The Transcripts, Transcripts
General Motors Company (GM) Management Presents at Morgan Stanley Annual Sustainability Conference (Transcript)
General Motors Company (NYSE:GM) Morgan Stanley Annual Sustainability Conference Transcript May 23, 2023 12:00 PM ET
Executives
Kristen Siemen – Vice President and Chief Sustainability Officer
Analysts
Alejandro Zambrano – Head, Transportation, Calvert Research and Management, Morgan Stanley Investment Management
Unidentified Analyst
Okay. Hi, everybody. We’re going to try to wake you up or preempt your food coma right now. But I really am excited with this session and have the privilege of moderating Kristen Siemen, Vice President and Chief Sustainability Officer of General Motors and then to Kristen’s left, we have Alejandro Zambrano [ph], who is the Head of Transportation of Calvert Research and Management, Morgan Stanley Investment Management.
We’re going to have a discussion about the important topic of decarbonizing and decarbonizing the automotive value chain, the automotive business model and some of the challenges and opportunities that Kristen and General Motors company has facing them through this transition.
Just a few remarks from me. I’ve been at Morgan Stanley for almost three decades and I feel more and more of my time spent looking back at the history of the auto industry from the period, for example, from 1908 to 1913, when the Model T was introduced, when the moving assembly line was introduced, when Durant and the founders of General Motors were agglomerating these businesses and coming up with their company over 100 years ago.
And we really are witnessing history again, where the topic of energy transition in autos and the enabling technologies in the supply chain. This is evolving, I mean, we used to say hundreds of billions that got out of style. I always say trillion. I mean this is like dekatrillions. I mean this is tens of trillions of investment and transfer of wealth over decades, because this is not going to be a quick win.
And I spent a lot of time thinking about the trade-offs, okay? The battery supply chain, for example. We all want EVs, right? Everyone wants an EV and that’s great. EVs will help save the world, right? We’ll hold on a second.
Where does your EV come from? Where are those materials coming from? How are those materials sourced, because there’s a couple inconvenient truth about the battery supply chain, the EV battery supply chain specifically which involve geopolitics, up to 90% of the upstream battery supply chain is refined and processed in China, okay, good on China, that’s fine. They had an industrial policy to skate to where the puck was going and they really be in a dominant position there.
But if we want a quick energy transition in the west, are we going to do that while flipping our supply chain to economic rivals and have no control over own economic destiny. The Department of Energy doesn’t think so. The Department of Defense is it also doesn’t think so, doesn’t want to do this.
Then aside from the geopolitical entanglement of the supply chain, we have the ESG and emission inconvenient truth of the supply chain. I was told and it’s been confirmed by many automakers. Kristen, if I’m wrong, tell me that in a nickel-based cathode battery that you’d have to drive a Tesla on solar and wind power for five years just to offset the coal emissions from refining the Grade 2 Pig Iron in Indonesia to the Grade 1 Pig Iron,, to the Grade 1 nickel that then goes in the nickel-based battery.
So we have to — as we get greater transparency on the supply chain on the batteries, not just for emissions, but water usage, land usage, tribal land rights, filed labor issues, anyone I — if you study the cobalt supply chain in the DRC, it’s hard breaking. Where is your blood battery come from?
And so the challenge is to try to solve a major ESG problem and an energy transition problem without creating new challenges faster than we’re solving them. And so that’s what we’re spending a lot of time looking at within the auto industry and trying to pick opportunities and risks along the value chain, all the way upstream, working with our partners in mining and refining and chemicals and cap goods and semiconductors and batteries all the way downstream to electric utilities and recycling and charging infrastructure.
So, with that, and I want to pass it on to you to kind of describe a little bit about what your mission is…
Alejandro Zambrano
Yeah.
Unidentified Analyst
… on the investment management side and how you’re spending your time and then we’re going to go to Kristen and open it up for Q&A.
Alejandro Zambrano
Sure. I think your introduction was great. And yeah, we’re spending a lot of time too. I would say, sometime not too much materiality of intended consequences of the transition. And we’re trying to see in the long-term those are going to play out.
