Mary T. Barra
Chair and Chief Executive Officer at General Motors
Thanks, Ashish, and good morning, everyone. Thank you for joining us.
I'd like to begin by thanking the entire GM team for once again delivering very strong results, including $3.6 billion of EBIT adjusted in the third quarter. Our supply chain team and logistics partners in North America have done great work, improving the flow of vehicles from our assembly plants to our dealers. Our U.S. dealers have helped us outperform the market from a share standpoint, with strong ATPs and essentially flat incentives. We were profitable in every region, including China. And GM International is on track to deliver significantly higher EBIT in 2023 compared to a year ago, thanks to our operating discipline and the lift we're getting from successful vehicles, like the Chevrolet Montana and the tracks. I'd also like to recognize our teams in Canada and Korea. They reached new competitive labor agreements and ratified them with little or no disruption to our operations.
Because we are in a highly competitive cyclical industry, we have been laser-focused on four fundamentals to strengthen our position. They are: delivering vehicles that customers love and are willing to pay for; a competitive cost structure; marketing efficiency and incentive discipline; and matching production to demand. Driving these fundamentals has been and will continue to be the foundation of our consistently strong earnings. For example, GM has now led the industry in full-size pickup sales for three consecutive years, and we have led full-size SUVs for nearly 50 years. Our overall incentives have gone from consistently above the industry average to consistently below. And we are on track to exit 2024 with fixed costs that are $2 billion lower net of increased depreciation and amortization than 2022. And we're launching several new SUV this year and next year, that will be more profitable than the models they replace.
We're also taking immediate steps to enhance the profitability of our EV portfolio and adjust to slowing near-term growth. These steps include moderating the pace of our EV acceleration in 2024 and 2025 to maintain strong pricing. The new launch timing at Orion Assembly also enables us to make engineering and other changes that will make the trucks more efficient and less expensive to produce, and therefore, more profitable.
Let's dig a little deeper into the steps we're taking with our ICE portfolio to keep margins and EBIT strong during a very -- in a very competitive environment. Over the last several years, we have bolstered our position in high margin segments, including full-size pickups, full-size SUVs and large luxury SUVs. We did this by managing capacity to meet demand, expanding the range of premium trim series that we offer, and with innovations like Super Cruise and the MultiPro Tailgate, and factory lifted trucks. And we're not going to let up.
As I said, we're launching a wide range of SUVs, that will have automotive gross margins up 5 points higher -- up to 5 points higher than the models they replace. The first two are the Chevrolet Trax and Buick Envista. These affordable small SUVs are rapidly gaining market share, and more than 50% of the Chevrolet Trax customers are new to GM. Then in the first half of 2024, we begin launching the new Chevrolet Traverse, GMC Acadia and Buick Enclave, followed by the next-generation of the ICE Chevrolet Equinox and GMC Terrain, which begin launching mid-year.
Here are the profit drivers. First, they're in growth segments. The larger SUVs compete within a segment that we expect to grow by 25% to 3 million units over the next three years, and the smaller SUVs compete in the industry's largest segment, which we expect to grow 9% to 3.4 million over that same period. Second, they're outstanding products. They offer more comfort and interior roominess, better cargo space, enhanced safety features and innovative technologies, including Super Cruise, which will be a segment-exclusive in the Traverse. And third, we develop them efficiently. We have simplified the powertrain lineups, where we're using 60% of the parts and reduced build combinations by 80% to 90%.
Now, let's look at EVs. Our commitment to an all EV future is as strong as ever. And we continue to plan to have annual EV capacity of 1 million units in North America as we exit 2025. This will allow us to participate in the EV market upside, but we are also scaling in a way that's consistent with the operating discipline I mentioned. Over the course of 2023, our battery cell manufacturing joint venture in Ohio has made tremendous progress. The plant will be running at full capacity next month as planned, and they are targeting the production of 36 million cells this year. Next year, production in Ohio is expected to rise to 100 million cells. At the same time, our battery module constraint is getting better, which helps us more -- or helped us more than double the Ultium platform production in the third quarter compared to the second quarter. And we are now in the process of installing and testing our high capacity module assembly lines, which will continue into the first part of next year.
We are currently challenged getting some of the critical equipment components, but we have a dedicated team working with our suppliers to resolve all issues and get these lines running at rate. By mid-year, we expect that modules will no longer be a constraint, and we will be focused on building to customer demand rather than setting new production targets.
