GM’s electric vehicle growth is ‘outpacing everybody’: CFO

General Motors (GM) has recently authorized a $6 billion share repurchase program, driven by the company’s robust revenue growth and strong profit margins. At the Deutsche Bank Global Auto Industry Conference, Yahoo Finance’s Autos reporter Pras Subramanian is joined by GM CFO Paul Jacobson to delve into the automaker’s outlook in the electric vehicle (EV) space.

Jacobson proudly notes that GM has experienced remarkable growth within the EV sector, stating that the company’s progress is “outpacing everybody.” With new product offerings set to hit the EV market, the CFO says, “We’re starting to execute really, really well.”

Regarding the company’s business dynamics moving forward, Jacobson tells Yahoo Finance, “We’ve always taken a very … stable view in terms of what we’re trying to do with incentives, with inventory levels, and the team’s been really strong at executing that, and the vehicles, customers love them.”

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This post was written by Angel Smith

Video Transcript

Turning now to the auto industry General Motors approving a new $6 billion share repurchase program today, the company’s CFO Paul Jacobson attributing the move to strong revenue growth margins and cash flow.

Joining us live from Deutsche Bank’s global auto industry conference in New York City.

We have the man himself, General Motors Chief Financial Officer, Paul Jacobson alongside Yahoo Finance’s pros Superman and hey, pross, take it away.

Hey, thanks, Brad.

Yeah, here with the man Paul Jacobson, GM CFO.

If you just announced Brad, talking about that new $6 billion share repurchase plan and this is on top of the $10 billion you guys did at a sr at the end of last year.

So what sort of kind of, what’s the, what’s the story here between GM and now it’s a lot of cash return shareholders.

Yeah.

Well, thanks for the time.

Uh Today, we’re excited to be here at the conference and uh share the share, the big news, which is we’re continuing to lean into our capital allocation policy and as the business has continued to perform and we’ve seen stable pricing, we’ve seen disciplined incentives uh from our team and we’ve seen a vehicle portfoli that is customers just love and all that spells a lot of success.

So we’re able to invest in the business.

We’re able to maintain a strong balance sheet and we’re able to return cash to shareholders.

So we’ve completed that private prior buyback authorization that we have done and pleased to announce that the board has just authorized another $6 billion in share repurchases that will commence beginning in the second half of 2024.

Story continues

Yeah, and, and you guys also boosted the dividend at the end of last year.

Uh So, you know, a lot of big news from a capital sort of return point point of view.

I think investors here at this Deutsche Bank conference happy to see that.

But some of the business too, what sort of evolution they’re going on right now as we as 2024 kind of the halfway point here.

Uh ev sales ramping up ice still is still strong.

What’s going on with the mix there?

Exactly.

So, you know, we’ve seen, um we’ve actually seen ev growth moderate a little bit this year for the industry, but MZV growth is outpacing everybody.

We’re picking up significant share.

We sold over 9500 evs in North America last month.

Um So seeing really strong gains in the lyric in the blazer, really excited about the game changing Equinox, which will be the lowest price 300 mile range, uh vehicle on the market in the EV space.

And that’s just starting to now get momentum as we see going forward.

So we’re starting to execute really, really well ev space and seeing that ramp up and the ice uh portfolio with the new Traverse, the new equinox, those vehicles, not only our customers really flocking to them, but they’re also more profitable than the, the older models that they’ve replaced as well.

So the business is really performing well.

You know, you talk about cars, the g the tracks, a cheap car that you guys can build affordably.

What about that?

Equinox?

Ev it, that’s going to be a mainstream EV you guys are trying to target a, a profit metric at the end of this year.

Is that still in play for evs?

Yeah.

So what we said is, um you know, we expect to produce 200 to 300,000 evs this year and we can be variable profit positive.

So this means that we can, we can sell it for more than the cost of the materials and start to offset all of our fixed costs.

We believe that we can be in that position in our whole EV fleet by the end of this year and guarding uh gating the way to become uh profitable on an E bit basis in 2025 and beyond, what about P haves and hybrids?

I know, you know, the Corvette E Rays out there.

We, we were talking about that earlier.

It’s a great car, amazing performance.

But are we going to see that technology trickle down to the, the more entry level cars?

When are we going to see those es come out?

So we have, we, we’ve talked about adding a plug in hybrid or a P have beginning in 2027.

Um We see this as a pretty valuable tool for us to help bridge compliance against ev adoption.

So for those customers who down the road aren’t yet comfortable with evs, a plug in hybrid is a great option to sort of get that additional range extension plus, still have the backup of of an ice engine um for road trips, et cetera.

So we think that this can be a really good tool to help some of those skeptics bridge into evs for the long term.

But when you look at our portfolio of battery electric vehicles, it’s, it’s really is compelling what we’re able to offer in terms of style range and capability and the kind of capability to sort of augment that with P habs and hybrids down the line.

Uh Look big picture at the business.

We’re at the conference here.

You’re gonna be talking to some investors short shortly about that.

Um What are some of the kind of key highlights you want to note for 2024 and beyond and sort of like the, you know, your adjusted ebit on a more uh targets things like that.

Yeah.

So, you know, we came out um at the beginning of the year and talked about 12 to $14 billion of EBIT.

And we were able to raise that guidance uh at the end of the first quarter based on the out performance and the business is continuing to perform very, very consistently for us.

So we’ve always taken a very sort of um stable view uh in terms of what we’re trying to do with incentives with inventory levels.

And uh the, the team’s been uh really strong in executing that and the vehicles, customers love them.

And that’s, that’s where it all starts.

If you don’t build products that customers want, then the big business becomes much, much more challenging to run.

But, um, our design team, our engineering team has uh has created a portfolio of vehicles that customers just uh just adore.

Well, yeah, the customers, the US, customers in particular, you know, we hear a lot about they’re doing well, they’re not doing well.

Prices are high.

What’s sort of your 500 ft or 30,000 ft view of the, of the US customer for GM, how are they, how are they, what are they telling you guys?

Um Our, our customers have, have responded really well and they’ve maintained that strength.

Um, you know, many times when you’re looking at full size trucks, full size suvs, we’re still seeing people adopt premium levels.

Uh and that that business has been strong.

Um But you look at the resiliency of our portfolio all the way down to the Chevy tracks that you mentioned.

I mean, this is an incredible vehicle that starts at $20,000.

So, um that’s, I think one of the keys to GM success is that portfolio that has something for everybody across all of the different price points that they might be looking for.