Ladies and gentlemen, welcome to the General Motors Company Third Quarter 2020 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference call is being recorded, Thursday, November 5, 2020. I would now like to turn the conference over to Rocky Gupta, Treasurer and Vice President of Investor Relations.

Thanks, Erica. Good morning, and thank you for joining us as we review GM's financial results for the third quarter of 2020. Our press release was issued this morning, and the conference call materials are available on the GM Investor Relations website. We're also broadcasting this call via webcast. I'm joined here today at GM's Tech Center by Mary Barra, GM's Chairman and CEO; John Stapleton, GM's acting CFO. And on the line, we have Dan Berce, President and CEO of GM Financial. Before we begin, I'd like to direct your attention to our usual forward-looking statements on the first page of the chart set. The content of the call will be governed by this language. I'll now turn the call over to Mary Barra.

Thanks, Rocky, and thanks, everybody, for joining the call today. This morning, I'll cover a few key areas of the business. I'll start with a brief snapshot of our record third quarter earnings, and then I'll follow with a more in-depth look at the rapid progress we're making in electrification. I'll wrap up by touching on our regional businesses, and then John will provide a deeper look at the numbers before we go to your questions. But before I do that, I know everyone on the call is closely watching and waiting for the final vote count in the U.S. presidential election. From our perspective, General Motors is ready to work with whichever candidate is certified as the winner, along with their administration and the new Congress. And we will continue to invest in our U.S. operations and pursue our growth initiatives, especially in the areas of electrification and autonomous vehicles. I also want to take a moment to recognize the tireless efforts of our employees around the world. Whether working remotely or in the workplace, they are keeping our programs fully on track, building every vehicle they can safely and with quality. In addition, our suppliers are moving mountains to keep their operations open so we can keep production going, and our dealers are embracing creative new ways to interact safely with our customers for service parts and sales. That has truly been remarkable and inspiring to see how everyone has come together to safely restart our operations with the health and safety of our teams and our customers as the number one priority. Our multilayered approach to COVID-19 safety has proven effective in preventing the spread of disease around all of our facilities. Where our protocols are followed, they are working. This is an extraordinary effort, and our…

Okay. Thank you, Mary, and good morning, everybody. The third quarter was very strong, resulting in $35.5 billion in net revenue, $5.3 billion in EBIT-adjusted, 14.9% margins, $2.83 in EPS diluted adjusted and $9.1 billion in adjusted automotive free cash flow. The $2.83 EPS diluted adjusted includes a $0.05 gain from the revaluation of our investment in PSA. Automotive liquidity remained strong at $37.8 billion at the end of Q3, demonstrating the resilience and flexibility we have built into the business over the past few years and our ability to manage through downturns and other disruptions. In Q3, we repaid $5.2 billion of the corporate revolver draw and paid an additional $3.9 billion in October. We expect to pay the balance by the end of the year while remaining at or above our target average automotive cash balance. We remain focused on our investment-grade balance sheet as well as our capital framework targets. Retail sales have continued to recover, with Q3 industry and GM results down less than 5% year-over-year despite limited inventories. Let's take a closer look at North America. North America delivered Q3 EBIT-adjusted of $4.4 billion, up $1.3 billion year-over-year and a 15% margin driven by strong full-size SUV and pickup truck performance, disciplined pricing, benefits from our cost actions and nonrecurrence of the $1 billion strike impact in Q3 of 2019. The launch of our all-new full-size SUVs is going extremely well and contributed favorably to the price during the quarter. Our new full-size SUVs are designed to keep GM the clear leader in a market we have dominated. During the quarter, GMC and Chevrolet combined had a 65% share of the retail segment, and we are trending up in both share and ATPs as availability of the new models increase. Dealers and customers truly appreciate…

[Operator Instructions]. And our first question comes from the line of Itay Michaeli with Citi.

Congrats.

Thanks, Itay.