Software is another critical piece of the strategy, and Mike Abbott and his team are actively engaged in the early assessment in each of these launches. Since he joined our team this summer, Mike has been moving aggressively to build a world-class software organization to fully execute our software-defined vehicle strategy, while accelerating our vision. We now have executives with experience from Apple, Google, Microsoft, Amazon, Uber and other leading tech companies, heading up our human interface design group, our product, software and services group, our software engineering and our software strategy group. These -- the team is optimizing the software strategy and fine-tuning the plans for our new vehicles to help make sure we execute with the highest possible quality and customer experience, while positioning the Company to drive significant revenue growth from subscriptions in the future. To give the team time to do this will move-out the launches of three products, the Chevrolet Equinox EV, the Silverado EV RST and the GMC Sierra EV Denali, each by only a few months. This will ensure their success.
We believe our products will succeed and the costs are coming out quickly. For example, our cost per sale has already decreased 45% over the last 12 months as production volume in Ohio has ramped up. We also expect to achieve significant margin improvement on our battery-electric trucks through engineering efficiency and improvements, supplier cost and reducing order complexity, buildable combinations and manufacturing complexity.
Another key launch for us is the next-generation Chevrolet Bolt EV. I know there has been some speculation in the market as to why we are developing a new Bolt EV. Our strategy to build -- is to build on the tremendous equity we have in the brand, and to do it as efficiently as possible. Our prior portfolio plans included several newly designed vehicles in the entry-level segments and a capital commitment of $5 billion over the next several years. However, by leveraging the best attributes of today's Bolt EUV as well as Ultium, our latest software and an ACS, we will deliver an even better driving, charging and ownership experience with the vehicle we know customers love. In the process, we are saving billions in capital and engineering expense, delivering a significantly cost-improved battery pack using purchased LFP cells. We're getting to market at least two years faster and our unit costs will be substantially lower. This will be our first deployment in North America of LFP technology in the Ultium platform.
So, now let's turn to Cruise. Since the early days of our Company, GM has been defining the future of transportation, and today, that's more true than ever with Cruise. In February, we celebrated Cruise becoming the first company to eclipse 1 million driverless miles. Fast forward to today, and they have logged more than 5 million miles and they continue to expand. Just last week, we announced that GM and Cruise are working with Honda to bring driverless rides to Tokyo in early 2026. We'll do that with our Origin, the world's first-ever vehicle purpose-built for autonomous driving on public roads.
As Cruise continues to push the boundaries of what AV technology can deliver to society, safety is always at the forefront, and this is something they are continuously improving. In fact, it's our zero crash vision that keeps us pressing forward, and we know from the data that Cruise AVs are involved in far fewer collisions than human drivers. This remains the focus of their ongoing discussions with government partners and regulators at the federal and state levels.
And now, let's talk about strikes. We know we have ongoing strikes at some of our U.S. facilities. I know many of you are concerned about the impact of higher labor costs on our business in the U.S. Let me address this head on. I'll start with the macro-environment. And then, I'll cover how we're positioned to -- positioning the business for success. It's been clear coming out of COVID that the wages and benefits across the U.S. economy would need to increase because of inflation and other factors. This has been playing out in many sectors for some time now. And I believe that the offer we have on the table with the UAW is better than the contracts that employees at companies like Caterpillar, UPS and Kaiser Permanente have ratified. The current offer is the most significant that GM has ever proposed to the UAW. The majority of our workforce will make $40.39 per hour or roughly $84,000 a year in salary by the end of this agreement's term. It also includes the cost of living reinstatement, a 25% increase to the Company's 401(k) contributions, world-class healthcare with no out of pocket premiums or deductibles for our senior members, and enhanced paid time-off and several other benefits.
Since negotiations started this summer, we've been available to bargain 24/7 on behalf of our represented team members and our Company. They've demanded a record contract, and that's exactly what we've offered for weeks now. Our historic contract with record wages, that have increases that are substantial, record job security and world-class healthcare. It's an offer that rewards our team members. But it does not put the Company and their jobs at risk. Accepting unsustainably high costs that would put our future and the GM team members job at risk is simply something that I will not do. Clearly, given the industry's changing pricing and demand outlook and higher labor costs, we have work to do to ensure we achieve low to mid-single-digit EBIT EV margins targets that we've laid out for 2025. The work has already begun, and I'm confident we will achieve our target and grow from there.
So, when you add up all the things we've talked about so far, it should be more clear than ever that we have taken and will continue to take decisive steps to grow our revenue while sustaining strong 8% to 10% EBIT margins in North America through 2025. We are optimizing both our ICE portfolio and our cost structure to continue to deliver strong profits. We are strengthening our EV business, and then, we will accelerate further. And we have assembled a world-class team to deliver new high margin reoccurring revenue streams from software-defined vehicles. It does remain a truly exciting time for us.
Now, I'll ask Paul to take you through the third quarter financials in greater detail, and then, we'll move to Q&A.
