Name is Rajat Gupta, member of the Automotive Equity Research team at JP Morgan. Very pleased to have with us CFO of General Motors, Paul Jacobson. Paul, thanks for being here. I believe you have a quick opening remark, and then we'll get into Q&A. Yeah. Thanks for having me, and it's great to see such a great crowd here and a beautiful building. First time in the building. I was telling Rajat, I missed that little auditorium with the tables and the microphones on there. Spent a lot of time in that room, but it's great to be here with everybody today. Just a couple of opening comments. Coming off our, Paul, as you know, the first half of the year has gone remarkably well for us. We were able to raise our guidance for the full-year. That, I would say, is fairly consistent with what we expected going into the year, aside from the IEEPA refund and then a little bit of the outperformance. But I think when you look seasonally between the first half and the second half, as we've talked about, there's some pressures that are adversely affecting the second half of the year. But I think everything really is pretty much in line with where we thought coming into. Consumer's held up remarkably well across the board. That's true for our GM Financial captive, and we have some of our GM Financial colleagues here in the room today. But also on the new purchase side, and the trucks, the SUVs have held up, despite a lot of public affordability concerns and reports of affordability concerns. I think the consumer's been pretty strong for the year for us, and that's led to what I would say is just more consistent results across the board. We have had a few announcements in the last couple of weeks, and wanted to just touch on those really quickly. First, you saw that we were able to reach an agreement to extend our joint venture in China with SAIC. We're very pleased with how that restructuring has talked about, and while China may not get back to the $2 billion annually, I hope it does, but if it doesn't, it's okay. The effect of the restructuring has made it so that we can self-fund and can be consistent profitability. We've applied a lot of the inventory discipline and a lot of the lessons that we've learned over here to that business over there, and it's performed well. I will tell you with China having some internal struggles economically with the consumer there, we're really, really grateful that we did the restructuring when we did. I think it really good position relative to a lot of the other foreign automakers that are operating in China and really pleased and really proud of the team there, both on the GM side, but also on the SAIC side, for the hard work that they put into that. I think the business is relatively healthy considering where it was. That's the foundation for us to be able to extend that partnership and move forward together. We're excited about what the next 20 years can bring together and capitalize on what we've done. The second announcement, you may have seen that we reached an agreement with Samsung SDI, to work on future development, but most importantly, take that battery plant in Indiana and let them have that. It's really important to note that this was factored into our second half accruals and our charges. The deal was sub at that point, which allowed us to go ahead and take that charge. There's nothing new coming out of that and very, very consistent with what we've said, which is reduce our capacity, make sure we maintain a lot of our partnerships and our relationships so that we can be there as EV demand grows, and we continue to see EV penetration grow, albeit probably much more slowly than what the market thought four or five years ago, given the changes in the government support, et cetera. I would say no real news there from that standpoint, but it is a big step forward. What it allows us to do is consistently think about the EV restructuring as we've said from day one, which is get it behind us so that we can focus that entire value chain on tomorrow rather than thinking about yesterday. I think where you look at where we stand competitively, I think we're way ahead of all of our major competitors that are out there in terms of putting our best foot forward and looking ahead to where we can make the improvements in EV profitability and grow as the market grows. That discipline, I think, is evident in everything that we've done on the EV front. Then lastly, the purchasing commitment or a purchasing facility that we announced last night or this morning. A $4.5 billion facility allows us to strategically, throughout the world, ramp up some inventory. What you've seen over the last several years has been disruption after disruption, whether it's geopolitical, it's act of God, acts of nature, or you've seen supply shortages, et cetera. What this does is it really gives us in an effective way, an ability to get supply chain continuity over the next few years. We think this is going to be a really important step. It'll add a little bit of cost to us on the interest line, but as you look at the facility overall, it was a really well-structured facility led by JP Morgan and Santander. We're appreciative of their partnership in working through it. But what it will allow us to do is essentially maintain that continuity of cash flow despite the fact that we are going to build up a fairly sizable inventory, allow us to maintain production, even in the midst of some of the global disruptions that we have seen over the past few years. Really excited about that. More to come on it, but I thought that was a really well-done structure by our treasury team, our supply chain team, and through our banking. We are excited about that, and I