Just maybe -- John, I appreciate the color into 2021. And I was hoping we can maybe just walk through North America, the bridge there in a bit more detail. And specifically, kind of as we think about the company's earnings power in North America relative to where you thought it was pre-COVID, just maybe walk us through some of the puts and takes there just given the strength of the truck franchise this year.

Well, I mean what we're seeing specifically relative to the industry is actually quite stronger -- much stronger in the recent months versus what we were seeing in COVID. You can look at our bridge. I think we're calling out cost savings, excluding warranty, of about $700 million quarter-on-quarter. I think you're asking what could stick, what translates forward. I think a big chunk, Itay, of the savings really represents the austerity actions that we put in place in Q2. And where -- they bled into Q3. And as operations start to normalize as our plants continue to run hard, we will start to see some of that cost go back into the system in Q4 and beyond.

Just to clarify, John, I guess, the 2021 comparison, should we think about the 2020 as sort of on a more normalized ex COVID? And if so, could you kind of quantify what that sort of comparability should look like?

Sure. Yes. I mentioned that our 2021 could be in line -- more in line with pre-COVID levels, really not that indifferent than what we reviewed at Capital Markets Day back in February. We do have the puts and the takes. We mentioned plus EV spend. We mentioned potential commodity headwinds really in the platinum group metals. The tailwinds: the full year of full-size SUV and inventory build opportunity, and so potential COVID cost savings. So EBIT-wise, not that real indifferent than where we were at the Capital Markets Day. On the cash side, a little different. Cash side, we actually delayed $2 billion of CapEx spend this year that will get retimed into next year. And as a result of our strategic decision to accelerate our investments, we will see some of this accrete into 2021 as well.

Just lastly, maybe for Mary, strategically. One of the announcements that you made throughout the quarter was the relationship with Uber to deploy EVs on rideshare networks is something we've talked about in the past. Curious if you can kind of comment on where this relationship could potentially progress over the next couple of years.

Well, I think you're seeing rideshare companies want to do their part from a 0 emissions perspective, and so providing the drivers the opportunity to have an EV that's within reach. And the Chevrolet Bolt EV is an excellent vehicle. We deployed it in past in the rideshare environment. And it was -- it did very well. It's very functional from that perspective. So we think it's a good offering, and we're going to continue to make that available and see how we can grow that business.

Our next question comes from the line of Rod Lache with Wolfe Research.

I was just hoping -- first, John, I apologize for being a little bit thick on this, but I didn't quite understand what you actually were guiding to for 2021. Did you say it would be similar to the roughly $10.5 billion EBIT that you're looking for this year, which obviously includes the gains that you're seeing in GM Financial and also COVID? Or did you sort of make adjustments to extract COVID impact from that?

No. I mean pre-COVID, Rod, I think at Capital Markets Day, we were guiding EPS diluted adjusted somewhere around $6.5 -- I think it was $5.75 to $6.25. And you can extrapolate that to our EBIT number. As we look forward into '21, we think we could be there. Our goal would obviously -- the puts and the takes could offset each other, but a lot is really dependent as we move forward in this uncertain world.

Okay. That's clear. And any color on what you're expecting for GMI ex China? Obviously, that's still a pretty significant drag. Is there a reason to be a bit optimistic about that as you look out to next year?

As we look to next year, it's still a difficult environment. I think everybody can see that. I think your question, is there any possible upside? I think some of the upside that we see is we'll have a full year of our Tracker, which is the SUV, we'll have a full year next year. And really, Rod, we've taken quite a bit of price this year, and that price will carry into next year, which will be a tailwind for us. I think those are the two positives that we can point to for next year in South America.

Yes. The only thing I would add, Rod, is also in addition to what John said, the team has just done an excellent job of continuing to take cost out of the business. So the team is very hungry to deliver positive results. And so they're committed and working day and night on that.

Okay. And just lastly, Mary, I mean, so much has happened here in the market over the past year competitively, especially with regard to electrification. And I was just hoping you might be able to share with us some updated thoughts on strategy and if it's evolved at all or changed at all since the March EV Day. Any thoughts about the -- accelerating the trajectory of growth in EV? Is this Oshawa expansion related to EVs or any changes to the distribution strategy?

