Q4 2025 Earnings Call Transcript

Good morning, and welcome to the General Motors Company Fourth Quarter and Full Year 2025 Conference Call. During the opening remarks, all participants will be in a listen-only mode. After the opening remarks, we will conduct a question and answer session. We are asking analysts to limit their questions to one and a brief follow-up.

As a reminder, this conference call is being recorded Tuesday, 01/27/2026. I would now like to turn the conference over to Ashish Kohli, GM's Vice President of Investor Relations.

Thanks, Amanda, and good morning, everyone. We appreciate you joining us as we review GM's financial results for the fourth quarter and full year 2025. Conference call materials were issued this morning and are available on GM's Investor Relations website. We are also broadcasting this call via webcast. Joining us today are Mary Barra, GM's chair and CEO along with Paul Jacobson, GM's executive vice president and CFO.

Susan Sheffield, president and CEO of GM Financial will also be joining us for the Q&A portion. On today's call, management will make forward-looking statements about our expectations. These statements are subject to risks and uncertainties that could cause our results to differ materially. These risks and uncertainties include the factors identified in our filings with the SEC.

Please review the Safe Harbor statement on the first page of our presentation as the content of this call will be governed by this language. And with that, I'm delighted to turn the call over to Mary.

Thank you, Ashish, and good morning, everyone. I'm incredibly proud of our global team, including our dealers and suppliers for delivering an exceptional 2025. Together, we grew the business and adapted to significant changes in tax and trade policy to deliver full-year EBIT adjusted at the high end of our guidance range. We are pleased that we delivered a total return of 54% for our investors and I'd like to share some of the operating highlights that underscore our momentum. In the United States, we achieved our highest full-year market share in a decade.

In fact, 2025 was our fourth consecutive year of market share growth and we continue to deliver with low inventory, low incentives, and strong pricing. Once again, GM led the industry in full-size pickups and full-size SUVs, and we had our best year ever in crossovers driven by vehicles like the redesigned Chevrolet Equinox and Traverse. We have also been very successful with smaller profitable crossovers like the Chevrolet Trax in Buick and Vista. Because we provide tremendous value, with great styling, technology, and a suite of safety features at some of the lowest prices in the market.

We're very proud that Car and Driver named Chevrolet Trax to its 10 Best list for the third year in a row joining the Chevrolet Corvette Cadillac CT5 V Blackwing, and our full-size SUVs. Not only that, but the Cadillac Escalade IQ won Motor Trend's prestigious SUV and Technology of the Year awards. Lastly, the vehicle and technology solutions that GM Involve delivers to our commercial, government, and rental customers helped us lead the US fleet segment for the second consecutive year. We demonstrated another true core competency throughout the year, our agility and speed in adapting to change.

We proactively managed our net tariff exposure reducing it well below our initial expectations. Thanks to self-help initiatives and policy actions that support companies like GM that have substantial and growing commitments to American manufacturing. We were also quick to respond to slowing EV demand by selling our share in the Altium Cells Lansing plant and pivoting or in assembly from EV to ICE production. Our compelling vehicle and technology portfolio, a resilient US market, and the steps we have taken to strengthen our position should help make 2026 an even better year for GM.

The charges we took in the second half of the year to reduce EV capacity will reduce our fixed costs and resolve the majority of our commercial claims tied to lower volume. In addition, our warranty expense is moving in the right direction and our EV losses will be lower. As a result, we expect full-year EBIT adjusted margins in North America will be back in the 8% to 10% margin range. We are also operating in a US regulatory and policy environment that is increasingly aligned with customer demand.

This allows us to onshore more production to help meet strong demand for our ICE vehicles. We continue to believe in EVs, and our portfolio brought almost 100,000 new customers to GM last year. We know EV drivers don't often go back to ICE, so we'll continue executing our plan to dramatically reduce costs and to be well-positioned for the future. This will require continued investment but at much lower levels, and I'm confident in our path to profitability.

Our strong foundation and operating discipline are why our average annual free cash flow generation has structurally improved from $3 billion to $10 billion over the last five years. Consistently strong cash generation has allowed us to execute all phases of our capital allocation program, from investing in the business and our people to maintaining a strong balance sheet and returning capital to shareholders. We believe that formula is sustainable, which is why we are increasing our quarterly dividend rate by 20% and planning future share repurchases. The growth of OnStar services and Super Cruise further underscores our confidence.

In 2025, OnStar had a record 12 million subscribers, including more than 120,000 Super Cruise subscribers, achieving nearly 80% year-over-year growth. OnStarFleet subscriptions hit 2 million, which is two times any other competitor. This year, we will continue to grow our Super Cruise business in North America and expand into South Korea, the Middle East, and Europe. We expect our deferred revenue from software and services to be approximately $7.5 billion by the end of this year up nearly 40% from 2025. We are also confident in the turnaround of our China business, and our growing new energy vehicle portfolio.

They are now about 50% of sales in China and profitable across all price points. As we look further ahead, our annual production in the US is expected to rise to an industry-leading 2 million units after we begin production of the Chevrolet Equinox in Kansas, bring the Chevrolet Blazer to Tennessee, and add incremental capacity for the Cadillac Escalade and launch our next-generation full-size pickups at Orient Assembly in Michigan. We are also launching our sixth-generation small block V8 and the engineering teams are leveraging world-class virtual tools to deliver better fuel efficiency and power for our customers and faster development times.

We reached our performance and emission goals at a third of the time versus the prior program by conducting thousands of combustion chamber simulations while we reduce prototyping for a 20% savings in material and tooling costs. AI machine learning and robotics are also driving safety, quality, and speed in our manufacturing plants so we can get great products and technologies into the hands of customers faster. For example, a cross-functional team developed a predictive weld quality model that has enabled us to deliver even more consistent welds and tighter control. Directly improving cost and quality.