And the IRA, in fact, is quite helpful for us, for my analysis, because it’s making that supply chain quite transparent. It’s making the company disclose information and they wouldn’t disclose otherwise to the public. So it’s given us a lot of visibility on how that supply chain cluster is being built.
But we still need to understand in the long-term how the companies are going to deal with declining authorization rates globally, deal with impact to communities, as you said, of mining of some of the metals in North America, in the U.S. or in FCH [ph] countries that have deal with the U.S. and we want to understand how the business is going to look in nearest. If it’s going to be a company that is twice the size that it is today that is just selling addition — everything that is selling electric is additional to what it sells today or is it going to be a company that is selling of the same size that is just selling dual Bright, Spring [ph] technology and what that — how that’s going to impact the manufacturing footprint on the existing assets.
So will the company still have 90,000 employees in the U.S. in 2035, will the company still have four manufacturing plants in the U.S. in 2035 when the transition continues to happen. And we look at those because, at this point, we believe that we are at a stage of execution of an environmental strategy for the car companies.
So looking at the supply chain will give us a lot of visibility on that and at the targets and how the models are performing. Now they’re starting to come out of the manufacturing facilities. But if we’re building this cluster where it doesn’t exist, we need to understand what the social issues are going to be.
So we’re spending a lot of time looking at how companies’ governance, I guess, strategies are changing as a result, how the Boards are changing as a result, how compensation is changing as a result to ensure that this cluster that is in the process of being built here in North America actually doesn’t face the issues that we have with the energy industry or the mining industry today. We don’t want to be in 10 years, in 20 years where we are today in the extraction of natural resources.
So that’s kind of like the approach we’re taking. And in the end, we care about what could erode value or create value for the business in the long-term. So that’s our challenge. We have to quantify things that are pretty quantifiable. We have to then try to understand how that’s going to make the company stronger and then we have to essentially rank these companies to see which ones are better point for this transition. So that we’re doing at Calvert and that’s the piece of IT that we provide to the larger investment management in Morgan Stanley in understanding how this transition is being carried out.
Unidentified Analyst
Thanks, Alejandro.
Alejandro Zambrano
Yeah.
Question-and-Answer Session
Q – Unidentified Analyst
So, Kristen, also some of the key messages for General Motors sustainability strategy and energy transition and how it might differentiate from some of your competitors?
Kristen Siemen
Sure. So, I mean, we’ve made some big bold goals like a lot of companies, right? Our plan to be carbon neutral in our products and operations by 2040. We plan to eliminate sale type of issues from new light-duty vehicle by 2035. We’ve made some big announcements in the past year of our renewable energy strategy. Our original strategy we set back in 2016 was to be 100% renewable by 2050. We saw that we could actually accelerate that based on a lot of the agreements we had made. We bumped it up to 2035. And then last year we actually — so we can be there in the U.S. by 25%.
So we saw the goal to keep — we actually beat that one by 25 years in the U.S. So that was a big accomplishment for us. A lot of other initiatives in place. But I think at the core at GM, our sustainability strategy is fully ingredient with our business strategy. They’re one and the same. And so it’s doing things to ensure that the company is planning for value, planning for growth, focused on the future, things like energy efficiency, water efficiency, waste elimination.
Those aren’t just good for the environment. They’re very good for the business. And so we continue to focus on how we meet those strategies in and really make sure that the company is resilient and looking at things like sustainable supply chain, et cetera. But they’re really weave together throughout the company.
Unidentified Analyst
So what I like about your background, you’ve been at GM for 29 years.
Kristen Siemen
Yeah.
Unidentified Analyst
27 of those years in product development.
Kristen Siemen
Correct.
Unidentified Analyst
You told me that when Mary called you to say we want you to do…
Kristen Siemen
Well, won’t Mary, who called me, but, yes.
Unidentified Analyst
When you got the call…
Kristen Siemen
Yeah.
Unidentified Analyst
… to be CSO at GM, your response was, why me?
Kristen Siemen
Exactly.
Unidentified Analyst
But I like that you bring to this to the role, the science and the product development background to be able to call BS on something that just doesn’t smell right and to see the challenges and be open and honest and realistic about them.
Kristen Siemen
Yeah.
