Mary Barra: Well, first on the first question, we remain committed to low single-digit margins IRA. Nothing has changed there. And so, as you said it would be similar to ICE like margins with what we believe we know the IRA to be. We still are waiting for final clarification from Treasury on a couple aspects of that. And then, again, as Paul outlined, with the flexibility we have in Ramos, with the flexibility that we have in Spring Hill and our plants, I don’t think it’s that we’ll adjust down the amount of capacity that we’ll have. It’s just that we’re going to be able to respond very quickly to EV or AV depending on where the customer is and what they demand. So, I think we’re going to need the capacity and again the flexibility that we have is I think going to be one of the ways that GM is going to be better positioned to serve the market for both ICE and EV as we move in this transition period.
Emmanuel Rosner: Okay, that’s helpful. And then, I guess more broadly for the overall business, just clarifying your net cost reduction target of $2 billion. This is, I assume this is before any labor cost inflation expected from the new contract. But can you please clarify this? And assuming that this does not include that inflation in the net reduction, what sort of actions are you contemplating to try and offset that labor cost inflation? What could be done above and beyond the $2 billion to offset any additional cost increase?
Paul Jacobson: So, good morning, Emmanuel. It’s Paul. What I would say is that the $2 billion is around controllable fixed costs and we remain committed to being able to do that. The implications of the UAW contract when it is agreed to and ratified will flow significantly and largely through cost of goods sold in our margin performance. So, when you look at the ways that we have to offset that, those are things that affect the EV profitability, et cetera going forward. So, what we’ve got to do is make sure that number one, we sign a contract that we know we can compete in the global marketplace because we want to make sure that these are good jobs and they are good jobs for the next people as well that are going to taking over.
We are protecting the brand, the company, the franchise, and the future. So, we are going to have to look at potentially reducing fixed costs further. We are going to have to look at efficiencies across the board in engineering and designing the vehicles. And that’s a little bit of trying to get ahead of some of those inflationary pressures that we saw with the steps that we have taken earlier this year. So, we are going to continue to look at doing that. And we’ve got some work cut out for us, but we are committed to making it work.
Emmanuel Rosner: Great, thank you very much.
Operator: Thank you. Our next question comes from Adam Jonas with Morgan Stanley. Your line is open.
Adam Jonas: Hi, good morning. Mary, you’ve acknowledged for some time that the General Motors share price is not really getting any credit for the cruise business. I think many would argue that at $29 a stock might even be implying a negative value for cruise, which I think you’d reckon would be pretty ridiculous. So, my question is, besides continuing on growing and executing on the business, I know we’re going to learn a lot in the next year. Is there anything else that your management team or board could possibly do to unlock value for the cruise business?
Mary Barra: Adam, first of all, I completely agree with you. I think the stock is undervalued. Even if it was just an ICE EV and software company, I think the cruise piece of it is further. I think as we continue to expand cruise in a very thoughtful way, focused on safety, I think people will see and start to unlock. I mean, just last week we announced the opportunity that we have with Honda and Cruise and General Motors in Japan. And so, to be able to be involved in driving expansion, not just in the United States, but globally, I think it’s going to be an important part of Cruise’s mid to longer-term future of success. So, we do believe in the technology. As I said in my remarks, it is safer than a human driver and is constantly improving and getting better. And that’s what we’re focused on doing.
Adam Jonas: It’s really amazing to see the growth in San Francisco. I know people that use it every day. Just a follow-up for Paul, you guys have been very specific, I think within a range at least of a 2025 EV target of the mid to high single digit without IRA. You’re obviously not disclosing where EV margins are today. So, I’m not going to press you on that because you would have disclosed it. You’re choosing not to. But I think in some of your comments, if I heard you correctly, Paul, you said you’re not doing it today because of the labor situation or you know until you get the clearer picture on labor but when we get through this standoff with the UAW, can we expect that you will be specific of what the starting point is in the next year?
So, we could understand the delta from how loss-making the EVs are today clearly they’re loss making but had to put a number on it, so that investors can have greater transparency the delta. Is that something you can commit to please?
Paul Jacobson: Yes, good morning, Adam. First of all just to clarify in your comments the target is low to mid-single-digits ex-IRA. I think you said mid to high in your question. I just want to correct that for the record. But yes clearly look as we said repeatedly this year the margins in EVs are just relatively nonsensical mainly because we’ve got a big scaled infrastructure with limited production across the board. So, we are absolutely committed to presenting that roadmap and we’ll do that at our Investor Day and the decision to push out Investor Day was really we’ve got a lot of good strategic data points to put out there. We want to make sure that it wasn’t something that was dominated by the UAW. So, when the weather gets a little bit warmer in Charlotte in March, we’ll have that Investor Day.
We’ll provide that roadmap including kind of where we’ve come from and where we’re going to get to that low to mid-single-digit margin target, and we’re making good progress internally.
Adam Jonas: Thanks, Paul.
Paul Jacobson: Absolutely. Thanks for your question.
Operator: Thank you. Our next question comes from James Picariello with BNP Paribas. Your line is open.
James Picariello: Hi, good morning everyone. I’m curious to get your thoughts on incentive spending for the fourth quarter and just the overall pricing backdrop in North America, I mean obviously we have there are production limitations type of strike right now. But just how are U.S. inventory data supply trending, today relative to quarter-end and just any color there would be great. Thanks.
Paul Jacobson: Yes, good morning, James. So, in terms of incentive strategy, like I said in my prepared remarks, I think the team deserves a lot of credit for really transforming the approach and the go-to-market strategies, not just around incentives, but how we market the vehicles and really across the board that has been a huge contributor to some of the profitability that we’ve had on the backs of the strength and the consumers and the products that we’re producing across the board. So, I expect that strategy to continue. Certainly as we looked at quarter-end, inventories had trended a little bit higher, and of course this varies on a product-by-product basis. And we’re watching that very closely in partnership with our dealers to try to make sure in light of the work stoppage that we are getting vehicles to market where we have them.
So, we’re going to continue to manage that very tactically across the board, but everything that we’re seeing in the demand set right now is pretty strong for our vehicles, and we expect that to continue through the rest of the year.
James Picariello: Okay, that’s helpful. And then, my follow-up, can you just confirm the materials and freight impact in the quarter and just at a high level as we think about next year based on current commodity spot pricing, any visibility you might have in supplier costs, just how we can think about this cost bucket for 2024? I believe the 2023 guide, the prior 2023 reflect for an expectation of neutral, any color there would be great. Thanks.
Paul Jacobson: Yes, it’s a little early to get into that. We’re in the midst of our budget process right now, but what I would say is we have seen some logistics and delivery pressure that we’ve talked about before, particularly with vehicles coming into North America from Mexico with rail challenges, et cetera. So, I expect there will be parts where there’s some inflationary pressure, but as we’ve said over the last couple of years, the amount that we spend on expedited logistics, et cetera has been coming down as the chip shortage and some of the supply chain shortages have been tempered from the peaks in 2021 and 2022. I will say that there’s a bit of concern on my mind in terms of the supply chain’s ability to ramp up after the work stoppage.
Obviously, we’re focused on getting this finalized as quickly as we can. But it’s important that we don’t end up in a situation where we can’t ramp up to full production because the supply chain has to rebuild, et cetera. So, we’re watching that closely and making sure that we’re in a position, but more to come on 2024 as we work through that and work through the budget.
James Picariello: Thanks.
Operator: Thank you. Our next question comes from Dan Levy with Barclays. Your line is open.