We are also deploying robotic systems alongside humans to make their jobs safer and easier to perform. For example, a robot can pick up an exhaust system and position it so a single operator can complete the installation without strain. Our robotics and AI work will converge at 2,500 robot and cobots controlled by GM Design Software. Then in 2028, we expect to launch our breakthrough LMR battery chemistry.

LMR will help us reduce cell and pack costs by several thousand dollars. Also in 2028, we expect to launch our second-generation software-defined vehicle architecture for ICE vehicles and EVs. It will unite every major system from propulsion to infotainment and safety. On a single high-speed compute core.

The performance upgrade includes 10 times more OTA capacity and a thousand times more bandwidth, allowing our vehicles to get better smarter, and deliver more value to our customers over time. It's also an enabler for our eyes-off, hands-off driving technology. This technology and our new software architecture will both launch on the Cadillac Escalade I in 2028. With our Super Cruise experience, the expertise we brought in-house from Cruise, and our learnings from millions of miles of fully autonomous driving, we believe we have everything we need to deliver a safe, reliable, and highly capable system that customers will embrace.

Safety is key to building trust in new technologies. As we've demonstrated with Super Cruise. For our Eyes Off solution, we are building in redundancy with LIDAR, radar, and cameras and we will begin on highways. Finally, I want to mention that we are hosting our call today from our new global headquarters in Hudson's Detroit.

This beautiful space is designed for the collaborative and tech-enabled way people work today while also saving us tens of millions of dollars annually. It's the latest example of our commitment to operate as efficiently and as profitably as we can. Thank you, and now I'll turn the call over to Paul.

Thank you, Mary, and welcome, everyone. Over the past several years, we've been on an incredible journey. In the face of a rapidly evolving industry and significant macro challenges, the resilience and adaptability of the GM team have been truly exceptional. These strengths have translated into consistently strong financial performance, including $12.7 billion of EBIT adjusted and $10.6 billion of adjusted automotive free cash flow in 2025. Resulting in a year-end cash balance of $21.7 billion.

As Mary noted, our product portfolio keeps getting better. Driving market share gains of 60 basis points in 2025 while we maintain some of the lowest incentives in the entire industry. This disciplined approach has been a key contributor to nearly $25 billion of free cash flow generation over the past two years. This robust cash generation enables us to execute confidently across all pillars of our capital allocation framework.

Over the last two years, we've invested more than $20 billion in capital projects to support growth in our core business and advance our strategic priorities. Looking ahead to 2026 and 2027, we expect to invest 10 to $12 billion annually including approximately $5 billion to expand US manufacturing capacity for some of the highest demand vehicles and further reduce our tariff exposure. We're also proactively strengthening our balance sheet by thoughtfully managing debt maturities. In 2025, we retired $1.8 billion of debt further enhancing our financial flexibility and reinforcing our long-term resilience.

Returning capital to shareholders remains a cornerstone of our capital strategy. In the fourth quarter, we executed $2.5 billion in open market share repurchases, retiring another 33 million shares and bringing total buybacks for the year to $6 billion. In 2025, we also distributed more than $500 million in dividends. Since announcing our accelerated share repurchase program in November 2023, we have returned $23 billion to shareholders through share repurchases.

These actions have reduced our outstanding share count by more than 465 million shares or nearly 35%. Leaving approximately 930 million diluted shares at year-end 2025. Our strong execution and consistent capital returns have delivered substantial shareholder value with our stock price appreciating more than 170% since late November 2023. This performance reinforces our conviction that repurchasing GM stock at current valuation levels, which are back to historical norms but remain well below our peers. Represents one of the most compelling opportunities to continue to generate long-term shareholder value.

Yesterday, our board approved a new share repurchase authorization of $6 billion and a 20% increase in our dividend to 18¢ per share. Reflecting its confidence in our ability to generate strong future cash flows and underscoring our ongoing commitment to returning capital to shareholders. Now let's turn to our fourth-quarter results. Total company revenue was $45 billion down approximately 5% year over year, primarily due to our disciplined approach to production and dealer inventory, including aligning EV production to demand.

We also face production constraints on the Chevrolet Trax and a year-over-year headwind from strategic decisions to end production of the Chevrolet Malibu and Cadillac XT4. The lower volume was partially offset by strong pricing across our 2026 model year lineup. EBIT adjusted was $2.8 billion and EPS diluted adjusted was $2.51. Both increasing year over year despite the impact of tariffs. We incurred incremental costs for alternate chip sourcing related to Nexperia totaling $100 million in Q4 and we anticipate another $100 million of pressure in Q1 2026. Hats off to our supply chain team as they did a great job finding all alternatives to ensure we had no production disruptions.

Adjusted automotive free cash flow was $2.8 billion driven by higher EBIT adjusted performance and favorable cash timing. I want to take a moment to address tariff costs for the quarter and for the full year as well as the charges we have taken related to EVs. Through the third quarter, we incurred $2.4 billion in gross tariff costs. In the fourth quarter, we incurred another $700 million bringing the total for the year to $3.1 billion which was below our predicted range of 3.5 to $4.5 billion.

When we provided updated guidance in October, we were tracking towards the low end of this range but took a conservative approach given the dynamic trade and tariff environment. We were able to do even better based on strong execution and favorable policy developments during the quarter, including the benefit from a lower tariff rate for Korea. For the full year, we were able to offset more than 40% of these gross tariff costs through a combination of go-to-market actions footprint adjustments, and cost reduction initiatives. Turning now to our EV charges.