Unidentified Analyst
So my question for you is, how the hell did you achieve the carbon neutrality 25 years earlier?
Kristen Siemen
So, the renewable energy one is a great example of setting a goal, it was the renewable energy commitment that we achieved early. And when we first set some of these rules, it’s kind of okay, we can see a path to get there, but we’re not exactly sure what the steps are no different than engineering of products and we set goals on price and cost and range and everything else. And you see a path, but it’s not identical, right, of each individual step.
And so, what we did by getting an early working with utilities and projects from a solar lens standpoint, we really found that we were able to not only find projects that were good financially, but some that were in the communities where we are building and really working together.
We participate in founding members of CEBA, Clean Energy Buyers line. And so as part of — we have a four-pillar strategy around renewable energy. The first is energy efficiency. So everything we can save and reduce is good for the bottomline. The second is around sourcing renewables and finding a way to add additionality and really grow that market of decarbonizing. The third is around resiliency in things like backup storage, things like GM energy and things we’re doing there. And then the fourth is around policy. But as we look at that four-pillar strategy and really put initiatives across the Board, it’s been successful.
Unidentified Analyst
And I’d love to know, as you approach the kind of talent of things that GM can do to continually improve efficiency and emissions and sustainability. What we’re — in addition to renewable energy, what were some of the areas of lower-hanging fruit and what are some of the things that are just really like the very high hard-to-reach fruit that, frankly, maybe you need to work with policymakers on achieving.
Kristen Siemen
Yeah. I mean if you look at our — I mean, if you take our carbon footprint as an example, right, less than 2% of our carbon footprint is Scope 1 and 2. So renewables are attacking a very small piece of our carbon footprint.
And the rest is Scope 3, which is the same for most companies. For us, 75% is the customer usage of our vehicles and then the next big — so, obviously, our transition to EVs will take care of that, assuming the grid is decarbonized and we get to charging with green energy 100% of the time. The next biggest piece is our supply chain, which is around 18%.
And so as we look at those, obviously, the transition to EVs, as I said, is that’s our business strategy. It’s a growth strategy. It’s a future of where the industry is heading. On the supply chain, we’re working very closely with our suppliers.
Last year, we issued — actually in 2021, we issued a supplier pledge and ESG pledge, where we’ve asked our suppliers to also sign up for their own both carbon-neutral goals, as well as the minimum score on EcoVadis. So a way for us to ensure that we’re getting at things like labor relations, force labor time labor, et cetera, throughout the supply chain as well.
And so far we’ve had over 70% of our Tier 1 APV have signed on. And what we’re seeing, which is great, is they’re now doing the same thing with their suppliers and so it’s really working as we had hoped and planned that it’s going down through the supply chain to Tier 2s or Tier 3s or Tier 4s to ensure that these things are progressing the way we want to progress.
And then we are helping each other with how to do renewable energy agreements, looking at ways to make this supply chain more sustainable, more resilient, more reliable and so when you ask what’s the toughest, obviously, the transition is the biggest piece in the grid and really getting to green energy across the Board is going to be tough. But it’s those two categories that I’d say we have the most focus on.
Unidentified Analyst
And just one more for me. I want to ask Alejandro. But on the supply chain side, we’re talking for the panel that if we’re going to onshore battery supply chain and we’re going to do the upstream stuff, extraction, refining processing. We’re going to have to do it very differently from the way it’s done. Audi in Far East. What are some of the technologies that GM is investing in right now to help not just accelerate onshore, but to make sure it’s done in a way that is equitable and got in a more renewable way.
Kristen Siemen
Yeah. I mean I think if you look at the agreements we’ve made, and as we talked before, we have all of the raw materials lined up for — to meet our volume goals for 2025 and now we’re working on 2026 to 2030 and we’re well on our way to that.
That’s really looking at how do we bring as much into North America as possible and how do we ensure that it’s done in again, a very sustainable way. And so there’s companies like control thermal resources out in the Salton Sea in California that are able to extract lithium in a less carbon-intensive way.
And so finding solutions like that, finding companies that have commitments and goals, whether it be Hosco, the joint venture in Canada around cathode active materials or some of the things we’ve even done all the way down to Lithium Americas, which is extracting on their own as well.