think it is just more evidence of the forward-thinking sort of risk mitigation of the past to try to get consistently more profitability and continuity and margin performance, more stable than what we have seen it in decades past. I think more the story of what is exciting to come about General Motors. Really looking forward to the conversation. Sorry those remarks were long, but we had a lot to cover. No, we will double-click on some of those through the conversation. Maybe just to start with the first one into the second half, there are a lot of items to watch in the second half. You step up in commodity inflation, you have more onshoring costs, you have some launch costs. What structural levers you think are tracking ahead or behind plan? What is the pacing item to hold these margins as the next launches materialize over the next six to nine months? Yeah, I think a lot of this gets caught up into what six-month period are you measuring when you think about the business over a long trend. We have got a lot of transition costs, as you said, as we cut over to the new truck, which will ramp up through 2027, until we get to full capacity. But those costs as you are transferring, you are losing some volume and cut over. You are hiring people, for Orion and the onshoring work that we are doing there. There is a little bit of structural inefficiency in the short run to get to the longer run answers. So, I think everything is on track. I think especially when you look at, and again, not looking at six months, six months, six months, but looking over the long run, we are transitioning to a new truck at the same time that the existing trucks in their last year of production are doing extraordinarily well. I think if you look back historically and we have challenged the commercial team to look at their past heuristics and pricing models, et cetera, you would typically see this massive fall-off in realized price as you ramp up incentives on the outgoing model. I think the discipline, the inventory, everything that we have done is just evidence that you look at this program in its last year of production. It has just done amazingly well and continues to do so. While we are excited about the new truck and we have started to slowly reveal it and we will start to see them in showroom floors in December, we are excited about the truck platform as a whole and what this can do for 2027. But 2026 has been remarkable considering where we are in the cycle. Some of the residual changes, changeover drag, would you say it carries on to 1Q? When do you think we hit a normalized run rate? Yeah. A couple of things. One, when you are looking at the trucks, you will be ramping up production. So you will have probably a little bit of a richer mix, but volumes are not going to be where they are until you get up. At the same time we are doing the new engine platform. So it will ramp up through the year. We will get more clarity on that as we give to 2027 guidance. Same for Orion. That is going to, with the new facility and the changeover from EV to ICE, with the Escalade production, et cetera, that is going to take a little bit of time to ramp up. So it should gain momentum through the year in 2027. Got it. I know we will get official guidance later this year or early next year. Just double-click a little bit on 2027. Should we view 2027 as more of fundamentally a pricing, mix, cost, execution story, or more of a volume story? What carries the top-line margins in 2027 as you see today? Yeah. I think, whether it is 2026, 2027, or even 2028 and 2029, I think it is about execution. There is always going to be disruptions. There is always going to be hiccups out there in the macro world or the geopolitical world. I think when you look at what this team has accomplished over the last several years, it is what we call no excuses. Let us just keep our head down, figure out what we need to adjust, pivot, and move on. When you look at the track record that we have tried to establish here of expanding our margins, it took us probably, what? About 18 months to get our margins back after being saddled with $3 billion of tariffs. That is the type of adjustments that we see. I look at 2027 every bit as much as I have the last couple of years, which is really, let us execute, let us figure out what needs to be done and go get it. Got it. Maybe just on commodities, you obviously said second half is going to be bigger than the first half. As you stand today with spot rates, it picked up in the second quarter. It has come back down a little bit. How should we think about commodities? Maybe you can throw in memory and DRAM in there, any plans for 2027 to give Yeah. It is too soon to talk about 2027 because it will change probably 100 x Yeah between now and then. But we are looking at it as potentially a year where we could see a little bit of the pressure. Say the war in the Middle East slows down, and we start to see a normalization. You could see that be a tailwind. You could see something flare up, and you could see it become a headwind. That is why it is just a little bit too early to talk about. But based on where we sit now, I think we would expect to potentially be more stable than what we have seen this year, but Right you have got uncertainty on what Mexico and Canada bilateral deals look like on the tariff side, et cetera. It is just a little bit too soon to talk about it. When we gave some of the color on our earnings call, it was really meant to let people know that while we have talked about warranty tailwind, we have talked about EV improvement, and all of the things that, those are multi-year things going forward. We are not going to solve all of the warranty increases that we