During the third and fourth quarters, we reassessed our EV capacity and manufacturing footprint to better align with softer than expected consumer demand particularly in light of recent US government policy changes including the termination of certain consumer tax incentives. As a result, in the third quarter, we recorded charges totaling $1.6 billion including $1.2 billion of noncash impairment charges primarily related to transitioning our Orient assembly from EV to ICE production. The remaining $400 million consisted of cash charges associated with contractual cancellations and supplier settlements.

In the fourth quarter, we recorded an additional billion dollars of charges. This included $1.8 billion of noncash impairments largely driven by our decision to discontinue production of the BrightDrop electric van and to impair certain EV-related assets. The remaining $4.2 billion was primarily related to contract cancellations and supplier settlements, which will impact future cash flows. The aggregate Q3 and Q4 charges totaled $7.6 billion of which $4.6 billion is expected to be settled in cash.

In 2025, we made approximately $400 million in cash payments and expect to pay the majority of the remaining balance in 2026. Moving forward, we expect material but significantly smaller cash and noncash EV-related charges as we continue commercial negotiations with our supply base and address proposed regulatory changes to greenhouse gas emission standards. Any greenhouse gas-related charges would be noncash. It is important to note that besides BrightDrop, we have not impaired our existing retail portfolio of EVs. We are working to improve the profitability of these vehicles through new battery technologies, engineering improvements, and operational efficiencies.

Along with a more rational EV market. As consumer adoption of EVs increases, albeit at a slower pace than previously anticipated, we expect to achieve the necessary scale to deliver EVs profitably over time. Now let's move to the fourth-quarter regional results. North America delivered EBIT adjusted of $2.2 billion and margins 6.1%.

We ended the year with forty-eight days of dealer inventory, which is slightly below our fifty to sixty-day year-end target. This positions us well for 2026, allowing us to balance production to various demand levels. We are seeing positive trends in our warranty performance with monthly cash flows continuing to be stable. GM International, excluding China equity income, delivered EBIT adjusted of $200 million driven by strong execution in South America and the Middle East.

Along with China equity income of $100 million excluding the restructuring charge. We recorded a $600 million item in our auto China equity income, primarily connected to prior restructuring actions. It's important to note that these charges are not expected to require any capital from GM as the joint venture has sufficient cash to cover these costs. I want to commend our China team for executing a disciplined multiyear plan to rightsize capacity, accelerate electrification, and revitalize our operations.

These collective efforts have been instrumental in achieving significant milestones including new energy vehicle sales reaching nearly 1 million units in 2025, representing more than half of the total sales in China. GM Financial also had another strong year of profitability and capital returns to GM. Fourth-quarter EBT adjusted was down slightly year over year at $600 million. Lower lease termination gains were partially offset by higher retail yields and lower provision expense.

GM Financial's full-year EBT adjusted was $2.8 billion within their guidance of 2.5 to $3 billion, and they paid dividends of $1.5 billion to GM. Last week, GM Financial received approval for their industrial bank application. Once launched, this bank will enable them to accept deposits providing another source of stable and diversified funding. Over time, we also expect this to lower the cost of funds and enhance their ability to offer more competitive auto loans to customers.

I want to personally thank Susan and the entire GMF team for their persistence throughout this process. Now let's turn to our 2026 guidance. Where we expect EBIT adjusted of $13 billion to $15 billion EPS diluted adjusted of $11 to $13 per share, and adjusted automotive free cash flow of 9 to $11 billion. Starting with tariffs.

We anticipate gross tariff costs in the $3 billion to $4 billion range, slightly higher than 2025 due to an additional quarter of tariff exposure, partially offset by the reduced Korea tariff and expanded MSRP offset program. For Q1, we expect the gross tariff impact to be in the 750 to $1 billion range, which is well below the Quarterly impact in Q2 and Q3 at 2025 but more than Q4. The higher quarterly run rate in 2026 versus Q4 twenty-five is largely driven by the timing of tariff costs, which can be lumpy particularly as it relates to the supply chain. The team did a great job offsetting over 40% of our gross tariff costs in 2025 through go-to-market strategies, footprint changes, and cost efficiencies.

As we look ahead to 2026, we expect these cost savings to be sustained and believe there are additional actions that can help mitigate our tariff impact. For the industry, we expect total US SAR to be in the low 16 million unit range for the year. We expect North America ICE wholesale volumes to be flat to up modestly. ICE volumes this year are constrained due to portfolio shifts.

Including the ending of the Cadillac XT6, and some expected downtime ahead of the new Chevrolet Silverado and GMC Sierra launches. We anticipate a benefit of one to $1.5 billion related to the actions we've taken to rightsize our EV capacity. The benefits from both EV-related charges and substantially lower EV wholesale volumes will positively impact both mix and cost. We also expect that the temporary downtime at our Altium Cells joint venture will result in lower production tax credits, but this impact should be largely offset by positive inventory adjustments from lower cell inventory levels.

Lower production tax credits in 2026 should then represent a tailwind in 2027 as we resume normalized production. We expect North America pricing to be flat to up 0.5% as we realize the full-year benefit of model year 2026 price increases. While this includes a placeholder for potentially higher incentives due to the competitive environment, we are confident in our ability to maintain pricing discipline. While some uncertainties remain in the regulatory environment, we are anticipating a benefit in the range of 500 to $750 million primarily related to savings from no longer having to purchase compliance credits.

In addition, we are seeing positive trends in warranty costs, which are expected to deliver a $1 billion benefit versus 2025. We expect an increase of around $400 million of high-margin revenue generated from the expansion of OnStar software and services including Super Cruise. This growth is expected to help increase deferred revenue from $5.4 billion at the 2025 to approximately 7 and a half billion dollars by the '26. Further strengthening our future margin profile and long-term growth trajectory. We expect headwinds in the range of one to 1 and a half billion dollars associated with the onshoring of vehicle production to the US investments to enhance supply chain resiliency, and investments to support our software initiatives.