So we're going to share a lot more of our EV strategy when we're at the Barclays conference later this month. But I would say we have done a lot since March -- the March EV Day, continued aggressively on the battery technology development and very pleased where we're at. From an Ultium perspective, we announced the Ultium Drive. That gives us a lot of flexibility and scale in addition to the wireless battery management system. So you can see there's a lot of work going on from a technology perspective to make sure we have leading technology. We've shared the Cadillac Lyriq and the GMC Hummer EV. Both reveals went exceptionally well, and the customer feedback from both has been very, very strong. In addition, we have announced the $2 billion investment in Factory ZERO in Detroit-Hamtramck. That will be an all-EV plant. We have the Ultium Cells LLC in Lordstown ahead of schedule, and we're hiring. And then we have the Spring Hill announcement, which is about a $2 billion investment as well. So when you step back and look at the potential that GM has from an EV perspective, we can leverage our iconic brands that have a relationship with customers across the country and, frankly, across the globe; leverage the technical capability of the team, which I'd put against any other group; the ability that we have to quickly convert our manufacturing facilities and get the scale very quickly not only from a component perspective, but in building. So when you look at all those things, our major goal is to make sure that we are in a leading position from getting the new vehicles out. We've already talked about the fact that Ultium will give us profitable electric vehicles. And we think leading and getting vehicles across the entire market, leveraging our brands is going to be very important. Lastly, you mentioned dealers. And what I'll say, we are working in partnership with dealers. There's already been quite a bit of transformation. And we're finding that some customers want to do everything online. Other customers still want to literally kick the tires. The new systems that we're deploying, the GM-based systems that we're deploying with our dealers are helping. I also mentioned that we're leveraging systems to help dealers order the fastest-moving and often most profitable vehicles. So that's improving their business as well. So we're working in partnership with our dealers to transform and provide an excellent customer experience. The last proof point I'll give you is the GMC Hummer EV, where you look at with 4 steps being able to make a deposit on a vehicle and improve pricing transparency so customers know exactly what they're going to pay, no incentives, no discounting, no haggling. And this is all being done in partnership with our dealers. So there's a lot more to come here, and I'm very pleased with the great work that we're doing together.

Our next question comes from the line of Emmanuel Rosner with Deutsche Bank.

One more question on the EV strategy. I really appreciate all the color today. So today, NIO's market gap has officially surpassed GM's. And that's the latest example of high market valuations and cheap access to capital for this electric vehicle company. I was hoping to get your latest thoughts on what the best way is to unlock shareholder value from your technology. Last quarter, you said nothing is off the table, but I'm certainly getting a strong vibe from all the announcements on the EV side that things seem to be being kept all together. So just your latest thoughts what's the best way to unlock shareholder value.

Well, Emmanuel, as I've always said, we're committed to and have taken many steps in our EV business as well as our autonomous business to maximize the ability to unlock long-term shareholder value, not something that's going to necessarily cause a quick pop. When you look at all of the assets that we bring to that and recognize that EV is a propulsion system, there's many other parts of the vehicle, we're focused on speed and what's going to drive the business and growth over the long term. So we'll talk more about it at the Barclays conference. But our focus is absolutely on unlocking shareholder value and speed to market.

Understood. And then a second question, could you talk a little bit more about the benefits from the alliance with Honda in North America? I'm just curious if you could maybe detail a time line, magnitude of expected benefits, what sort of product lines are even being considered, just anything that helps us understand the opportunity here.

Sure. As we mentioned in September, we announced a nonbinding MOU. We continue to have discussions, are making great progress on a definitive agreement. And the scope of things that we're working on are platform sharing, sharing with R&D, connectivity solutions as well as purchasing. So -- and if you think about the items that I've just mentioned, those are -- can lead to significant cost savings. So we'll have more to outline as we get to a definitive agreement, but it's a pretty broad look at what we can do together to make us both more efficient and also make -- allow for leading technology and EVs and platforms in the market.

