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Item 1A. Risk Factors

2023-01-31 compared with 2022-02-02 · 93 added, 93 removed, 235 unchanged (44% of the section changed)

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If we do not deliver new products, services, technologies and customer experiences in response to increased competition and changing consumer preferences in the automotive industry, our business could suffer.

We believe that the automotive industry will continue to experience significant change in the coming years, particularly as traditional automotive original equipment manufacturers shift resources to the development of EVs.

In addition to our traditional competitors, we must also be responsive to the entrance of start-ups and other non-traditional competitors in the automotive industry.

In addition to our traditional competitors, we must also be responsive to the entrance of start-ups and other non-traditional competitors in the automotive industry, such as ridesharing services.

These new competitors, as well as established industry participants, are disrupting the historic business model of our industry through the introduction of new technologies, products, services, direct-to-consumer sales channels, methods of transportation and vehicle ownership.

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We operate in a very competitive industry with market participants routinely introducing new and improved vehicle models and features designed to meet rapidly evolving consumer expectations.

Producing new and improved vehicle models, including EVs, that preserve our reputation for designing, building and selling safe, high-quality cars, trucks and SUVs is critical to our long-term profitability.

Producing new and improved vehicle models, including EVs, that preserve our reputation for designing, building and selling safe, high-quality cars, crossovers, trucks and SUVs is critical to our long-term profitability.

Successful launches of our new vehicles are critical to our short-term profitability.

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Because of this product development cycle and the various elements that may contribute to consumers’ acceptance of new vehicle designs, including competitors’ product introductions, technological innovations, fuel prices, general economic conditions, regulatory developments, transportation infrastructure and changes in quality, safety, reliability and styling demands and preferences, an initial product concept or design may not result in a saleable vehicle or a vehicle that generates sales in sufficient quantities and at high enough prices to be profitable.

Our high proportion of fixed costs, both due to our significant investment in property, plant and equipment as well as other requirements of our collective bargaining agreements, which limit our flexibility to adjust personnel costs to changes in demands for our products, may further exacerbate the risks associated with incorrectly assessing demand for our vehicles.

Our high proportion of fixed costs, both due to our significant investment in property, plant and equipment as

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well as other requirements of our collective bargaining agreements, which limit our flexibility to adjust personnel costs to changes in demands for our products, may further exacerbate the risks associated with incorrectly assessing demand for our vehicles.

Our long-term strategy is dependent upon our ability to profitably deliver a broad portfolio of EVs.

The production and profitable sale of EVs has become increasingly important to our long-term business as we accelerate our transition to an all-electric future.

In 2021, we increased our commitment to investments in EV and AV technologies to more than $35.0 billion from 2020 through 2025, with plans to launch more than 30 new EV models globally across several price points in that timeframe.

Our EV strategy is dependent on our ability to deliver a broad portfolio of high-quality EVs that are competitive and meet consumer demands;

reduce the costs associated with the manufacture of EVs, particularly with respect to batteries;

scale our EV manufacturing capabilities;

reduce the costs associated with the manufacture of EVs, particularly with respect to battery cells and packs;

increase vehicle range and the energy density of our batteries;

efficiently source sufficient materials for the manufacture of EV battery cells;

license and monetize our proprietary platforms and related innovations;

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and leverage our scale, manufacturing capabilities and synergies with existing ICE vehicles.

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In addition, consumer adoption of EVs will be critical to the success of our strategy.

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perceptions about EV features, quality, safety, performance and cost relative to ICE vehicles;

the range over which EVs may be driven on a full battery charge;

the proliferation of charging infrastructure, in particular with respect to public EV charging stations;

the range over which EVs may be driven on a given battery charge;

the proliferation of charging infrastructure, in particular with respect to public EV charging stations, and the success of the Company's charging infrastructure programs and strategic joint ventures and other relationships;

cost and availability of high fuel-economy ICE vehicles;

volatility, or a sustained decrease, in the cost of petroleum-based fuel;

failure by governments and other third parties to make the investments necessary to make infrastructure improvements, such as greater availability of cleaner energy grids and EV charging stations, and to provide economic incentives promoting the adoption of EVs;

and negative feedback from stakeholders impacting investor and consumer confidence in our company or industry.