While these initiatives create near-term pressure, they will increase the capacity of our highly profitable full-size pickups and SUVs as well as to help further mitigate tariff costs beginning in 2027. We also expect incremental headwinds in the range of 1 to 1 and a half billion dollars driven primarily by recent trends in aluminum, copper, and other key commodities as well as higher DRAM costs and unfavorable foreign exchange movements. Turning to our regions, we expect both China and our international operations outside of China to be profitable and deliver results largely consistent with 2025. GM Financial is once again expected to deliver EBT adjusted in the 2.5 to $3 billion range, reflecting a stable credit environment.

Importantly, as Mary noted, we believe we have a clear and achievable path back to eight to 10% North America margins in 2026. The midpoint of our EBIT adjusted guidance supports this outcome and we are confident in our ability to deliver this goal ahead of investor expectations. We are accelerating innovation and investing in advanced mobility, manufacturing technologies, and robotics to chart the future. This includes expanding Super Cruise to bring hands-free driving to more vehicles and scaling high-value digital services through OnStar. Further strengthening our competitive advantage and enhancing the customer experience.

In summary, we enter this year with strong momentum, a resilient balance sheet, and the operational flexibility to deliver on our commitments. We remain focused on investing in long-term profitable growth while retaining the agility needed to navigate a dynamic macro and regulatory landscape, positioning GM for sustained success not only in 2026, but well beyond. Thank you. And with that, we'll move to the Q&A portion of the call.

Thank you. As a reminder to analysts, we are asking that you limit your questions to one in a brief follow-up so that we may get to everyone on the call. To withdraw your question, press star then 2. Our first question will come from the line of Dan Levy with Barclays. Your line is open.

Hi, good morning. Thanks for taking the questions. Wondering if you could first just address the assumption on pricing. And specifically, I think we know that we are in an environment where, arguably, it's a demand-constrained environment.

There's one of your competitors that is keen on gaining some share. You're coming off of a let's say, tougher comp on the pricing side. I think you did just under $1 billion in positive pricing last year. So can you just unpack the assumption for pricing to be flat to up?

How much of that is just the benefit of ICE or some other dynamics in play?

Hey. Good morning, Dan. Thanks for the question. What I would say is going into this year, we're not modeling any increase this is really just the annualization of what we did in twenty-five.

Coming through, primarily for model year '26. So, you know, we're obviously gonna take it one day, one week, one month at a time as we go through and watch where we are. But, we're not putting projections out there as if we've got a lot of price increases to go through. We're cognizant of what the environment is out there, but we're also confident with our vehicles and with the new truck launches later this year. Feel like, we can continue to drive the momentum commercially that we have in the past with no significant change.

Great. Thank you. As a second question, I wanted to just ask about the dynamics of your product portfolio. And within that, first, maybe you could just address the fixed cost base that you have.

You still have all of your EV programs intact. You still have much of the battery capacity intact. This was set for a higher volume outlook you know, to what extent does this portfolio align with what's gonna likely be higher near-term ICE mix? And then maybe you could just address the potential to add hybrids into the portfolio.

Just how much more do we have to see the portfolio and the fixed cost base shift to adjust to this new reality that we have.

Well, you know, I'll start, and then I'll turn it over to Paul for some of the financial piece of it. But we think we have the right portfolio. We have an incredibly strong internal combustion engine portfolio, as Paul mentioned, the new trucks coming out. And unlike many others, we did we invested in having a dedicated EV platform that gives us a foundation for the portfolio we have.

As we've said, the investments we're making now in EVs will be very much focused on cost reduction like LMR. We also have teams on each of our EVs continue to take cost out beyond the battery. And then, know we have announced in the past that we will have some hybrids in key segments. So I think we're gonna have the right portfolio.

And we also are focused on the endgame. You know, we know once, somebody drives an EV, they rarely go back to internal combustion engine. And we also you know, a big enabler of EV adoption is gonna be charging. And last year, the charger, level two chargers increased by 25%.

So EV adoption is gonna grow over time. We think we're well-positioned there. So we were very, I think, thoughtful about the way that we adjusted capacity in light of a very dramatic change in the regulatory environment as well as the, eliminating the consumer tax credit.

Yeah. Just to add to that, Dan, I think, you know, as we went through the restructuring, we were mindful of, you know, where is the excess capacity that we know we're not gonna need, for a long time. Because we had built up for a very different regulatory environment Mary had said. But we're also cognizant of making sure that we preserve capacity to be able to pivot and rotate where we need to to get the cost savings.

So particularly as it relates to battery capacity, you know, we've got enough to be able to transition to LMR and to LFP as those projects get underway over the next couple of years. So it really was trying to look at, you know, what is the right short-term decision, but also how do we balance that against long-term and where we know it's gonna go or we believe it's gonna go in the future. And as far as, you know, vehicle programs, remember, with the product cycle that the industry has, some of these decisions were made years ago. And we have to do our best to be able to pivot to where demand is gonna be.

And I think if you look at this management team, and what it's accomplished over the last several years in the midst of a lot of uncertainty, I think, I think we've got what it takes to be able to respond and meet the consumer where they are as they continue to evolve.

Great. Thank you. Thank you.

Our next question comes from Michael Ward with Citigroup. Your line is open.

Thanks very much. Good morning, everyone. Two things. First, on the inventory. You see the impact on the pricing. Is that inventory discipline is that going to continue? And are the implications for cash flow? Is that one of the ingredients that's adding up to the stronger than expected cash generation?