And just timing-wise, any sense when the earliest benefits could be realized?

I think probably need to let us get the definitive agreement before I start quantifying and timing them, Emmanuel, if that's okay.

Our next question comes from the line of John Murphy with Bank of America.

I just wanted to look at Slide 17 in the supplemental portion of the deck and look at this and -- I mean maybe recognize -- I mean I've got data going back more than 30 years. $4.4 billion EBIT for North America is a record and a pretty strong one. And you can certainly argue there's some puts and takes and benefits at the current time, but it's not necessarily the greatest time in the world in North America. So it's pretty impressive, right? I mean I don't think this should be undersold. I'm just curious, as you're looking at this, I mean, John, you mentioned that some of the cost savings may not repeat. But I think you guys indicated that you're going to get $200 million -- or you got $200 million of the $4 billion goal to wrap that up. And you're going for $4.5 billion now. But let's take out $800 million there and say maybe that's not going to repeat and maybe knock out the price and say, "Hey, listen, the market is just so insanely hot that might not repeat." You're still doing well north of a 10% EBIT margin. So I'm just curious if that logic makes sense to you and why, given the strategy and the product that you might not be able to hold on to some of that price and some of that cost go forward. Because I mean you're being very humble and underselling what you did in North America.

I guess, John, I guess a couple of comments there. As we look forward -- we've worked hard on the $4 billion to $4.5 billion. We're looking hard at what can we make stick from an austerity perspective. We do have some tailwinds with the all-new full-size SUVs, 3 brands, we've got some strength there. If you look at the last handful of years, we've been in launch mode, really, launching our T1 platform, the Silverado, Sierra and the SUVs. And now we're -- we've got the launch behind us. And so going forward, yes, I mean, we're going to utilize some of that strength. And I think we've talked about North America 10% margins. We've demonstrated in the last 5 years we can do 10% in most years and even some quarters better than 10%. Some of that, though, will actually have to use to pay some of the acceleration of our EVs on a go-forward basis. And I think Mary mentioned we're going to go hard at this and more to come at Barclays in the middle of the month.

But I think it's a really good point, John, that our North America business, especially the strength of our full-size truck platform and the franchise there, full-size SUVs, gives us excellent opportunity to self-fund our growth in EVs and then leverage all the assets we bring, whether it's manufacturing, engineering, technology. So I think we have to focus in on what it takes to really put vehicles on the road that are long-term durable and high quality, also that customers want. And I think, frankly, that's been a little bit underappreciated. But when you look at the earnings potential, even with the adjustments that you made in North America, we're going to go hard at EVs and demonstrate the assets that we're going to bring to it. And the North America performance that John is being a bit modest about allows us to do that.

Okay. That's helpful. I still think you're being awful humble there, but we'll be -- just a second question on EVs, and I understand you're going to talk about it more in the coming days. But you've made certainly comments about doing Ultium powertrain inside and you've discussed cycle times being shorter. So I just wonder if you could sort of clarify on the EV Ultium strategy whether levels of outsourcing or in-sourcing may be similar or different versus ICE vehicles have been historically. And then also, Mary, I mean, in the press release, you did talk about cycle times being faster, so that should be fair game on this call. What does the faster cycle times mean -- product cycle times mean on EVs?