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Our near-term profitability is dependent upon the success of our current line of full-size ICE SUVs and full-size ICE pickup trucks.

While we offer a broad portfolio of cars, crossovers, SUVs and trucks, and we have announced significant plans to design, build and sell a broad portfolio of EVs, we currently recognize higher profit margins on our full-size ICE SUVs and full-size ICE trucks.

Our near-term success is dependent upon our ability to sell higher margin vehicles in sufficient volumes.

We also plan to use the cash generated by our ICE vehicles to fund our growth strategy, including the development and sale of EVs and AVs.

Any near-term shift in consumer preferences toward smaller, more fuel-efficient vehicles, whether as a result of increases in the price of oil or any sustained shortage of oil, including as a result of global political instability, concerns about climate change, including any constraints related to lending on GHG-emitting products, or other reasons, could weaken the demand for our higher margin vehicles.

While we offer a broad portfolio of cars, crossovers, SUVs and trucks, and we have announced significant plans to design, build and sell a broad portfolio of EVs, we currently recognize the highest profit margins on our full-size ICE SUVs and full-size ICE trucks.

As a result, our near-term success is dependent upon our ability to sell higher margin vehicles in sufficient volumes.

We are also using the cash generated by our ICE vehicles to fund our growth strategy, including with respect to EVs and AVs.

Any near-term shift in consumer preferences toward smaller, more fuel-efficient vehicles, whether as a result of increases in the price of oil or any sustained shortage of oil, including as a result of global political instability (such as related to Russia's invasion of Ukraine), concerns about fuel consumption or GHG emissions, or other reasons, could weaken the demand for our higher margin vehicles.

More stringent fuel economy regulations could also impact our ability to sell these vehicles or could result in additional costs associated with these vehicles.

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In addition, we have made, and plan to continue to make, significant investments in EV manufacturing capacity based on our expectations for EV demand, which is subject to various risks and uncertainties as described above.

Many manufacturers, including GM, have relatively high fixed labor costs as well as limitations on their ability to close facilities and reduce fixed costs, often as a result of collective bargaining agreements.

Many manufacturers, including GM, have relatively high fixed labor costs as well as limitations on their ability to efficiently close facilities and reduce fixed costs, often as a result of collective bargaining agreements.

In light of any excess capacity and high fixed costs, many industry participants have attempted to sell more vehicles by providing subsidized financing or leasing programs, offering marketing incentives or reducing vehicle prices.

As a result, we may be required to offer similar incentives that may result in vehicle prices that do not offset our costs, including any cost increases or the impact of adverse currency fluctuations, which could affect our profitability.

As a result, we have had, and may in the future need, to offer similar incentives, which may result in vehicle prices that do not offset our costs, including any cost increases or the impact of adverse currency fluctuations, which could affect our profitability.

Our competitors may also seek to benefit from economies of scale by consolidating or entering into other strategic agreements such as alliances or joint ventures intended to enhance their competitiveness.

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These actions have had, and are expected to continue to have, a significant negative effect on our vehicle pricing, market share and operating results in these markets.

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Our AV strategy is dependent upon our ability to successfully mitigate unique technological, operational and regulatory risks.

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and significant competition from both established automotive companies and technology companies, some of which may have more resources and capital to devote to AV technologies than we do.

In addition, we face risks related to the commercial deployment of AVs on our targeted timeline or at all, including consumer acceptance, achievement of adequate safety and other performance standards and compliance with uncertain, evolving and potentially conflicting federal and state or provincial regulations.

Advanced technologies such as AVs present novel issues with which domestic and foreign regulators have only limited experience, and will be subject to evolving regulatory frameworks.

Any current or future regulations in these areas could impede the successful commercialization of these technologies and impact whether and how these technologies are designed and integrated into our products, and may ultimately subject us to increased costs and uncertainty.

In order for Cruise to successfully execute its business plan and achieve its revenue targets, legislation and regulations must evolve to permit widespread commercial AV deployment.

To the extent accidents, cybersecurity breaches or other adverse events associated with our autonomous driving systems occur, we could be subject to liability, reputational harm, government scrutiny and further regulation, and it could deter consumer adoption of AV technology.

Any of the foregoing could materially and adversely affect our results of operations, financial condition and growth prospects.