Hey, good morning, Mike. Thanks for the question. So on the inventory side, I think the commercial team and the production team have both done a really good job of coordinating the last few years to keep us within that targeted range of 50 to 60. We had a really strong December, month, which is why we ended the year at forty-eight days of inventory. So, you know, I think we're gonna continue to balance that where it is.

I don't think there's a big buildup contemplated. In fact, you know, with the transition to the new truck we'll lose some production as well. But overall, I think it's that discipline that has really helped us to drive much much more consistency in our cash generation going forward. So we're not banking on any significant inventory builds, although it is an opportunity, to get back into that fifty to sixty-day range.

And then on the this announcement by the industrial bank, and I think FDIC approval the other day, that seems like a bigger deal than it just on the outset as it relates to the cost of capital for GM Financial. How much can you save from just a cost standpoint of capital?

Yeah. I'll start, and then I'll let Susan chime in as well. But you know, this is really a great achievement and one that, you know, candidly probably should have been approved, a few years ago as we went through that. But, you know, the perseverance of the team to get that through provides yet another opportunity to drive capital in an efficient way for us.

It'll take some time, but, Susan, I'll let you comment on anything you wanna add.

Yeah. Thanks, Paul, and thanks for the question. I'm very excited to have the conditional approval and get the industrial bank up and running. And as Paul said, this is going to be complementary to our funding platform, and it will allow us to offer depository products and another source of funding to help us bring down the cost of funds somewhat.

They are high-yield savings accounts and broker deposits. So as it gets up and running, again, complementary to our footprint, not gonna replace how we fund the business but we'll be complementary to it and allow us to bring down the cost of funds in the basis points over time and on our debt complex, you know, that's a meaningful move.

Meaningful. Like, 100 basis points? Is that the type of meaningful move you're talking about?

Probably not that much. It just depends on the rate environment. But it's gonna help us be more competitive.

Thank you very much.

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

Thank you. Good morning, everyone. First, just, I guess, bigger picture, Mary, I wanted to go back to some of your comments on portfolio and you mentioned hybrids. I mean that's a pretty broad term nowadays with you know, traditional plug-ins and eREV.

So I was wondering if you could maybe shed a little bit more light on how you're seeing that portfolio evolving. And then is that considered in the 10 to $12 billion CapEx you've guided for the next couple of years? And I guess most importantly, you know, yes, Powertrain, I think, is going to be part of the consumer decision. But you know, the features in the car seem are seemingly becoming more important than your sort of highlighting that with some of the Super Cruise and other software.

So will all these vehicles be able to use that next-gen architecture showed that I think is supposed to launch in '28?

Sure. Joe, a lot packed into that question, but first of all, any products that I've talked about are comprehended in the 10 to $12 billion capital. So, yes. As Steve our next-generation software-defined platform and Cruise will be available across both ICE and EV platforms.

And, from a hybrid perspective, again, we're looking at where are the segments that there's the most demand for hybrids that are important from our total portfolio. So I'm not going to give you any specifics other than you know, we're looking at a segment by segment for what we feel that we need to have to make sure we compete. And I'll just reiterate that we're, you know, in the last four years, even as others have brought on hybrids, we're still growing share. And, that, I think, just indicates that we have the right product portfolio.

So, and lastly, I just want to comment. You're absolutely right. You know, the propulsion system of the vehicle is one distinguisher, but people are looking for their vehicle to do more. And that's why I think we also are going to be distinguishing ourselves as a full-line OEM that's been around for a while, able to have a very modern electrical architecture, that will then be the foundation for offering more services, you know, AI assistance as well as continuing to grow Super Cruise and into our eyes-off, hands-off, that we've announced for 2028. So I feel very confident that is gonna be another area where GM distinguishes itself from others.

With what we have planned and what we'll be rolling out. And the team is excited and is on track.

Thanks. And then, Paul, I just wondered if we could unpack $1 to $1.5 billion in onshoring software expense? And is there any way we should think about split between that? Because and please correct me if I'm wrong in thinking about this, but I imagine the software expense portion of that is ongoing and may even grow over time in line with what we just talked about.

The cost really in the start-up, the onshoring, would think of as more as temporary, and maybe there's some relief as we think beyond '26. Is that right?

Yeah. Thanks, Joe. I would probably put him about 50/50, as we're thinking about it going forward. Obviously, the ramp-up costs of the onshoring will be offset as they go into production into the future.

So there's a little bit of an offset there. And then, you know, certainly on the software side, we're continuing to invest in those technologists and those programmers to be able to get where we need to go on SDV 2.0 and, on autonomy and ultimately Super Cruise enhancements. Going forward. So, I'd split them about fifty-fifty.

It'll vary over time, but that's why we're thinking about it.

Thank you.

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

Great. Thanks so much. Good morning, everyone. Thanks for taking the question.

I want to start on the tariff disclosure, the $3 to $4 billion gross tariff cost for 2026. It sounds like you're assuming the lower South Korea tariff in that assumption. Can you maybe just talk to I know it's obviously overnight some headlines that it might be going back to 25%. What would that mean for you? And then maybe just remind us what you're doing in terms of tariff mitigation for 2026. I think you talked about 35% offset for 2025. Wondering if that's a similar range for 2026 and maybe what some of the moving pieces are to get you there.

Well, I'll start and then turn it over to Paul for some of the specifics. But, you know, we are encouraging and hopeful that the countries will get the regulatory approvals, or, legal approvals in their country to put into place the deal that was actually, negotiated and agreed to in October. As Paul indicated in our guidance, it is we assume 15%. And if there are, you know, if there's a period of time where it's not 15%, that's gonna be something, a headwind that we'll work to offset.