So trying to find the right partnerships with companies that have the same goals, beliefs and objectives that we do, I think, is really the key to the ultimate solutions. And GM is very committed to ensure that we’re part of that success and we talked to kind of the make versus buy earlier as well and so it’s finding those critical materials and insuring. We learned a lot through the last few years of supply chains and where we have to be strategically engaged in these stuff of the process.
Unidentified Analyst
I’ll stay with the topic then. So something that we’ve observed at Calvert is that especially the Japanese and Korean OEMs are very comfortable being fully vertically integrated. They’ve been like that for a while. But the U.S. OEMs, they basically ended that structure and created the per system of suppliers. With the electrification change, it looks like we’re going back to the vertical integration all the way to the metal in the buying. So my question is, when you’re assessing you brought the lithium, I guess, example, okay, you’re assessing that project, lithium more versus lithium brine but ESG factors coming to that. Is it purely a financial decision or is it — are you taking into account the emerging risks around local communities, water usage, which could in the end, if you going to talk about financial materiality or own brand value.
Kristen Siemen
Right. Yeah. It’s definitely all in. In fact, so one of the things I do at the company is around what we call an Office of Sustainability and this have representative senior leader level representatives from across all of the various functions, everything from purchasing and supply chain to marketing, manufacturing, et cetera. So that we can come together and talk through these major initiatives.
So when we’re looking at a company, when we’re looking at a partnership or a new agreement or initiative to sign on to, we’re all evaluating it for our functions and to ensure that those things aren’t being ignored.
As far as where we engage and where we don’t, when we talked about the vertical integration, in reality, our propulsion systems were very vertically integrated throughout the company for years. And so if we look at electrifying the propulsion system, it’s very consistent with what we’ve done traditionally.
So finding those things where we believe either we need a competitive advantage to be engaged earlier in the supply chain or where maybe there’s a supply risk, et cetera. And so all of that is factored in, including all of the ESG aspects.
Unidentified Analyst
When it comes to — we were doing some analysis recently and roughly 80% of the EV capacity on the passenger vehicle side outside of China is coming from five cell makers that are working with OEMs globally. So we see a very strong concentration there and we see potential emerging risks from our ESG perspective, Alejandro has views on the fundamental side. Have you thought about that? At GM I know you’re working with GM, Samsung, but micros, I believe. Have you thought about it? How would we approach that is?
Kristen Siemen
Yeah. I mean I think the LG partnership is a great example, it’s a 50-50 joint venture on the cell manufacturing. I mean we have one plant producing already in the U.S. The second one is about to come on Board. Third one in construction and the fourth one announced, the fourth one with a new partner.
But GM is very knowledgeable and has a lot of expertise in the manufacturing, the quality effect to take that and partner with the chemistry that LG has. It’s been a very successful joint venture, as well as we continue — I think a lot of people forget you talked about looking back in the industry. GM has been doing electric vehicles for over 25 years, right?
And so there’s still engineers that worked on those early chemistries and early vehicles that are working on it today and advancing. Every day there’s new and more innovations. We just built a new innovation center in our tech center around battery chemistry and cell development.
So that innovation in those new technologies are going to continue to happen every day in advance. And so I think it’s finding the right partners for the right reasons and then also continuing to do our own development as well.
Unidentified Analyst
And the other one, if I may add, I don’t know. I don’t want to take your time, but when — so we are all very excited with the IRA. There’s an expected boom in construction. Labor markets are going to be doing relatively well. We’re starting to think about once this boom passes talking about 2035, when you’re already selling over 1 million EVs. How do you think about that — kind of to my initial point, the size of the business? What’s going to happen to those facilities that cannot be retool, that has to be shut down. What’s going to happen to those communities in those places where you’ve had a footprint for 100 years. Have you thought about that? Do you take into account that when you decide these long-term strategies?
Kristen Siemen
Very much so. And I mean, I think, our track record to-date shows that we do care, right? I mean, we continue to transform our facilities where we are today. So things like Spring Hill or in assembly factory in Detroit Hamtramck. And so even our parts facilities that we’re making compo for some of our ICE engines are now transitioning to build electric drive units.