So I think a couple of points, and I'm really glad that you asked the question. So we have -- from an Ultium perspective, we have a very robust road map of how we're going to work to take costs out and really leverage the scale and the opportunity that we have when you think about the market size that we have in North America as well as China. And there's other markets that are open for us. So I think there's a huge opportunity for EV growth in our business. And as we mentioned, I think what you're referring to on cycle times is the fact that the GMC Hummer EV is the fastest vehicle development we've ever put on the road. We're using new technology and tools. The fact that the way the Ultium platform has been designed, it's very modular. So that allows for reuse of engineering. That speeds up the process. The design team with how the Ultium platform -- when you're not trying to retrofit an ICE platform but you start with an EV-intended platform, that gives you a lot of design freedom and flexibility. You're seeing that with the LYRIQ and with the GMC Hummer, and there's more to come. So all of those things are allowing us to have a much faster global vehicle development process to get the vehicles on the road. And so we'll share more about that, but that -- those are all the elements that are allowing us to do that. And again, the milestones we've established and the speed at which we plan taking cost out from the battery -- because cost on EVs is all about the battery. And so getting those costs down, controlling what we need to control, and I think you've seen are a definite change at General Motors of how we did ICE vehicles versus the way we're doing EVs with controlling and having the JV on cell manufacture. So we're rethinking every aspect of the business to make sure that it's going to allow us speed, it's going to allow us to have a cost base that allows us to enter many more segments with profitable EVs into the marketplace, which I think then that represents the growth opportunity in front of us.

Could this mean that mid-cycle majors are a thing of the past?

Well, I think we have to look at that, that it will be customer-driven. Because I think if you step back and you go 5, 6 years ago, mid-cycle enhancements are all about the exterior. And now not only do you have changes you can make to the exterior possibly faster, but also what you can do internally. And with our vehicle intelligence platform and the ability to do over-the-air updates, whether it's something new that you're going to put out on a model or something that you can upgrade in a previous model to, that's all new business for us in the services side of it. So don't underestimate the fact that I think John said we're going to have VIP on about 33 vehicles, was it, John, by 2023. And of course, that will be driving our EV vehicles as well.

Just on the dividends from China and GMF, John, what are the -- I mean I think it's -- year-to-date China's 500 and GMF is 800. What do we have left just to top out the year? And then I'm done.

Yes, nothing left on GMF, and the 500 remaining at -- from China will be in Q4.

Next question comes from the line of Joseph Spak with RBC Capital Markets.

I want to go back to the electrification question. I mean you've clearly shown you've done a great job managing through the past year plus, I guess, with the strike and the pandemic. You showed the resilience. We've seen the return to solid cash flow. And I know, historically, that's been a big part of your goal and investment thesis, improving that conversion. But you're also clearly talking about here accelerating investment in electrification. So given what's going on in the industry and the capital markets, I think you could probably build the case that it's better for you to not theorize robust free cash flow as maybe you were sort of talking about a year or so ago. And I wanted to get your thoughts on that. And it sounds like, with these accelerated EV investments, maybe you could just help us a little bit about how we should think about the return on that. You talked about improved speed to market, but does this actually mean you can pull forward bringing some of that product to market faster than initially thought?

Absolutely. We will definitely be bringing EVs to market faster than what the plan was a year ago. We've learned a lot in the last year. And the speed at which we're developing the Lyriq and the Hummer, I think, are evidence of that. And so we definitely will have vehicles in market more quickly with our new strategy.

Okay. And then just a second one. So the HUMMER EV looks great. And I know you indicate this is going to be profitable, but it's also certainly an expensive vehicle. And if we look at Tesla's plan, one of their tenets is really was to use expensive vehicles to lower the cost of technology, broaden the addressable market. And again, I mean to be fair, right, the initial Model S is in that sort of -- $100,000 vehicles for them as well. So I guess the question for you is, between the Hummer and the Lyriq and the Cadillac product, those are also expensive vehicles, is the plan similar? Like I know you've got the Bolt EUV. But beyond that, how do you think about leveraging the high end and the technology to move towards higher-volume passenger cars? Or do you really want to stay within your sort of core segments of trucks and maybe some luxury?

So the trajectory that we have for the Ultium battery technology is going to allow us in this initial rollout of Ultium to have vehicles in the high-volume segments. So we definitely plan on -- when you think about our brands, where Chevy plays in the heart of the market in value, we will have entries across our brands and across segments and into affordable high-volume segments.

Okay. That's very clear.

Our next question comes from the line of Adam Jonas with Morgan Stanley.