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We are subject to risks associated with climate change, including increased regulation of GHG emissions, changing consumer preferences and other risks related to our transition to EVs and the potential increased impacts of severe weather events on our operations and infrastructure.

Increasing attention to climate change, increasing societal expectations on companies to address climate change and changes in consumer preferences may result in increased costs, reduced demand for our products, reduced profits, risks associated with new regulatory requirements and the potential for increased litigation and governmental investigations.

Increasing attention to climate change, increasing societal expectations on companies to address climate change and changes in consumer preferences may result in increased costs, reduced demand for our products, reduced profits, risks associated with new regulatory requirements, risks to our reputation and the potential for increased litigation and governmental investigations.

Climate change regulations at the federal, state or local level or in international jurisdictions could require us to further limit emissions associated with customer use of products we sell, change our manufacturing processes or product portfolio or undertake other activities that may require us to incur additional expense, which may be material.

These requirements may increase the cost of, and/or diminish demand for, our ICE vehicles.

See “Our operations and products are subject to extensive laws, regulations and policies, including those related to vehicle emissions and fuel economy standards, which can significantly increase our costs and affect how we do business.”

Part of our strategy to address these risks includes our transition to EVs, which presents additional risks, including reduced demand for, and therefore profits from, our ICE vehicles, which we plan to use to fund our growth strategy;

higher costs related to EV technologies impacting profitability compared to ICE vehicles;

and risks related to the success of our EV strategy.

and abroad there are an increasing number of sustainability-related rules and regulations that have been adopted or proposed.

Such regulations may also subject us to new disclosure requirements, which could result in risks to our reputation or consumer demand for our products if we do not meet increasingly demanding stakeholder expectations and standards.

higher costs or reduced availability of materials related to EV technologies impacting profitability, particularly with respect to batteries and battery raw material;

and risks related to the success of our EV strategy, particularly with respect to advancement of battery cell technology, charging infrastructure and competition.

See “Our long-term strategy is dependent upon our ability to profitably deliver a broad portfolio of EVs” and “Our near-term profitability is dependent upon the success of our current line of full-size ICE SUVs and full-size ICE pickup trucks.”

Finally, increased intensity, frequency or duration of storms, droughts or other severe weather events as a result of climate change may disrupt our production and the production, logistics, cost and procurement of products from our suppliers and timely delivery of vehicles to customers, and could negatively impact working conditions at our plants and those of our suppliers.

Such weather events may also adversely impact the financial condition of our customers, and thereby reduce demand for our products and services.

Any of the foregoing could have a material adverse effect on our financial condition and results of operations.

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Because we have a high proportion of relatively fixed structural costs, small changes in sales volume can have a disproportionately large effect on our profitability.

A number of economic and market conditions drive changes in new vehicle sales, including disruptions in the new vehicle supply chain, the availability and prices of used vehicles, levels of unemployment and inflation, availability of affordable financing, fluctuations in the cost of fuel, consumer confidence and demand for vehicles, political unrest or uncertainty, the occurrence of a contagious disease or illness, including COVID-19, barriers to trade and other global economic conditions.

A number of economic and market conditions drive changes in new vehicle sales, including disruptions in the new vehicle supply chain, the availability and prices of used vehicles, levels of unemployment and inflation, availability of affordable financing, fluctuations in the cost of fuel, consumer confidence and demand for vehicles, political unrest or uncertainty, the occurrence of a public health crisis, barriers to trade and other global economic conditions.

For a discussion of economic and market trends, see the "Overview" section in Part II, Item 7.

Any significant decrease in new vehicle sales could materially and adversely affect our results of operations and financial condition.

High prices and uncertain availability of commodities, raw materials or other inputs used by us and our suppliers, or instability in logistics and related costs, could negatively impact our profitability.

Increases in prices for commodities, raw materials or other inputs that we and our suppliers use in manufacturing products, systems, components and parts, such as steel, precious metals, non-ferrous metals, critical minerals or other similar raw materials, or increases in logistics and related costs, may lead to higher production costs for parts, components and vehicles.

In addition, any increase in the cost of critical materials for our EV propulsion systems, including lithium, nickel, cobalt and certain rare earth metals, could lead to higher production costs for our EVs and could impede our ability to successfully deliver on our EV strategy.