And so very much a commitment to those communities where we live and work. It’s very important to us. And so I think we’ll continue to evaluate as we go forward and keep making those important and strategic decisions of where it makes a lot of sense. But very committed to be in localized, yah.
Unidentified Analyst
I wanted to give the audience a chance to ask any questions, your questions.
Unidentified Analyst
[Inaudible]
Unidentified Analyst
Just want to make sure people heard that question on autonomous driving and how that factors into your mission?
Kristen Siemen
Yeah. I mean are you asking the question in regards to the carbon footprint aspect of autonomous driving or?
Unidentified Analyst
Yeah.
Kristen Siemen
Yeah. I mean, certainly, if you drive a vehicle, I’ll go back to my engineering things here now. If you drive a vehicle on cruise control, you’re going to get the most efficient performance of the vehicle. And so from a range perspective in that with autonomous driving, we’re certainly — it’s certainly an advantage from that standpoint.
And what it does to — if you look at the bigger ESG aspect and the social piece of what autonomous driving does for communities and offers that freedom, our autonomous vehicles are EV vehicles and so it plays directly into our overall strategy and business strategy.
And again, as we can transition more of the grid from a decarbonized in the grid, be able to charge those with green energy, with the zero emissions gain that plays right into our overall business strategy.
Alejandro Zambrano
Can I add to that just from our research lens? Your question is — involves a lot of trade-offs. I mean, 120 people dying every day in this country in traffic fatalities and growing. 15 times that of serious and capacitating injuries. 3000 deaths globally per day in traffic fatality. So the life-saving injury saving aspect is huge. Anyone in this room has been affected by automobile tragedy. Statistically, there’s a number of you, what I’m talking about.
If you’re able to match supply and demand of transportation as well through autonomous network, there’s hope that you can increase utilization of the car park, which is woefully underutilized is only 4% and we can produce less cars and there’s other ways for GM to make money instead of just making cars, you can have more recurring revenue.
But then there’s the unintended consequence that Elon talked about fairly recently and I agree with, which is, if you take the — if autonomy takes the price per mile traveled down from a $1 mile that $010 mile or some imaginably — unimaginably low number.
We tend to consume more of it and then you kind of have these dystopian kind of views of our infrastructure not being ready for just people sitting in traffic jam just coming away, just consuming some, I don’t know, living a metaverse I know way that your community base level would have taken something.
So this — we’re going to have to see how this goes. I’m very hopeful in our team at Morgan Stanley working with our colleagues, we’re very optimistic on autonomous technology, but we are trying to push. The more we learn, the more we realize, this is maybe the hardest thing you may ever trying to probably and that we try to solve and the regulatory aspect is also incredibly complex. So, there’s some stepping stones along the way and GM Super Cruise technology and other technologies are giving lives today.
Kristen Siemen
For sure. I mean, absolutely. I mean, you could go through all the statistics of, how much safer you are in a vehicle with those systems and particularly Super Cruise, which is very gated on safety, and ultimately, Ultra Cruise, which is coming, which is up to much more roads as well.
And the thing that autonomous also provides is there’s less of accidents. So now there’s less congestion on the road. You figure you’ve got less traffic incidents where you need police or ambulance or that type of thing coming to the scene. And so all of that plays together, I think, ultimately, frees up a lot of things to happen in really advanced things. But the safety aspects are tremendous.
And also the, I am saying again, my parents are aged, I am sorry, to — they’re not as quick as they were 10 years, 15 years, 20 years ago. And so I think of the freedom of what it will continue to give them where people with disability that now can have access to transportation that didn’t have access.
And we continue to follow on everything GM has always done has been gated by safety. I mean I kind of last — going back in my engineering days, we are driving around our text under or I’m sorry, our proven ground 15-plus years ago autonomously. It’s easy when you know exactly what route you’re on and what’s around you. And so, to think of where we’ve come since then it’s really amazing both the technology and capability.
Unidentified Analyst
While the audience thinks of our next great questions and there’s a couple here. Well, I don’t even have to ask if there were, you and then over here. Yes. Please.
