General Motors Company (NYSE:GM) Q4 2022 Earnings Call Transcript

Adam Jonas: Thanks, Mary. And I just have a follow-up for Paul on the pricing. You mentioned higher incentives, but offset by the increase in step-up in the MSRPs. I just want to make sure we’re interpreting that correctly that those are kind of a wash that you think one more or less compensates for the other to leave the pricing element more or less stable from 202s2 to 2023. Is that — is that the correct way to think about it broadly? I know it’s a volatile environment, but just want to as a starting point, is that the message, a wash?

Paul Jacobson: Yes. I would say order of magnitude, yes. The pricing increases, we’re not contemplating big ones this year, rather the annualization of what we did last year across the board. We have some new launches that would kind of come in. We won’t get specific on that. But we are assuming that there’s going to be some steady increased normalization of incentives. That’s where we said we’re trying to plan conservatively. What I’ll tell you is, January month has come in really, really strong, a continuation of what we saw in December and we’re just watching the environment around us, but we still feel good about where demand sits.

Adam Jonas: Thanks, Paul. Thanks Mary.

Paul Jacobson: Thanks, Adam.

Mary Barra: Thanks.

Operator: And our next caller is Chris McNally with Evercore.

Christopher McNally: Thanks so much. I just want to revisit Ryan’s question on the IRA $300 million, and thanks so much for giving that number. Just our math is that, that would be something like 10 to 12 gigawatts from the two facilities in Ohio and Tennessee and without sort of confirming the explicit math, can we just talk about maybe how long it may take to ramp Ohio? And then obviously, Tennessee is only starting at the end of this year, but I think they’re about 40 gigawatts each. So it seems like there is a material amount to grow at that capacity growth, but just anything you could talk about the time line on Ohio and Tennessee Giga?

Mary Barra: Yes. So the plan was we started in fourth quarter, and we said a couple of earnings calls ago that Ohio would add 20% more capacity every quarter, so it would be fully up and running by the end of the year. That plan is still on track. I think you’ll see us follow with similar, but maybe a little faster in Spring Hill because we already have all the experience. And we actually have people from Spring Hill at the Ohio facility right now to make sure we have a smooth start-up there. So — and we’ve talked about the plan is roughly around 37, 40. So I think you’re in the right ballpark, but that’s how those plans will ramp up.

Christopher McNally: Perfect. That’s super helpful. And just the follow-on, just from a modeling perspective, should we assume the 300 flows through EBIT or is there any benefit that also is going to start to benefit taxes as well? Just it is more we’re going to see the benefit of IRA if it’s only in EBIT or if there is actually some tax component as well?

Paul Jacobson: We think that there will be some that kind of flows through both. Our deck has a guide on a lower tax rate of 16% to 18% for 2023. That’s largely driven by R&D credits and some IRA. We’re not getting any specifics into the breakout between them until we see the regs written, and we get more definition around it, but we do expect that there are likely going to be components in both areas.

Christopher McNally: Okay, thanks so much Paul.

Operator: Thank you. And our last question comes from the line of Emmanuel Rosner with Deutsche Bank.