have Yeah seen over the past few years in one year. But we do see a trend line that is starting to improve, as we have talked about. We have flattened out the monthly spend. As that plateaus, you will start to see, hopefully, and it come down, you will start to see the warranty accruals lag that. So, we see this as a multi-year journey going forward, and that is what we are tasking ourselves with. Got it. Since we are on the warranty topic, clearly you have done a phenomenal job executing on that this year. Can you talk us through what is changing in terms of the benefits you are seeing there? How have the accruals in the new platforms, how do you see that changing? Any guidance on that? Are those already starting to come in at lower accruals than the previous ones? Yeah. While I appreciate your description of it as phenomenal, I am a little bit less bullish internally on that. We have a lot of work to do. When you look at warranty as a function of revenue, first of all, so much of our revenue uplift over the past few years has been on pricing, which really shouldn't affect warranty, right? I think it is stepped out from where it has been historically, stepped out even more when you think that it really should be volume driven and not really tied to anything on the price side. Some of that has been inflation. We have talked about the inflationary pressures at dealerships. Some of it, I think, has been driven by some pretty big supplier spills, as we have seen over time with the L87 and things like that. I feel like we are coming over the hump on that stuff, which is where it starts to get a little bit better. While we are seeing a $1 billion - $1.5 billion improvement year-over-year, we have got to do better than that. We have got to do better than that for the customer, because that ultimately affects their experience, their willingness to purchase another vehicle, et cetera. So it is important that we get the accruals down, and we get the liability down. It is even more important that we get quality up and continue to drive value for the consumer as we think about their next truck, their next vehicle, and their vehicle after that. The team has done a really good job of focusing, redirecting inventory and parts to the customer care department, which has actually hurt us on production. But it is more important that we get the vehicles out there back on the roads for our customers than it is that we produce a new one in some cases. I think the team is doing a good job. But I think we need to continue to drive better improvement in this area. Got it. Just moving on to some of the other bridge items. Obviously, there are so many moving pieces in 2026 that can change in 2027, and one of them is tariffs. You have talked about this $900 million level continuing for the remainder of the year. But you do have Orion, Fairfax, Spring Hill coming online. How much of this gross tariff number, you think starts to fall away, as these facilities ramp, maybe in 2027, 2028? Well, I think we set those up under where we are in the current world. I think we will start to see some goodness, I think, in 2027. Too soon to tell on whether that means that tariffs will be flat, lower, or higher for 2027 as part of an official guide. But if all else being equal, we would start to see some tariff load come down. But we will see when the new rates get set, et cetera. Like I said, too soon to put any official guidance out there. But as we ramp up more of that domestic production, and we get to the 2 million units as we get through 2027 into 2028- Yeah we should see some of the benefits of that. Got it. I'll just pause here for a second to see if there are any questions in the audience. Quiet group today. I think maybe a little later. I'll just move on to the other items in the bridge, just onshoring costs. What are the primary manufacturing milestones between here and volume production at Orion, and how do they rank in terms of what shows up in the P&L first? How much of automation investments translates into more measurable labor hour savings versus just quality outcomes? Yeah. Where we are right now is we've put a lot of the infrastructure costs in and all the retooling and everything. A lot of that has come. Now we're in the process where we're hiring people and getting them trained to start production. That's an efficiency lag because you're hiring the people, but you're not actually ramping up production yet. That's where we see a little bit of pressure in the second half. That should start to unwind as you start production. Yeah. But you're still going to be at a little bit of an efficiency low point until you are able to ramp production up and get the plant running where we know it's going to do that. That will continue to be a little bit of an efficiency drag into 2027, and as we ramp up production, get better as we get towards the second half of 2027. Got it. Then one more item from the bridge is the EV losses. You touched upon it a little earlier. I think what you've communicated is that you'll see improvement in 2027, but maybe at a slightly lower pace. You're ramping up, you're expecting more volumes, and then you have a larger step change in 2028 with the LMR battery and some more architecture changes. Can you decompose the $1 billion-$2.5 billion between fixed cost capacity actions and just pure volume mix effects? Given only one persists if volumes recover, what is the clean run rate we should think about in terms of EV losses? As we talked about, in 2025, EV profitability was worse than 2024. A lot of that really was driven by the fact that we were constantly chasing demand reductions going in. When you create that kind of churn in the supply chain, it creates