Just a couple of quick questions. The first is on Ultium LLC. You're really rapidly developing the capabilities of this business at a time when there is -- seems to be a scarcity of those skateboards in that kind of -- those -- that module, that system with so many entrants, whether they're legacy entrants or all-new entrants that want to get in. And so obviously, I think that the core business of Ultium is to help GM time to market and flexibility, but also presents an interesting third-party opportunity. Now in addition to Honda, which you've disclosed as a potential customer, if you will, can you tell us the state of any other discussions of third-party supply from Ultium to other manufacturers? Are there discussions going on? Even if you can't be specific, are such discussions going on at this point?

So Adam, one is the Honda isn't a possibility. It's already a done deal that Honda will be leveraging our Ultium platform for two vehicles. So -- and there's just more opportunity as we work with them. I don't have anything specific to share right now on others, but I would just tell you there are other conversations underway.

Okay. Appreciate that, Mary. And just as a follow-up on cash return. Now if we think life pre-COVID, the strategy -- and you've laid it out very clearly in the past: invest in the business; fortress balance sheet; profitable growth; and then what's left, return to shareholders. Pre-COVID, you guys returned on order of $20 billion through share buybacks, right? That was money you took out of the business and your investors are wanting you to do it, and you did what they wanted and you gave it back instead of investing in the business. . Am I right in thinking that post-COVID, the world really has changed? And while you still reserve the right to define what excess cash is, but given the growth opportunity ahead and managing this with perhaps even greater emphasis on fortress balance sheet post-COVID, am I thinking that while you may still give us those -- that sequence or that waterfall of what's left, that this is not a cash return story anymore as much as it used to be and is much more a growth story? Is that just conceptually the right emphasis here?

Adam, I think we're going to still follow our capital allocation strategy, which means reinvest in the business to generate appropriate returns, a blended return on invested capital of 20%. We're going to maintain an investor-grade balance sheet. And then the third pillar, as you suggest, was returning to shareholders. I think what you hear us saying is we do believe that there are a number of very important programs and services that we can deploy that are going to lead to growth of General Motors. I can't talk about the rest of the world, but we see a huge growth opportunity for General Motors. That's why we're accelerating EVs, putting the focus on services with the addition of Alan Wexler joining the organization. And so we see a growth opportunity that focus on that first pillar. We'll still maintain it because we want to do the right thing for all of our investors. But we will be heavily focused on the growth opportunity, and that's facilitated by the first pillar.

Our next question comes from the line of Ryan Brinkman with JPMorgan.

Congrats on the quarter. Maybe starting with a follow-up on the GMNA profitability questions earlier. Are you able to sort of parse out how much of the $1.0 billion of year-over-year contribution from lower cost in 3Q, as shown on Slide 17, is related to more temporal factors such as austerity-related cost savings that might reverse versus how much stems from savings that are more structural in nature? And how should we think about the cost line specifically tracking in GMNA going forward as austerity savings normalize but structural savings continue? And I think you might also combine in this driver the higher cost of the content on new launches, such as the SUVs, which you've suggested before might need to be netted against pricing. So any sort of disaggregation that you might be able to provide with regard to all of the different factors in 3Q that went into the cost driver for GMNA would be very helpful.

So the way I would look at it, Ryan, is clearly, there were austerity measures that are more related to the pandemic. And as the business resumes manufacturing, et cetera, there will be costs that we incur. There will be savings as well as we demonstrated through the transformation. But what you also hear us saying is we're going to accelerate EV. So some of that savings will go against that. Significantly improving the rollout of EV is going to take both engineering and capital. So I think as you look forward and try to map into '21, you have to factor in, yes, we've made permanent savings in the way we do business, but we're now accelerating other parts of the business. And some of that savings will fund that. Some of the austerity will stick, and we'll provide more clarity around that when we get to talking about '21 in the February time frame when we roll out fourth quarter earnings.

