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00:00 Speaker A
I do want to dig into that EV question, but first of all, just taking a look at this quarter, the buyback, the dividend increase. Um, it seems like investors got kind of most of what they wanted here.
00:11 Speaker B
Yeah, I would agree with that. I think into the quarter, there’s been a lot of negativity on autos, a lot of geopolitical questions and tariffs, etc. Um, and then some worries about US sales, would it be down next year and all of this? Um, and so I think these results, first of all, just on their own, they were great. Uh make no mistake. But even beyond that, I do think there was some surprise factor to the positive. It’s probably showing why there’s an outsized uh positive performance.
00:41 Speaker A
Yeah, it seems that way with that 9% increase. I mean, the shares were already running up um into this report, right? We’ve already seen some increases there. So, what does this reaction imply about now what future expectations are for GM?
00:54 Speaker B
Yeah, yeah, I guess I was talking about just the past couple of months. um, how how the stock was trading. but um, I think it’s it’s a very positive picture. We’ve been talking about this now uh for for a little while now. We’re very constructive on the US auto market. This is we don’t think a car is a consumer discretionary purchase, unemployment is at record lows. GM is also specially uh positioned because they make they have like 60, 70% of large SUVs and pickups. We know that that the strength of the US economy right now is on the higher end, right? not the lower end. That actually benefits uh GM. they’re doing this big buyback. There are a lot of things also that came out on the um conference call, which I think are are important. A lot of people were worried about memory chips, right? And GM said, you know what? like at least for now, things are okay, right? They put it in their kind of uh commodities bucket and it wasn’t even the biggest um element there. Um and then the other big story is EVs, which I’m sure you’re about to ask me about.
01:41 Speaker A
I am about to ask you about that, Dom. I thought it was really interesting that Jacobson painted this as, well, the government was making us do it, as though there was no consumer demand. There is still some consumer demand for EVs. Do you think that um GM has sort of um right-sized or corrected the course um for their EV strategy? Do you think they’ve done that properly?
02:04 Speaker B
I mean, I think they’ve really done a great job, honestly, in how they’ve structured uh their EV deployment. They were later, right, than let’s say Ford, for example. Um they have plants that are flexible. That’s really important, right? Because you know, for example, at Orion, they just instead of making uh electric pickup trucks or what have you make more ICE pickup trucks. Um that is a huge luxury to be able to do. Um and then, you know, in in Ramos, they’re making the EV Equinox and Blazer and they can just shift production to ICEs there. And so I think it’s also a smart way they’ve they’ve put together their EV strategy. They still believe in EVs, right? longer term. You know, I’ve been saying this for a long time, we did a lot of work on this. I think one of the big reasons why there’s an EV slowdown, sure, there’s policy, but it’s also like you can get really cheap used EVs right now. Why would you buy a new one, right? So there’s a huge glut of, you know, leases from three years ago that are hitting the market and you can get really cheap used EVs. I think that’s a factor. There is EV demand. People do want these products. Um we’ll get there, right? It’s just right now, GM can very smartly shift uh production, you know, and lower its EV costs. That was a big driver of their guidance that they gave is coming from uh lower EV losses and their uh, you know, 2026 EBIT guidance is coming in way ahead of uh 2025 and it could go even higher if we get a USMCA resolution. So I think that’s really what folks are have really focused on.