frictional costs across the board. That's why we, at the end of 2025, and what we've done in the first half of 2026, has really gone hard after let's level set across the entire supply chain. Let's do it quickly to make sure that we don't have any slack capacity sitting out there. Because producing a couple hundred thousand EVs against a capacity of 1 million is never going to lead to the type of efficiency and so on. As I've said before, you don't. Writing off capital investment is not the best thing and the funnest thing to do for a CFO, but sometimes you've really got to look at the seismic shift in the environment around you and understand what happened. That's what the regulatory environment was. We were basically capacitized up to 1 million units a year in anticipation of the stringency curves coming up in 2027, 2028, and ultimately to 50% by 2030. That was not going to be tenable for us or the entire supply chain after the political environment changed. Being able to bring down that excess capacity, as I said, maintain the relationships, because number one, we want our supply base to continue to innovate. We want them to find efficiencies, albeit at a smaller scale, where we can get material cost savings, where we can get architectural and structural savings on the vehicles themselves, ultimately making the vehicles more efficient, which should provide significantly more profitability as we ramp up volume and production. 2026 has been about much lower production, therefore much lower variable losses on that at the same time that we've gotten out of this sort of serial shift of restructuring charges or supplier claims for reduced volumes. 2027 should be a year where it's a little bit more stable. We'll see what happens to volumes. I suspect that maybe they'll be a little bit higher because we have seen EV adoption in the 5%-6% range, and we're seeing a little bit of increase, albeit pretty slow. Then we get into 2028, where we get the LMR changes and so on, and we expect that we'll make some really, really good progress towards profitability. The goal is to continue to bring down that loss, which ultimately brings enterprise EBIT and margins higher. Yeah We think we can get. We're working ultimately to get to EV profitability. When we do that, and hopefully we can do it in advance of any significant ramp in EV adoption, that'll put us really, really well-positioned competition with our ICE portfolio, which is performing incredibly well, and an EV portfolio that's outperforming everybody else. Got it. Makes sense. Just maybe double-clicking on international. I know we talked about China a little bit. Obviously, the Middle East disruptions continue to have an impact on that segment. It's not expected to improve anytime soon. Curiously, what has your JV in China taught you about Chinese OEM cost structures and just product velocity? How are you defending that in other regions, as these exports from China go into the other regions? How are you managing that in terms of the impact to your portfolio? Yeah, look, I think when you look at what Mary has done over the last decade and really kind of focused on those international markets where we have an advantage and we can win, we've got a long history in those markets, whether it's in South America or in the Middle East, where we've done remarkably well. We've got a lot of brand loyalty. We've got a lot of customer loyalty across the board. That being said, Chinese competition throughout the world is real. It's very, very real. I think in various pockets, we're holding up pretty well against that backdrop. As a result of some of the structural changes that Mary did a decade ago, we don't have a big footprint in Europe. Grateful for that right now. That would be a big challenge today. While we're trying to start a business in Europe, it's very low capital, very low investment. So there's not as much at risk here from that standpoint. That's where I think it really differentiates us, is where can we make the right bets. As to the Middle East, yeah, it's been difficult. It's been a headwind for GM International, but broadly offset by being able to redirect many of those vehicles into North America, albeit at even slightly higher margins. So from an enterprise, it's probably flat to slightly positive. But it's not sustainable. We need to have that market there, and when it reaches some stability, we think we can get some upside back into GM International from where it is. South America, the team's doing a really good job there in the face of a lot of increased competition. But that's where we've got a lot of loyalty behind our vehicles. We've got some good sustaining programs. We just need to make sure that we stay capital discipline wherever we're going to compete in the international world, similar to the approach that we've taken in China. Which is, if it can self-sustain and self-fund, it's a good business to have. If it requires billions of USD of capital to make a couple of hundred million dollars of earnings, it's not the right investment. Got it. No, makes sense. Just wanted to see if anyone in the audience. Maybe we can go there. Sorry, thanks. Can you talk about the defense opportunity for GM and where you see that going over the next few years? Yeah. The question about the defense opportunity. I think when you look at the Infantry Squad Vehicle, really good success story about how we can participate with technology, with essentially an existing platform that we were able to apply to a really good defense product that the military loves. We've been able to significantly increase that. That's an example where it's really low capital. I think it's beneficial for the taxpayer because it