If our operating environment deteriorates for these or other reasons, such as a moderate to severe recession, it could lead to a significant decrease in new vehicle sales, which could materially and adversely affect our results of operations and financial condition.

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Inflationary pressures and persistently high prices and uncertain availability of commodities, raw materials or other inputs used by us and our suppliers, or instability in logistics and related costs, could negatively impact our profitability.

Increases in prices, including as a result of inflation and rising interest rates, for commodities, raw materials or other inputs that we and our suppliers use in manufacturing products, systems, components and parts, such as steel, precious metals, non-ferrous metals, critical minerals or other similar raw materials, or increases in logistics and related costs, have led and may continue to lead to higher production costs for parts, components and vehicles.

In addition, any increase in the cost, or reduced availability, of critical materials for our EV propulsion systems, including lithium, nickel, cobalt and certain rare earth metals, could lead to higher production costs for our EVs and could impede our ability to successfully deliver on our EV strategy.

Further, increasing global demand for, and uncertain supply of, such materials could disrupt our or our suppliers’ ability to obtain such materials in a timely manner and/or could lead to increased costs.

Geopolitical risk, fluctuations in supply and demand, any weakening of the U.S.

dollar and other economic and political factors may continue to create pricing pressure for commodities, raw materials and other inputs.

These inflationary pressures could, in turn, negatively impact our future profitability because we may not be able to pass all of those costs on to our customers or require our suppliers to absorb such costs.

Geopolitical risk, fluctuations in supply and demand, fluctuations in interest rates, any weakening of the U.S.

dollar and other economic and political factors have created and may continue to create pricing pressure for commodities, raw materials and other inputs.

These inflationary pressures could, in turn, negatively impact our profitability because we may not be able to pass all of those costs on to our customers or require our suppliers to absorb such costs.

Our business in China subjects us to unique operational, competitive and regulatory risks.

Pursuing opportunities in the Chinese market is an important component of our global growth strategy.

Our business in China is subject to aggressive competition from many of the largest global manufacturers and numerous domestic manufacturers as well as non-traditional market participants, such as domestic technology companies.

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Increased competition, continued U.S.-China trade tensions or weakening economic conditions in China, among other factors, may result in cost increases, price reductions, reduced sales, profitability and margins, and challenges to gaining or holding market share.

In addition, the public health and policy response to COVID-19 in China may continue to present geopolitical, macroeconomic and operating challenges.

Certain risks and uncertainties of doing business in China are solely within the control of the Chinese government, and Chinese law regulates the scope of our investments and business conducted within China.

In order to maintain access to the Chinese market, we may be required to comply with significant technical and other regulatory requirements that are unique to the Chinese market, at times with challenging lead times.

These actions may increase the cost of doing business in China or

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limit how and under what conditions we may do business in China, which could materially and adversely affect our profitability and financial condition.

The Chinese government may adopt new regulations that may impact entities operating in China, potentially with little advance notice.

In order to maintain access to the Chinese market, we may be required to comply with significant technical and other regulatory requirements, including under such regulatory actions, that are unique to the Chinese market, at times with short notice.

These actions may increase the cost of doing business in China or limit how we may do business in China, which could materially and adversely affect the profitability and financial condition of our China business.

We benefit from many ongoing strategic business relationships, and a significant amount of our operations are conducted by joint ventures, which we cannot operate solely for our benefit.

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If we are unable to successfully source and execute on strategic business relationships in the future, our overall growth could be impaired, and our business, prospects and results of operations could be materially adversely affected.

In addition, many of our operations, primarily in China and Korea as well as our battery manufacturing operations with LG Energy Solution, are carried out by joint ventures.

In particular, to secure critical materials for production of EVs, we have entered, and plan to continue to enter, into offtake agreements with raw material suppliers and make investments in certain raw material suppliers.

The terms of these offtake agreements may obligate us to purchase defined quantities of output over a specified period of time, subject to certain conditions.

If we are unable to utilize or otherwise monetize the raw materials we are obligated to purchase under these offtake agreements, it could materially adversely affect our cash flows and increase our inventory.

In addition, many of our operations, primarily in China and Korea as well as certain of our battery manufacturing operations in the U.S.

and Canada, are carried out by joint ventures.