Okay. And then lastly, I think I heard John say that you expect a mid to high 15 million range of U.S. light vehicle SAAR in the back half of the year. Looking at July through October, I think it's running at about 15.6 million so far and the last couple of months at 16.4 million. So just curious if you're seeing or anticipating any kind of a slowdown here in November and December or perhaps are just being cautious. I think your guidance, which is based on wholesale, is derisked relative to the near-term trend in sales, just given your ability to replenish inventories going forward. But still, I'd be curious to know how you're feeling about the market, if you think it's likely to continue to hold strong like in September and October in the 16s or if you're concerned about, I don't know, any sort of risks around uncertainty due to the election or higher COVID cases or something else.

No. I mean we didn't really bake COVID uncertainty, if you will, into our SAAR projection. What we are seeing, though, on the retail side, in particular, very, very strong. If you look at the retail SAAR for H2, it's virtually in line with last year. Last year, in total, we had 17.5 million units. So the actual reduction, if you will, in the second half of the year relates more toward fleet, daily rental companies. Fleet customers have dialed back a bit. But we see -- barring a major event in COVID, we do see continued strong retail SAAR in the second half and into Q4.

Your next question comes from the line of Brian Johnson with Barclays.

Obviously we'll have a chance in a couple of weeks to talk about the EV strategy, and appreciate the advertising for it. But I do want to ask when people think about the leading EV company, it's not just the EV propulsion system, it's the digital cockpit, vehicle update capability, the frequent kind of mid-cycle refreshes, if you will, that's delivered by software updates. So can you give us a sense and also you mentioned Alan Wexler, the kind of digital transformation outside of EV propulsion that we could expect to see either in the electric vehicles themselves or, frankly, in a broader lineup to keep them fresh and relevant for modern buyers?

Yes. Brian, your line has got a lot of static on it. So I think I got the question. And you're talking about the digital transformation. We do view the vehicle as a digital platform. We have -- over the last 5 years or so, we have in-sourced virtually all of the software inside. That gives us the opportunity to have much better control, much better integration and speed to put new offerings. So we see a definite opportunity with over-the-air, not just for EVs, but for all of our vehicles, ICE vehicles as well, to leverage the service opportunity and build on what we have with OnStar with the number of vehicles that we have connected already. So I say that, that is a huge growth opportunity as well in both EV and ICE.

Okay. And in terms of when those types of products could be seen in the showroom on non-EVs, when would we sort of see a [indiscernible] different cockpit, much more connected, showing up in showrooms?

Well, I mean I think if you look at the Cadillac Escalade right now, you see a -- that -- there's already 9 vehicles that have our vehicle intelligence platform in it, and that's growing. And that provides us the foundation just to build on that. So I think it will continue to grow the number of vehicles that we have with that capability. And then the services, we -- like I said, we have a team that's working on that right now as well. So as we have 30 vehicles by 2023 that have the VIP, with more following as quickly as we can, that's going to give us the opportunity to seize the service piece of it and leverage the digital platform.

Our next question comes from the line of Dan Levy with Crédit Suisse.

I just wanted to start first on the commentary on the dealer stock. So you're not going to get to 600,000, I think, which is well understood. But the question is, like, you need to continue rebuilding your inventory into 2021. We've now seen a couple of months of SAAR north of 16 million, which basically normalized. And in the 2018/'19 period, you were running at roughly 800,000 units of gross stock on a monthly basis. Is that 800,000 a reasonable target that we should expect you to rebuild toward? Or are you going to try to play it maybe a little more conservatively?

I think that we'll -- I think that was a very high number. We were coming off of launches, and we wanted to build a little bit of inventory as we walked into the second half of last year. I think what we're seeing now with this focused ordering approach with our dealers -- and dealers are learning to operate at much lower inventory levels. They're taking cost out. That allows us to take cost out. I don't see the 800,000 to transfer into the future. We do see a lower number.

Okay. So we should consider just going forward, you're going to be a little -- you're going to aim to be a little more lean on the dealer stock levels. Okay. And then a follow-up. Mary, maybe you can help us understand on the Honda MOU. I know you said TBD on the timing, but could you maybe just contextualize what's your current spend is on combustion platforms? How significant the portion of the budget it is? And how much of that can be shared with Honda? Just trying to get a sense for the magnitude of product or content you have that's maybe less value-add or a little more commoditized, which people aren't giving you as much credit for, but that can be shared with Honda and that can -- allows you to reinvest that amount into EV.

