to be driven by the call situation.
Operator
Next up is JPMorgan’s Ryan Brinkman.
Ryan Joseph Brinkman
Thank you for all the main points about your upcoming planned BEV launches in the U. S. U. S. It turns out that you will most likely get a percentage of the number and appeal of the offers. I’m curious if you have an equally competitive EV deployment strategy. planned in China, especially since it turns out that its share in China has declined amid the industry’s transition to electric vehicles. I heard you mention earlier the increased competitiveness of Chinese automakers as another contributing factor. And there may be other factors. But do you think that at this point a new EV crusade would be enough to stabilize the trend in Chinese stocks?Have you planned such a bombing in the next year or two?And would this be a path to greater monetary functionality or, given some recent price trends, would it rather be an investment that would pay off in a few years?
Maria T. Barra
I think we have some counterfeit net asset values coming to China this year. We’re repositioning [LYRIQ]. The Cadillac OPTIQ will be launched soon. You’ll see it at the Beijing Auto Show. And we also have PHEV inputs on the Buick GL8 and Equinox. And then for our ICE vehicles, we also have, for example, a leader with the GL8 and there will be other innovations to come as well. So, and then at SGM, we also got a new, excuse me, new NEV releases as well. So I think we’re going to be in a bigger position, and that’s going to continue as we move from this year to next. And that’s why I think we can play into the market position of NEVs, whether it’s plug-in hybrids, hybrids and ICEs, as well as electric vehicles. And then, as I mentioned, with Durant Guild in the niche segment. So I think GM is in a position to play and increase its market share.
Ryan Joseph Brinkman
It’s bien. Super. Et the consultation is probably about new vehicle operations in China, just underscore some of the appeal if you can tap into GM’s installed base of cars there, the OnStar, the financing, the sales, the service, the smart leasing. , to clarify, what do you think about this detail of doing business in China?
Maria T. Barra
Well, you discussed all the things that make it possible for us to succeed in the marketplace. But I would say that last year we also created an organization in China committed to software and e-commerce. And that will allow us to continue to improve and be competitive in terms of software and also facilities, in addition to what we have from the perspective of GMF, investment and OnStar. So we’ll continue to build on that.
Operator
Our latest comes from RBC’s Tom Narayan.
Gautam Narayan
Paul, just a continuation of this comment about the EV margin. Thus, 60% of the 60 basis point improvement comes from scale advantages. So if BEVs were closer to, say, 200,000 than 300,000, is that a negative net result or a positive for overall margins?Presumably, BEVs have lower margins, but if you sell some, there’s a negative effect due to a smaller scale advantage. So I’m just trying to understand that, for example, how do we think about that volume in the company’s margins.
Paul A. Jacobson
Yeah, what I would say is obviously depending on where we are in the journey, escalate the issues a lot when you’re building the infrastructure that we have. Therefore, it is certain that, in the short term, a drop in volume would have a negative effect on this trajectory. But I think what we’re looking for is kind of a balance on the variable profit aspect around 200,000. So we are still tracking to be able to reach that goal. But I see this as kind of a moment where we become what we’ve built. And I think from a strategic perspective, there is a need to build capacity a little bit before adoption to ensure that we can accelerate and become stronger throughout this entire journey. Aren’t we betting on a game that has been around for more than 10 or 15 years from that point of view? Therefore, we have acquired the necessary flexibility to be able to react to ebbs and flows. And lately we are in a phase where we want to reach the scale that we have built. But those are all really smart investments. And we are sure of the direction this will take in the short and medium term. And then we will continue to monitor this in the future.
Gautam Narayan
And fast tracking. As far as batteries are concerned, obviously, we noticed a drop in lithium of around 80% from the peaks. I’m just curious to know how their contracts work. When – did we see the best of this reduction? Or is there – is there some sort of delay in that you see – are there other benefits to come given the delay in your raw battery mat contracts?
Paul A. Jacobson
So what I would say is that there are still smart things to come in 2024. So while we have noticed that battery costs have come down, don’t forget that we finished the year with a vital cell reserve as we ramp up production of our modules. As a result, there are still historical costs compared to last year. But I think that will change around mid-summer. And in the second part of the year we will see cells much closer to existing costs. And then if you look at the type of vertical integration and the investment measures that we have taken, the maximum of that capacity is in 2026 and beyond. I would say we don’t regret anything we did because we set higher costs, etcetera. Everything we’ve done has been done with a portfolio technique to make sure we get a price for our investment, whether it’s through floors and caps or market discounts and so on. So we didn’t do anything that would have kept costs traditionally high. And this deserves to be a credit to us until 2026 and beyond.
Operator
Now I would like to turn the floor over to Mary Barra with her closing remarks.
Maria T. Barra
Thank you and thank you all for your question. As we said today, we are making incredibly vital progress across all spaces. We boost growing currencies. We have fair margins, our cash on hand is strong, allowing us to reinvest in the business and our people. Therefore, we plan to invest between $10. 5 billion and $11. 5 billion in capital this year to leverage not only the strength of our ICE business, but also to advantageously grow our electric vehicle business. And we are also editing the software-defined capabilities of our vehicles. So I feel very smart about the key spaces we’re focusing on and how we’re achieving them. Additionally, we reserved more than $160 million in profit sharing for the first quarter to recognize the contributions of U. S. production team members, which were significant, both in terms of production volumes and quality. And our shareholders also benefit from the progress made, thanks to our early execution, a higher dividend and the valuation advantages of the ASR we introduced in November. We are on track to reduce the number of notable stocks to less than one billion. Therefore, I can tell you all with confidence and conviction that our team is absolutely on point. We are in the spotlight and will do everything in our power to maintain this momentum. 2024 could be a very strong year for GM. So thank you all for your time.
Operator
That concludes today’s conference. Thank you for us. You can log out.