In joint ventures we share ownership and management of a company with one or more parties who may not have the same goals, strategies, priorities or resources as we do and may compete with us outside the joint venture.

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In joint ventures we are required to foster our relationships with our co-owners as well as promote the overall success of the joint venture, and if a co-owner changes, relationships deteriorate or strategic objectives diverge, our success in the joint venture may be materially adversely affected.

Further, the benefits from a successful joint venture are shared among the co-owners, therefore we do not receive all the benefits from our successful joint ventures.

Further, some of the benefits from a successful joint venture are shared among the co-owners, therefore we do not receive all the benefits from our successful joint ventures.

In addition, because we share ownership and management with one or more parties, we may have limited control over the actions of a joint venture, particularly when we own a minority interest.

As a result, we may be unable to prevent violations of applicable laws or other misconduct by a joint venture or the failure to satisfy contractual obligations by one or more parties.

Moreover, a joint venture may not follow the same requirements regarding compliance, internal controls and internal control over financial reporting that we follow.

Moreover, a joint venture may not be subject to the same financial reporting, corporate governance, or compliance approaches

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that we follow.

To the extent another party makes decisions that negatively impact the joint venture or internal control issues arise within the joint venture, we may have to take responsive actions, or we may be subject to penalties, fines or other punitive actions for these activities.

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We manufacture, sell and service products globally and rely upon an integrated global supply chain to deliver the raw materials, components, systems and parts that we need to manufacture our products.

Our global operations subject us to extensive domestic and foreign legal and regulatory requirements, and a variety of other political, economic and regulatory risks, including:

Our global operations subject us to extensive domestic and foreign legal and regulatory requirements, and a variety of other political, economic and regulatory risks, which may have a material adverse effect on our financial condition or results of operations, including:

(1) changes in government leadership;

(2) changes in trade compliance, labor, employment, tax, privacy, environmental and other laws, regulations or government policies impacting our overall business model or practices or restricting our ability to manufacture, purchase or sell products consistent with market demand and our business objectives;

(3) political pressures to change any aspect of our business model or practices or that impair our ability to source raw materials, services, components, systems and parts, or manufacture products on competitive terms in a manner consistent with our business objectives;

(4) political uncertainty, instability, civil unrest or government controls over certain sectors;

(4) political uncertainty, instability, civil unrest, government controls over certain sectors (including as a result of Russia's invasion of Ukraine and related impacts of the global supply of oil and other raw materials) or human rights concerns;

(5) political and economic tensions between governments and changes in international economic policies, including restrictions on the repatriation of dividends or in the export of technology, especially between China and the U.S.;

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or other trade laws or measures;

(7) new non-tariff barriers to entry or domestic preference procurement requirements, or enforcement of, changes to, withdrawals from or impediments to implementing free trade agreements (for example, the United States-Mexico-Canada Agreement), or preferences of foreign nationals for domestically manufactured products;

(7) new or evolving non-tariff barriers or domestic preference procurement requirements, or enforcement of, changes to, withdrawals from or impediments to implementing free trade agreements, or preferences of foreign nationals for domestically manufactured products;

(8) changes in foreign currency exchange rates, particularly in Brazil and Argentina, and interest rates;

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No single facility is designed to manufacture our full range of vehicles.

In some cases, certain facilities produce products, systems, components and parts that disproportionately contribute a greater degree to our profitability than

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others and create significant interdependencies among manufacturing facilities around the world.

Should these or other facilities become unavailable either temporarily or permanently for any number of reasons, including labor disruptions, supply chain disruptions, the occurrence of a contagious disease or illness, such as COVID-19, or catastrophic weather events, whether or not as a result of climate change, the inability to manufacture at the affected facility may result in harm to our reputation, increased costs, lower revenues and the loss of customers.

In particular, substantially all of our hourly employees are represented by unions and covered by collective bargaining agreements that must be negotiated from time-to-time, including at the local facility level, which increases our risk of work stoppages.

In some cases, certain facilities produce products, systems, components and parts that disproportionately contribute a greater degree to our profitability than others and create significant interdependencies among manufacturing facilities around the world.