can be designed and implemented and built really quickly. There's not a huge lag time across the board. Where there are opportunities to use our engineering, our advanced manufacturing to potentially help the taxpayer, we think that there's an opportunity there. The defense team's done well growing their revenue base, getting to break even. We see this as a good margin contributor for us in the future. There's more to come on some of the deals that we're hoping to work on. Maybe one more. Good morning. Sorry. Go ahead. Good morning. Thank you for taking the question. Have you benefited from some of the troubles your competitor has on the supply front in trucks this year? Have we benefited? I think when you look at where the market sits right now, it's a combination of availability and a combination of pricing. A lot of those offset each other. I think what we've tried to do is we've tried to distance ourselves. I think historically, pricing actions led to immediate reactions and so on, and what we've really tried to do is say, look, we have volume targets, we have inventory targets, and we have pricing targets across the board. I think when you look at our inventory discipline, and you combine that with the incentive discipline that you've seen from General Motors, I think what you'll see is we're trying to do our own thing. There's no doubt others, I think, have benefited. I think we've seen some good benefits as well. But we really look at it from, let's focus on our play. That's what's going to ultimately drive our margin performance. I think the team's done a really good job of that. One more. Hey, Paul. Two quick ones. One on just cash restructuring for the EV. I think you said you spent like $4.5 billion in the first half, and there's roughly, I think, just shy of $3 billion left. Just curious, what's the cadence on that remaining cash spend on restructuring? Then I had a follow-up. Yeah. I would say that the bulk of it is probably going to be done this year. Some of it may trickle into 2027. What we've tried to do from that standpoint is, number one, work really quickly. In reality, we probably paid more than we had to. That's okay. I don't think about that as wasted. I think about that as an investment in the supply chain and speed and innovation. We want our partners to be happy. We want our partners to be focused where they can. Hoping that that generates some goodwill, but the most important thing is that we're all focused on tomorrow. The second thing is creating balance in the deals that we're doing that allows us to continue on about the very sort of steady state of the business, which includes investing in the company as well as repurchasing shares, which as you saw in the first half of the year, we're actually slightly ahead of the pace that we were last year. I know that was a concern, early in the year, by the market that all of this was going to drown out our ability to continue to run our disciplined capital allocation. I think the team has done a fine job of balancing all of these competing priorities throughout the year. We think it's business as usual as we continue to close this out on the cash side. Then the follow-up, just on fleet, you had said fleet's been a nice positive for the year, and I think in government in particular. Maybe it's a little early, but just curious on how does that look for 2027? I know it's sometimes lumpy. Do you think fleet can still be a net positive and just curious on how you're thinking. Well, I'll confirm it is too early to talk about 2027. But I think what the fleet team has done there, I think, is strike the right balance of looking at that business and what it can be to serve our commercial customers because they're very different than the retail customers across the board. The revenue opportunities are different as well, and I think some of our competitors have leaned into that fleet story pretty well. I think what we need to be is disciplined about it, right? It can't be the fleet sales of old, where it was essentially a dumping ground for excess production and excess capacity at lower prices. That's not what's happening here. So I feel good about the direction the fleet team is going and optimistic that they'll continue to be able to maintain the business. But it can't come at the expense of the retail business and the performance that we need. Okay, thanks. And one quick one. Battery energy storage, you're using new technology, the sodium technology, and a lot of positive press on it and potential. I guess the question here is just more around, some others are further along using LFP. What's the opportunity set? Obviously, if a customer's interested in your technology, they'll have to wait longer for it. Do you see that there's enough of an opportunity that you feel longer-term you guys can introduce this sodium technology and that the tech is better, potentially thermal propagation, all that type of stuff. Just curious on how you guys are thinking about it, because obviously there's some business to be had now that perhaps maybe you're not going to be able to get because of the fact that the technology hasn't matured enough. Yeah. I think this is an area that generates a lot of questions and a lot of interest. What I would say is we've tried to maintain a very disciplined approach to it. I will tell you that we looked hard at the LFP business and retooling some of our plant capacity. When you look at the competitive landscape, we don't necessarily have a natural advantage to produce LFP cells ahead of everybody else in the market that's doing it as well. That's whether it's LG or it's CATL or it's others, Samsung, et cetera. There's a lot of people in a very crowded LFP space in