Yes. Well, first of all, I think it's also important to note with Honda, we're also already sharing EV platforms. So it's hard to quantify that. I will tell you that we are -- much of our capital and engineering is now over-indexing into EVs. And as I mentioned, we already have sharing going on with Honda on that. But I think your point of -- for being flexible with how quickly the EV transformation will happen and having the right products from an ICE perspective as well as an EV perspective, joining with Honda on those key platforms that may continue for a while allows us to do that much more efficiently. I mean it cuts it in half virtually for the core and then we each do our top hits that we go to market with a very different offering. So there is tremendous savings there. It's hard for me to quantify that because it changes year-to-year based on what programs we're engineering and launching. But I will tell you -- so I would just say there's significant cost savings available. It will be as we commonize platforms, we have already started to do that from an EV perspective. So there's potential further opportunity there, and it just makes us more efficient.

And is it possible to bring other automakers into the fold on the combustion sharing side?

I would say anything is possible. We have to look for what makes the most sense and how, I'll say, new program schedules align. But we're opening to look for ways to drive efficiency across the industry. We're very open to that.

Our last question comes from the line of Mark Delaney with Goldman Sachs.

Yes. I was hoping to ask more on Cruise and the news about getting the approval to do testing with no drivers in San Francisco. Maybe you can help us better understand what are the key factors that are needed from here in order to get to commercial deployments. Is it just a matter of time and seeing how these driverless vehicles are performing and that gives you enough confidence as you get more data to be able to deploy? Or do you think there's further technical or regulatory hurdles that will need to be cleared in order to get to commercial deployment?

Well, if you look at commercialization, we're going to continue our development and testing work that we're already engaged in and then the discussions with regulators to ensure that both from a technology and a regulatory perspective we're in a position to operate commercially. When you think about what we've announced with what we're going to do yet this year in San Francisco with the testing without a safety driver in the vehicle, I think that that's just another level of milestones that we need to achieve. And then -- and we'll be the first doing it in a complex urban environment. And why that's so important is, if you think about even today's ride-sharing, the opportunity for profitability is in dense urban environments. And so being able to deploy the technology there instead of in a suburban environment, I think, gives us a faster pathway to commercialization and profitability. And the vehicle capability will only continue, and that means then the area, the geofence area that the vehicle can -- vehicles can operate in grows as well. So both will go together.

Okay. That's helpful. And then a question on cash flow. Kind of within that scenario, the company was discussing a relatively flattish SAAR on a sequential basis going forward. What would that imply for working capital as either a headwind or a tailwind for 4Q and perhaps into 2021 as well?

Yes. For Q2, we burned $9 billion, so we had a huge unwind. Q3, it was almost dollar-for-dollar rewind. We generated $9.1 billion of free cash flow. As we look forward, Q4 and beyond, we're really more toward the normalized levels now, not as big or hardly any impact on a managed working capital. It's already happened in Q3.

I'd now like to turn the call over to Mary Barra for her closing comments.

Well, thanks, everyone. I really appreciate everybody's interest, especially in our EV transformation. But to sum up the quarter, it was a very strong quarter. Very proud of the team for the great results that were delivered. And I think it demonstrates that we're fully maximizing our strong new vehicle portfolio both in crossovers, full-size trucks and full-size SUV, obviously being helped by a recovering market. We also greatly accelerated our EV and our AV progress. We've talked a lot about that this morning, and we have more to announce very soon. And it does, I think, start to outline a very significant growth opportunity for General Motors. Overall, the team has worked very hard to build an agile and resilient business. I think we've demonstrated that over the second and the third quarter. We are committed to not only continuing to run a strong business with all of our franchise, but also focus on growth opportunities that will create long-term value for our shareholders. So I want to thank everybody again for participating. And please stay safe, stay healthy, wear your mask.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for joining.