When these or other facilities become unavailable either temporarily or permanently for any number of reasons, including labor disruptions, supply chain disruptions, the occurrence of a contagious disease or illness or catastrophic weather events, whether or not as a result of climate change, the inability to manufacture at the affected facility has resulted, and may in the future result, in harm to our reputation, increased costs, lower revenues and the loss of customers.

We may not be able to easily shift production to other facilities or to make up for lost production.

Any new facility needed to replace an inoperable manufacturing facility would need to comply with the necessary regulatory requirements, need to satisfy our specialized manufacturing requirements and require specialized equipment.

Any disruption in our suppliers’ operations could disrupt our production schedule.

In addition, substantially all of our hourly employees are represented by unions and covered by collective bargaining agreements that must be negotiated from time-to-time, including at the local facility level.

In 2023, our collective bargaining agreements with the UAW in the United States and Unifor in Canada, as well as collective bargaining agreements in Mexico, will expire, which will require negotiation of new agreements.

As a result, we may be subject to an increased risk of strikes, work stoppages or other types of conflicts with labor unions and employees.

Disruption in our suppliers’ operations have disrupted, and could in the future disrupt, our production schedule.

Our automotive operations are dependent upon the continued ability of our suppliers to deliver the systems, components, raw materials and parts that we need to manufacture our products.

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In some instances, we purchase systems, components, raw materials and parts that are ultimately derived from a single source and may be at an increased risk for supply disruptions.

Any number of factors, including labor disruptions, catastrophic weather events, the occurrence of a contagious disease or illness, such as COVID-19, contractual or other disputes, unfavorable economic or industry conditions, delivery delays or other performance problems or financial difficulties or solvency problems, could disrupt our suppliers’ operations and lead to uncertainty in our supply chain or cause supply disruptions for us, which could, in turn, disrupt our operations, including the production of certain higher margin vehicles.

If the COVID-19 pandemic continues to spread or re-emerges and results in a prolonged period of travel, commercial, social and other similar restrictions, we could experience continued and/or additional global supply disruptions.

If we experience supply disruptions, we may not be able to develop alternate sourcing quickly.

Any number of factors, including labor disruptions, catastrophic weather events, the occurrence of a public health crisis, such as a global pandemic, contractual or other disputes, unfavorable economic or industry conditions, delivery delays or other performance problems or financial difficulties or solvency problems, could disrupt our

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suppliers’ operations and lead to uncertainty in our supply chain or cause supply disruptions for us, which could, in turn, disrupt our operations, including the production of certain higher margin vehicles.

If the COVID-19 pandemic continues to spread or reemerges and results in a prolonged period of travel, commercial, social and other similar restrictions, we could experience continued and/or additional global supply disruptions.

When we experience supply disruptions, we may not be able to develop alternate sourcing quickly.

Any disruption of our production schedule caused by an unexpected shortage of systems, components, raw materials or parts even for a relatively short period of time could cause us to alter production schedules, increase work-in-process inventory or suspend production entirely, which could cause a loss of revenues or an increase in working capital, which would adversely affect our profitability and financial condition.

In particular, a global semiconductor supply shortage has had, and is continuing to have, wide-ranging effects across multiple industries, particularly the automotive industry, and it has impacted multiple suppliers that incorporate semiconductors into the parts they supply to us.

In particular, while the global semiconductor supply shortage is easing, it has had, and is continuing to have, wide-ranging effects across multiple industries, particularly the automotive industry, and it has impacted multiple suppliers that incorporate semiconductors into the parts they supply to us.

As a result, the semiconductor supply shortage has had, and depending on how long it persists, could continue to have, a material impact on our operations.

The COVID-19 pandemic and its impact on the global economy may disrupt our business and operations, which could materially adversely impact our business, financial condition, liquidity and results of operations.

Pandemics, epidemics, disease outbreaks and other public health crises, such as the COVID-19 pandemic, have disrupted our business and operations, and future public health crises could materially adversely impact our business, financial condition, liquidity and results of operations.

Pandemics, epidemics or disease outbreaks in the U.S.

or globally may disrupt our business, which could materially affect our results of operations, financial condition, liquidity and future expectations.

The COVID-19 pandemic has caused, and is continuing to cause, significant disruption to the global economy, including the automotive industry, and has had a material impact on our business.