Unidentified Analyst
[Inaudible] to describe the common competition with Chinese automakers. And I know in the U.S., historically, we’ve had some protections. I mean there’s some European brands I never even saw on U.S. road until they went outside the country. If that is the reality, what is the company like GM doing to try to, I guess, tackle that or deal with that potential threat?
Kristen Siemen
Yeah. I mean I think at the end of the day, it’s great products, it’s great services it’s a safety record and it’s who we are as a company. And I think we will continue to win based on the products and what’s available.
And there’s very few full-scale automotive companies out there that cover all segments and price points and we have a portfolio announced a number of EVs across that range, as well as other branches that are new to GM, which signify growth and value and opportunity, things like GM Energy.
So energy stores services, backup power generation, our BrightDrop, which is delivery services, both from a vehicle van level perspective, as well as small delivery cards for kind of that last mile. And all of those are new businesses that didn’t exist before and so provide more opportunities for us in the future.
Alejandro Zambrano
I think I heard that point as well earlier today and something that wasn’t route that point came was that most of the Western new OEMs have been working in China via JVs for decades.
Kristen Siemen
Yeah.
Alejandro Zambrano
So if somebody knows the competition that is coming are the Western OEMs, they essentially help build that industry there for decades. So I think it was a little bit Armageddon [ph] in my view how it was proposed, because there’s a lot of knowhow from Western OEMs and how cars are making China, what cars are made and what are the advantages of bringing their own brand.
Kristen Siemen
No. I agree with…
Alejandro Zambrano
What I would say, I mean, you got to make room. I mean, we saw this in the 1970s, after the oil crisis, people were rulings going to buy Japanese car, okay. I guess all that turns out. Then the 1980s and 1990s, no one’s going to buy a Korean car, okay? They’re making really a gas.
No one is going to buy a Chinese core. No, no, no. You don’t — you know these are really good cars. They’re very well made. Companies like GM help the local players make beautifully design and close the door. It’s like from Cocoon now like nice cars and they’re going to come. So what was described as blood bath, I would just say, it’s just another day in the office with General Motors probably, but.
Kristen Siemen
Yeah.
Unidentified Analyst
Question up here?
Q
On the fully autonomous vehicles, first question is, how far we reaching in urban dense areas for the autonomous vehicle, because it’s not by, okay, something you can get central, because there is a safety issue. You need sales close to 100%, right? There’s no margin of error. And the second, how do you think the competition from like Apple or tech companies just even from attracting talent? And third is, you think this is a secular effect that’s like a networking effect that the safer the algorithm, the more people use, the more data, I guess, we can take all markets, I hope business is expect to that?
Kristen Siemen
Okay. So let me try and remember the first question around the safety of autonomous in urban area. I mean, I think, you can see where we’re at with our partners at Cruise and we’re currently offering driverless taxis that you can inhale yourself in San Francisco.
Unidentified Analyst
Yeah. Anyone been in one of these [inaudible]
Alejandro Zambrano
I guess.
Kristen Siemen
At what was — what.
Unidentified Analyst
Amazing.
Kristen Siemen
Thank you.
Unidentified Analyst
No. I don’t think so…
Kristen Siemen
I don’t think everyone heard that word.
Unidentified Analyst
Yes. It’s pretty cool.
Kristen Siemen
It’s incredible. Yeah.
Unidentified Analyst
Yeah.
Kristen Siemen
And there’s, frankly, no more complex area to drive than San Francisco. And now it’s rolling out to other cities as well. Again, gave it on safety and the readiness for the technology. And so I think San Francisco and Cruise have proved what the technology can do and do it safely.
Your second question was around competition from, the automotive industry is not in an easy industry. Building and manufacturing a vehicle, if you’ve never been in the assembly plant is extremely complex and that takes years of optimization, understanding of quality and safety in all of the aspects.
And so I truly believe that we have a huge competitive advantage there based on what we’ve done, what we know and we’ll continue to see that apply across the Board. So — and then your third question was…
Unidentified Analyst
[inaudible].
Unidentified Analyst
Presentation…
Unidentified Analyst
[Inaudible]
Unidentified Analyst
Like at a local level when they take all because of the network effect on data.
Kristen Siemen
I don’t know.