If you wanna get into some of the specifics.

Yeah. So, thanks for the question, Andrew. You know, the offset the self-help, provisions just as a reminder, you know, we talked about go-to-market. We talked about manufacturing foot changes, and we talked about fixed cost reductions.

Obviously, you know, per Joe's question that we just, we just went through, there's some fixed cost pressure that's new, with the manufacturing, additions that we'll take on in '26, that'll obviously lead to significant offsets in 2027 as we begin to onshore production. But in '26, it's really a lot of the annualization of what we've done. So know, with the, with the go-to-market and then the fixed cost reductions, we'll get an annualization benefit in '26. So we should end up at a position where our net tariffs are actually lower in '26 than they were in 2025. So that equates to you know, slightly more than the 40% offset just from that annualization.

Got it. Okay. That's super helpful. And then maybe just coming back to Super Cruise, you mentioned expanding that into some international markets.

Can you just remind us what maybe what regulatory approvals are needed to do that? And also, from a functionality standpoint, can you maybe just give us a roadmap for what improvements consumers might expect to see going forward, whether that be point to point? Just kind of wondering the progression of that looks like over the next few years before you get to full eyes-off, hands-off L3 with that next-gen NextGen platform. Thank you.

Andrew, we can't get you the specific. We have a roadmap that we're working to where we continue to expand and add more features that we haven't announced yet, so stay tuned on that. And as to the regulatory specifics, I think, I don't have them top of mind, but I know the team is working and the rollout is as planned. And I don't think there's any barriers for stopping the global expansion that we have of Super Cruise.

Great. Thank you.

Thank you. Our next question comes from James Picariello with BNB Paribas. Your line is open.

Hi, everybody. Just have a First, on the GM North America margin range of eight to 10%. I mean that clearly embeds a pretty sizable step up, and you have the $14 billion midpoint guide for the total company. Just want to address the moving pieces there as to how we get to that range yet still only have total company at the $14 billion I guess what my model is currently saying is if I get to eight to 10% for Geo North America, even at the low end, would imply you know, higher overall than a EBIT.

So any clarity there would be great. Thank you.

Yeah. Thanks, James. Excuse me. Sorry.

We're incredibly proud of the work that the North America team is doing to continue to drive back to that eight to 10% margin. Many of the tailwinds that we mentioned in the prepared remarks about improved EV profitability, improved warranty expense, regulatory costs, all benefit North America. So, you know, it's a journey that I think is ahead of where investors were. And, you know, we worked hard to make sure that we can deliver that in 2026. And I think our guidance reflects the confidence that we'll be able to do that.

Know, obviously, a lot of things going on in the world internationally and, with the work that the China team has done that kinda disrupts a little bit of the balance that we've seen historically. But overall, we think it's a good start to the year, in terms of laying out these expectations, and we're set to go get them.

Yep. Understood. And then just my follow-up is on GM's memory chip supply and just an understanding of it, you know, how much of this year's supply is already locked in? And is pricing also predominantly locked in for the year? Thank you.

Well, we shared that between commodities, DRAM, and FX, you know, we see a headwind of $1 to $1.5 billion. We're not breaking that out specifically. I would say the team is actively working you know, from a membership perspective. And as of now, we don't see any issues that are going to impact our ability to produce.

I think you've seen us over the last couple of years, even going back to the semiconductor shortage to see how the team works and gets ahead of these. And so that's obviously ongoing work the team is doing. But as of now, we don't see anything that's gonna create an issue for us there.

Thanks.

Thank you. Our next question comes from Ittai McKelley with TD Cowen. Your line is open.

Great. Thank you. Good morning, everyone. Just first, a question on the full-size pickup launch this year. I'm curious kind of what's embedded into the guide at a high level. I know Paul, you mentioned some downtime. Don't know if you're able to clarify that or quantify that. And should we think about some of volume price mix impacts more later this year or more of a 2027 impact?

Yes. Thanks, Itay. Obviously, we're really excited about new trucks that are coming online. You know, we'll obviously have to take some downtime as we retool, for that.

Some of that we'll be able to build ahead a little, to offset, but you will see that impacted in our volumes this year, overall. On the pricing, I would say it's largely gonna be a 2027 tailwind, I think, going forward. And you know, the one thing, I've shared this with a number of investors that you know, the historical norm of a giant pop in, in price, for a model year really doesn't hold in this environment where pricing has held up. On the later years of the model run going forward.

So, obviously, in the low inventory, low incentive world that we've seen, we haven't seen the typical pricing heuristic where we see a lot of pricing erosion, at the end of a production run. So we're not expecting to see a giant pop in prices, but, you know, this is an opportunity to deliver more value, and we're confident that when the new, when the new trucks come out, we're gonna continue to drive the type of share momentum and pricing discipline that we've seen over the past several years.

Perfect. That's very helpful. And a quick follow-up. I was hoping you can check kind of at a high level what you're assuming the declines in EV volume this year, how much of that could translate to incremental ICE demand for GM? And kind of how does that affect your inventory and kind of wholesale volume planning throughout the year?

Well, it is a great question. I don't think anyone really knows what the steady-state EV demand will be in this new environment. We're still seeing, we saw a fairly pull ahead before the consumer credit went away. And so we're looking at other, geographic, geographies that had EV incentives and then took it away.

It literally was six months before we really started to understand what steady state would be. Having said that, you know, we're looking across all aspects of where we can have additional volume power to answer the fact that we ended the year with a lower inventory below the fifty to sixty days. So gonna continue to look at where the opportunities to get more, with the full-size truck downtime, we're pretty tight. But, the usually does a great job of pulling out, more production when it's needed.