that. While I think that as we looked at the opportunity, there might be some short-term opportunities, as you said, long term, the competitive environment should stabilize at, I would say probably considerably lower margins than what the market expects that to be, over the long run. That's where we couldn't get over the hump to spend $1 billion+ to convert a plant, et cetera, without a book of business. What the joint venture and opportunity with Peak Energy is, it's their technology. It's good. We've got a lot of battery experts that have looked at it and feel like it is going to be a competitive advantage for them. But what it, most importantly for us, allows us to do is to go in with a capital light opportunity. We've got a lot of embedded optionality to basically supply cells to be exclusive for them in North American supply and to grow with them. What that means is, as they grow their business and as they build a forward book, we can be there making investments into known contracts, into known growth, with an advantage technology that very few people have. We thought that this was a better opportunity than trying to capture some short-term margin opportunities at a really high capital. We'll see where it goes. I think some of our competitors have done well with their announcements and where they go, but we think longer term, we'll be in a better position to execute in a much more capital efficient way. Great. Jose. Good to see you, Paul, and congratulations. Second quarter results, very impressive. The cash flow number was impressive. Can you talk about the opportunity on the GM-Samsung SDI partnership, puts and takes, impacts to 2028 or any of the projects that you have upcoming? Then second, with regards to the U.S. exposure to China, any lessons learned from products you're launching in China that could benefit in terms of the technology, the product development, any lessons learned into the U.S. business and how you maintain that footprint, maintain it profitable, but then bring back some of those lessons learned back into the U.S.? Yeah. First of all, on the partnerships, whether it's Samsung SDI or Honda historically and everything, we're always just trying to find where are those opportunities to create capital efficiencies to help develop products that are going to compete throughout the world. Nothing specific to talk about there. As to China, what I would say is our software platform in China actually competes remarkably well. It gets rated higher than many of the Chinese platforms. Now, we can't lift it and bring it here from that standpoint for obvious reasons. But I think when you look at the capabilities and the confidence of what the team inspires there and our ability to compete on the technology platform, I think we feel good about being able to create that over here as well. I think when you look at the momentum that we have in the software business and the digital business, start to get really excited about some of those milestones that we talked about in 2021, where digital revenue growth, some of it is just coming in from the seasoning of deferred revenue, some of it is coming in from the growth of more Super Cruise vehicles coming into active subscriptions. Then the promise of SDV 2.0, what it is going to allow us to do in terms of additional features for customers and so on. You start to see where it can create real meaningful shifts, and over time, with a sizable car park, get really excited about what it can become. I think we are in the very, very early stages of this, but already seen some good promise, and a lot of that is the confidence that we have been able to gain from what we have been able to do in China technologically. Yeah. Since we are almost up on time, I just want to make sure I ask the software question as well. Super Cruise is moving to the standard on high-end Silverado, Sierra trims. Is this a deliberate pricing architecture shift that you have made? Or any early sense of how that approach might change as you roll out more autonomy features in 2028 and beyond? Yeah. I think on Super Cruise specifically, on Super Cruise, we have got really good attachment rates. So 30%-40% of people as they come up on the end of their three-year subscription are re-upping and getting a new subscription for Super Cruise. That is a really strong attachment rate. What we need to do is we need to actually scale the availability up there. So today, in order to have Super Cruise in a vehicle, you got to buy it as an option. We think that there is an opportunity here to balance the cost of putting it in as standard, but the opportunity of having significantly more volume out there in the future. Starting that with the higher trim trucks, we think that this is going to be a good attach point, not only to attract people into the truck, but also to help to grow that digital revenue going forward. Because that's a huge part of where I think there's margin accretion and margin opportunity even beyond what we see getting into the core going forward. When you look at the strides that the team is making, eyes off, hands off, next generation Escalade coming up in 2028, feel really good about where they're heading. I think leveraging the technology and the expertise that we had from Cruise and a lot of those people have come back that are working for us on the retail side and on the consumer side. We're excited about what that can bring. As we continue to make progress on that, we'll keep the market updated. 2028 will be here soon and- Yep it'll be a big technology shift for Super Cruise and where we can go with the ESCALADE IQ. Awesome. I'm looking forward to seeing that and- Absolutely That's all the time we have. Thanks, Paul.