Unidentified Analyst
TBD.
Kristen Siemen
Yeah. I mean, yeah, TBD, I guess, would be the best way to say that. I mean we want to make sure that we protect and we own the customer experience and how the vehicle drives, how it behaves, we talked about make versus buy earlier in the day. Things like our autonomous system that’s ours, right, our HS system, Super Cruise also that’s developed and designed in-house.
Unidentified Analyst
Our view — our take on that answer is, we think it’s winner-take-most at a localized level, not unlike an electric utility or an airline that has a local hub. You’re not going to have every single airline equally represented in every city, they’ll lend themselves to maybe natural monopolies or natural oligopolies over time based on a lot of factors, including geopolitics and the network effect and first-mover advantage as well. So we have about 10 minutes left. I know you love more questions for me, but I want to ask the Wall Street question. How do you make money doing this? I mean it does strike me that beyond the abilities and the installed base of invested capital and human capital that GM has and has brought to bear in energy transition and will continue to do. A critic could say, boy, this is an incredibly easy way to go out of business, trying to get into mining and into technologies that are not fully developed competing against players that might have superior scale and cost to you right now. So how do you reconcile those — the economic sustainability point with the environmental sustainability point.
Kristen Siemen
Yeah. I mean, well, I think that’s what I said at the beginning, right? Our sustainability strategy is part of our business strategy and they play together. I mean we’re in the business to make money clearly. And so I mean those apply agreements that make sense for the future, it’s continuing.
GM is based — it’s a technology-based company that’s been innovating for well over 100 years. We continue to innovate and drop. Our battery technology is using less and less materials, more efficiently, providing more range at lower cost and we will continue to do that and evolve that over the next generation of Ultium platform, et cetera.
So — and I think we know and have shown we know how to scale technologies and so whether it’s things like AVS that start in a smaller segment of the car park and it’ll continue to portray across the rest of the vehicle. So we’ve done it and we will continue to find those opportunities and make sure that their leads together.
Alejandro Zambrano
And actually, can I ask any quick follow-up on that. When looking at the way down to 2035 and looking at the emission goals that you have in the company and taking a position that in 2035 currently is going to have a cost, right?
We’re talking about, I think, it’s 150 million tonnes of CO2. That’s going to be the Scope 1, 2 and 3 for the whole company. If we assume $50 per tonne, that $17.5 billion, if you were to abate it. Have you — is the company developing a strategy for what’s going to happen once we get to the point when we reduced to half our CO2 footprint?
Kristen Siemen
Yeah. I mean our first prioritization is on eliminating it, eliminating as much as we can. So we talked about energy efficiency projects and all the work we’re doing there, the transition to renewables, as well as the grid itself is going to decarbonize over time also, right? And we’re doing everything we can from our small piece, but the rest of the transition is happening as well.
Then when you talk about what’s left, I mean, really, the big technologies that we’re still looking for solutions for our heating and cooling or facilities and paint ovens, are kind of the ones that are left.
And then in our supply chain, we continue to work with them on renewable energy for their facilities, things like signing up with First Movers Coalition for steel, aluminum, sealant and concrete to really drive the demand in the market for green options there as well.
So I think there’s a lot that’s going to happen between, we talked about how quickly we were able to accelerate our renewable energy objective. And I think we’re going to see that happen in other segments, as well as this transition happens, frankly, faster than any of us anticipated.
Alejandro Zambrano
And do you think recycling — battery recycling is going to be a big chunk of that?
Kristen Siemen
Absolutely. I mean we’ve already got — we’ve recycled batteries to-date on things like the Bolt and the Bolts. And we have agreements in place with companies like Lithion to take the raw materials of the batteries, even in the manufacturing process and put them back in.
So — our view of the recyclability thing is really to look at it from the circular economy standpoint. Even things like plastics. I mean we talk a lot about batteries, but plastics is another one where you can add a small percentage of almost — I hate to say anything, but it is almost anything to the plastic materials that we use in the vehicles and it’s using recycled content.