It's as an old manufacturing person, those are the challenges that you love to have. So, again, we're gonna see where the EV market is, and then we're gonna maximize as much we can from an internal combustion engine perspective.

That's very helpful. Appreciate that. Thank you.

Thank you. Our next question comes from Colin Langan with Wells Fargo. Your line is open.

Great. Thanks for taking my questions. If I look at the quantified puts and takes in the guidance, they kinda net out. So what is actually driving the expected increase? There's a slight increase in pricing. And then is the rest volume? Because I thought your commentary said ICE volume flat to slightly up. So what is the gap to kinda drive numbers up year over year?

Yes. So good morning, Colin. Thanks for the question. So we try to do a good job of laying out sort of the key headwinds and tailwinds.

But, when we lay all of that out together, we actually see some upside coming through on that. Some of it'll be in our ability to lower our net tariff exposure. Some of it will be on the regulatory side, that we expect coming in. As well.

And then some of it is, you know, gonna be continued work on driving EV profitability improvement. So we laid out what we see on some of the fixed cost relief. But as you know, we struggled this year with sort of step down after step down after step down in EV costs. That, you know, at the end of the day, result in a lot of supplier claims that we've tried to sort of all bring together in the onetime step down.

So when you look at it across the board, all of those results in what we believe is gonna be a pretty strong year-over-year improvement as we've highlighted.

So is that a cost improvement that you're implying that outside of what's listed in the slide?

I mean, ultimately, when you look at listings in the slide and what we've highlighted, it really comes down to a margin. Improvement on the vehicles, going forward because we absorbed so much cost in, in twenty-five. Between that warranty, all the tailwinds that we highlighted.

Got it. Okay. And then you know, why you assume last year the guidance of pricing down one to 1.5%. Why that optimism this year? Seemed like a little bit more conservative last year. Ended up being a lot better.

Well, you know, I think last year, as we were looking through the uncertainty that we saw, across the board. We didn't want to make any statements. Then, obviously, as we saw the year progress, we took that guide up and you know, this year, what we've assumed, as per the question from Dan, at the beginning of the call, was we haven't assumed any pricing increase at all. This is just, we put in the model year '26 late in 2025. This is the annualization of that.

So we were assuming that that holds, but we're not counting on any additional pricing, coming through. So I wouldn't say that it is an aggressive assumption. It just, it's more of a function of kind of where we see the landscape today.

Got it. Alright. Thanks for taking my question.

Absolutely. Thanks. Thank you. Our next question comes from Emmanuel Rosner with Wolfe Research. Your line is open.

Great. Thank you. Can you talk a little bit about how you're thinking about the mixed benefits implied or assumed in this year's outlook? I know some of it is reflected in these lower EV losses that you quantified at one to one and a half.

Is there another potential mix benefit from optimizing ICE mix in light of the emissions deregulation or from rebuilding inventories, which were, you know, at a very lean level at the 2025?

Yeah. Good morning, Emmanuel. The mix benefits as you highlighted, you know, we certainly are expecting, you know, EVs to probably be down for the full year given the cessation of the consumer tax credit. Going forward.

You know, the volumes are somewhat hampered by the transition to the new truck platform. So I'm not sure that there's a huge volume push, that we're banking on, but, obviously, we'll take every opportunity we can. Now, you know, without, perhaps being obvious, the weather that we've seen recently has obviously impacted production likely for everybody given the width and the breadth of the storm, going forward. So you know, we've got, I think, some makeup work that we've gotta do going forward, but we're confident that the team will be able to do that.

I'm glad that everybody has stayed safe through our plans.

And then it was hoping to ask you about the warranty cost benefit of a billion dollars for this year. You just remind us the dynamics and then drivers of this? Obviously, you had know, pretty large warranty costs in 2025. But then I think, you know, recently, there was a reopening of the investigation into some of these V8 engines. So how much of it has already been essentially provisioned for?

And what drive really, the confidence in this year's benefit?

Yeah. So, all of this starts, Emmanuel, with what we see on the monthly cash and where we see the exposure. It's obviously a very complex set of calculations and analyses going forward across the vehicle universe, but it really begins with cash. And, we've seen that flattening, which is the first thing that needs to happen before you can ultimately come back down the curve on accruals because of the lagging effect, there.

But when you look at the L87 and the V8 engines, we've seen really good progress with the fixes that the team has put out there with the oil change and some of the testing that we can do with dealerships. So, we believe that, that will mitigate and hopefully ultimately bring that down or so certainly not lead to any more increases going forward. So, you know, the team is hard at work across looking at every detailed cause of the warranty accrual. It's not just the big ones, but it's the small ones.

We're looking at inflationary pressures that we've seen at the dealerships. And making sure that, that the dealers are charging fair prices to us for warranty, as they are for retail across the board. And, it's really an all-hands-on-deck, and we're starting to see some really early green shoots on some of that work that's been ongoing. And that's where we think it'll compound into warranty savings for us into '26 and hopefully beyond.

Great. Thank you.

Thank you. Our next question comes from Ryan Brinkman with JPMorgan. Your line is open.

Good morning. Thanks for taking my question, which is on the emissions regulation assumption baked into the '26 guide. The outlook for $500 to $750 million of savings there from no longer needing to purchase those compliant credits. It seems a bit less than the roughly think, $1 billion annually that you've maybe been spending.

Is that because some of the purchases sit outside the US? Or because some US regulatory credit purchases maybe at the state level will need to continue in some form or is the right way to think about that?

Yeah. Ryan, obviously, the compliance requirements are pretty complicated. You've got both state, federal, local, and international as well. But as we've talked about, the credits were roughly split between CAFE and GHC.