But what’s important is what can we do with it at the end of the life and making sure that we have options there and sometimes what you add isn’t easy to separate at the end. And so we’re really looking at all of our design practices of how do we no longer just build design for assembly, design for serviceability, but how do we design with a circularity view in mind so that it is recyclable or that total picture and everything from how much water something uses to how do we make sure that the sealant we’re using is easily removed to be able to separate the materials. So it’s really holistic within the company.
Unidentified Analyst
Question here, second row.
Unidentified Analyst
Thank you. Given the criticality of EV charging infrastructure and the disparate approaches to passenger light-duty EV charging and medium- and heavy-duty charging. How does all of that fit into GM’s electrification strategy and business model.
Kristen Siemen
Yeah. I mean, the charging infrastructure is extremely important and it’s not something that we’ll be able to solve by ourselves. But we’ve made a lot of commitments in doing a lot to help the transition.
One is we do a partnership with Pilot and P.J. to build out the infrastructure across the major corridors in the U.S. with DC fast chargers, we have a commitment that we’ve made with our dealerships. There is some statistics, there’s over 90% of the U.S. population is no more than 10 miles from the GM dealership.
So we’ve committed to providing our dealerships 40,000 charging stations for them to decide in their community where they should be. That may be at the community center, I say it’s a mom of free boy, I say it should be at the factor field, where the baseball fields we’re waiting for practice to end.
But really to — for people to be able to see that it’s available in their community and that they can move within this EV future. And again, I — maybe I’m an internal optimist, but I do believe that supply and demand drives a lot and innovation continues to happen and so things the charging infrastructure is going to happen pretty quickly.
Alejandro Zambrano
And I would add, it will affect how the cars are designed. So I think of the movie Wall Street, Michael Douglass, Audi’s on the beach in the Hamptons with this brief case found or whatever, a big brick. And then I see batteries today that are where the battery ways as much as a car unlike auto specific.
I really think we’ll look back at today’s EV batteries and EVs and you like how stupid was that? Why was the battery that, because there was no place to charge and range anxiety was deterministic or whether you sold the vehicle or not.
And so I think high speed DC fast charging combined with charging station ubiquity will mean that we can get away with. I mean the vast majority of our vehicles could be sub-50 kilowatt hours. You have a whole range of micro vehicles and megacity vehicles at 30 kilowatt hour batteries that are just so efficiently used in charge really fast, because that again is going to take some time, but it will get there.
Kristen Siemen
Most people don’t drive that far, maybe once a year that people really drive where they would need the full range of watt. But it’s an expectation and a customer desire right now today. I always say that either you could use the analogy that there wasn’t a gas station on every corner when the automobile started. And when we first got cell phones, you behave differently. You charge when charges available, you don’t necessarily go and drain it completely an influential charge.
Unidentified Analyst
We have time for one more or wrap this up over here.
Unidentified Analyst
So…
Unidentified Analyst
Yeah.
Unidentified Analyst
[inaudible].
Unidentified Analyst
Can you speak up.
Unidentified Analyst
At first it was didn’t helpful, I know the transition, including green bonds and congrats for that. And I’m wondering what else can the financial community do to help multinationals like GM accelerate the transition from a finance perspective, perhaps, incentives and other, because I know the spread on green bonds isn’t very — it’s not that much wider than other bonds. So is there more that can be done?
Kristen Siemen
And not my area of expertise.
Unidentified Analyst
Ashish, do you want to…
Kristen Siemen
Do you want to …
Unidentified Analyst
… follow-up…
Unidentified Analyst
[Inaudible]
Unidentified Analyst
And I can tell you just from the Department of Energy and the loan program office, they were kind of radio silent, they weren’t given anything over the last 10 years and that is my contact in D.C. and Mr. Bird’s contact that is changing. This is being like amped up to a level of things I didn’t think I’d see in my professional for not my lifetime, so stay tuned. But with that, Kristen, and Alejandro, thank you for your time and thanks for your questions…
Kristen Siemen
Thank you.
Unidentified Analyst
And that concludes this session. Thanks.
Kristen Siemen
Thank you. Thanks.
Alejandro Zambrano
Thanks.
Kristen Siemen
Thank you. Thank you.
Unidentified Analyst
Thank you very much.
Kristen Siemen
Thank you. Thank you. I appreciate it.