So, CAFE, we know we don't need to purchase credits as the administration has already zeroed out the CAFE penalties, across the board. We took a charge for that in the third quarter and expect that to result in some year-over-year savings in '26 versus '25. And then GHC is still pending with the administration. We're assuming that, ultimately, that gets resolved over time, but there's gonna be a lag effect as the administration works through the regulatory process to accomplish what their objectives are on GHG. So, when we purchase credits, we amortize them over the time.

The remaining life of those credits. So that's where you're probably seeing a little bit of a disconnect versus the P&L and the cash.

Okay. Very helpful. And then just lastly, on international operations. Obviously, a lot of focus on the improvement in turnaround in China.

Maybe just if you could talk about consolidated IO. It looks like a lot of sequential improvement there in revenue and wholesales as well. But just curious about we're reading a lot about the incremental pressure being placed on some of these regions outside of China by Chinese automakers. Obviously, it doesn't affect you in North America.

You're not in Europe. You don't have to worry about that. But maybe if you could talk to LATAM or some of the other markets where you operate and what you might be seeing there.

Well, I think highlighted, we are seeing improvement from an international perspective. Specifically in South America. And when you focus on Brazil as an example, even with the stiff competition coming from the Chinese OEMs that are heavily subsidized. We've seen improved performance there among other countries in South America.

So I think it's that each of the different areas we've seen improvements. And I think it speaks to the strength of our vehicles and the strength of our brands. So again, it was across the board that we're seeing that improvement. And we are in Europe.

We just export into Europe, with some vehicles that we have actually the Lyric and then the Vistac, won German car years, for over the last two years from an EV perspective. So luxury perspective. So we're there, in a small way as we look to see what's gonna have the European market is going to sort out. And I think that's a growth opportunity for us.

And I'm proud across the international markets for the work they've done to improve their business.

Very helpful. Thank you.

Thank you. We have time for one last question. Our last question comes from Tom Narayan with RBC. Your line is open. I do apologize you disconnected. Our last question will come from Mark Delaney with Goldman Sachs. Your line is open.

Yes, good morning. Thank you very much for taking my question. The company is expecting SuperCue's revenue to be $400 million in $20 up from $234 million at the 2025. You help us better understand what's driving such a big step up this year in Super Cruise revenue? And then as you think about that broader OnStar and Digital Services business momentum that you spoke about, are there other key areas you're seeing momentum beyond Super Cruise or is Super Cruise the big driver of digital services?

Yeah. Well, Mark, thanks for hanging on the whole call. I appreciate you getting your last question in. You know, the Super Cruise revenue is a couple of things.

So remember when we sell a vehicle with Super Cruise, we include three years of prepaid services on that. So that balance then, amortizes over a three-year period. What you're seeing is growth in those initial rates, as we ramp up, production and sales of vehicles equipped with Super Cruise. The second aspect of it, which, you know, we're continuing to see really good penetration and attachment rates is on the renewal.

So at the end of three years, customers are approached with, you know, would they like to subscribe? And we've seen attachment rates in the low 40% range with people stepping up and renewing that. So where you're seeing a lot of the growth in super cruise. In OnStar, you know, we include an OnStar basics, package with the sale of vehicles that has that amortizes over the life of that period.

But it also what it does is gives us an engagement opportunity with the consumer that, you know, is really laying the foundation for number one enhanced non-star services currently, but also then second, you look at GM rewards, you look at when we get software-defined vehicles down the road. It's really a big step function. So that's where you're seeing a lot of the deferred revenue growing. And coming in at very attractive software-like margins.

Thanks for that, Paul. My other question was on China. The company has obviously made a lot of improvements there. And I think expecting pretty similar China profits in 2026. There is a view though that the China market in general is becoming more difficult after a lot of stimulus in 2025 and maybe demand in the broader China market could be down this year.

Maybe talk about what offsets there could be for GM specifically, perhaps just the product portfolio, but would hope to better understand what would allow GM to be more stable year on year if the market does soften? Thanks.

I think the number of vehicles that we launched this year, the new energy vehicles, I think, are doing very well, over 50%. As we indicated, with the right software, the right technology. And virtually across the board, we have in China, for China solutions, that I think are resonating really well in the marketplace. And, I think that discipline along with the discipline of the way the business is operating of making sure we manage inventory, which allows us to manage incentives.

And it also has allowed us to have a much better relationship with the dealers because we had a dramatic improvement in their profitability. So, you know, I think it's if you wanna say what's gonna drive China's business overall, it's the right product portfolio and then the discipline in which we're managing the business. And I have to give a lot of credit to the team over there for really turning around that rather quickly in a sustainable way. And then lastly, I'll just say both of our strong brands Cadillac and the Buick brand, have a long history.

The Buick brand especially but also, the strength of the Cadillac franchise as well is serving us well. So we think we can compete, obviously, not to the extent we were five, six years ago, but, we think we can have a meaningful presence there, with the right product portfolio that a premium and luxury level.

Thank you.

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

Well, thanks, everybody for sticking with us through the call. I know we're running a little over, so I'll be brief. But I just want again, I want to start by thanking everyone, in General Motors, our suppliers, our dealers, for all of their hard work to deliver the 2025 performance. But it really goes beyond that because over the last several years, we've really built a foundation of product excellence, innovation, operating and resiliency and agility.

So I we know we're gonna continue to see opportunities. I think we have the right team to be able to manage through those and, to deliver results for our shareholders. So I wanna, tell you I'm extremely excited about this year and what we can do at an even better 26. And getting North America back to the 8% to 10% margin is, something that we're looking forward to executing through the year and delivering for our shareholders. So thanks, everybody, and I hope you have a great day.

Stay safe. Stay safe.

Thank you. That concludes the conference for today. Thank you for joining. You may disconnect.