However, the full extent to which the COVID-19 pandemic will impact our operations will depend on future developments, including the duration and severity of the pandemic, any subsequent outbreaks of the virus or any related variants and the efficacy, availability and adoption of vaccines.

Future developments are highly uncertain and cannot be predicted with confidence and may adversely impact our global supply chain and global manufacturing operations and cause us to again suspend our operations in the U.S.

and elsewhere.

In particular, if the COVID-19 pandemic continues or re-emerges, particularly in North America where our profits are most concentrated, resulting in a prolonged period of travel, commercial, social and other similar restrictions, we could experience among other things:

or globally, including the COVID-19 pandemic, has disrupted, and may in the future disrupt, our business, which could materially affect our results of operations, financial condition, liquidity and future expectations.

Any such events may adversely impact our global supply chain and global manufacturing operations and cause us to again suspend our operations in the U.S., China and elsewhere.

In particular, we could experience among other things:

(1) continued or additional global supply disruptions, including a delayed recovery from the global semiconductor supply shortage;

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and (8) an impaired ability to access credit and the capital markets.

We may also be subject to enhanced legal risks, including potential litigation related to the COVID-19 pandemic.

We also have substantial cash requirements going forward, including:

(1) ongoing cash costs including payments associated with previously announced vehicle recalls, the settlements of multi-district litigation and other recall-related contingencies, payments to service debt and other long-term obligations, including mandatory contributions to our pension plans;

and (2) capital expenditures and payments for engineering and product development activities.

Our ability to meet these cash requirements may be negatively impacted by the ongoing COVID-19 pandemic.

Any resulting financial impact or the duration of such impact cannot be reasonably estimated at this time, but the COVID-19 pandemic could have a material impact on our business, financial condition and results of operations going forward.

We may continue to restructure our operations in the U.S.

and various other countries and initiate additional cost reduction actions, but we may not succeed in doing so.

Since 2017, we have undertaken restructuring actions to lower our operating costs in response to difficult market and operating conditions in various parts of the world, including the U.S.,

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Canada, Korea, Southeast Asia, India, Africa, Australia and New Zealand and Europe.

As we continue to assess our performance throughout our regions, we may take additional restructuring actions to rationalize our operations, which may result in material asset write-downs or impairments and reduce our profitability in the periods incurred.

In addition, these restructuring actions subject us to increased risks of labor unrest or strikes, supplier, dealer, or other third-party litigation, regulator claims or proceedings, negative publicity and business disruption.

Failure to realize anticipated savings or benefits from our restructuring and/or cost reduction actions could have a material adverse effect on our business, liquidity and cash flows.

Any new pandemic or other public health crises, or future public health crises, could have a material impact on our business, financial condition and results of operations going forward.

Risks related to our intellectual property, cybersecurity, information technology and data management practices

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The theft or unauthorized use or publication of our trade secrets and other confidential business information as a result of such an incident could adversely affect our competitive position.

In addition, we may be the target of patent enforcement actions by third parties, including aggressive and opportunistic enforcement claims by non-practicing entities.

In addition, we have been, and in the future may be, the target of patent enforcement actions by third parties, including aggressive and opportunistic enforcement claims by non-practicing entities.

Regardless of the merit of such claims, responding to infringement claims can be expensive and time-consuming.

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Further, customers using our systems rely on the security of our infrastructure, including hardware and other elements provided by third parties, to ensure the reliability of our products and the protection of their data.

We also face the risk of operational disruption, failure, termination or capacity constraints of any of the third parties that facilitate our business activities, including vendors, service providers, suppliers, customers, counterparties, exchanges, clearing agents, clearinghouses or other financial intermediaries.

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intermediaries.

Such parties and other third parties who provide us services or with whom we communicate could also be the source of a cyberattack on, or breach of, our operational systems, network, data or infrastructure.

Despite our security measures and business continuity plans, our information technology systems and networked and connected products may be vulnerable to damage, disruptions or shutdowns caused by attacks by hackers, computer viruses, malware (including “ransomware”), phishing attacks or breaches due to errors or malfeasance by employees, contractors and others who have access to these systems and products.

Techniques used in cybersecurity attacks to obtain unauthorized access, disable or sabotage information technology systems change frequently, as data breaches and other cybersecurity events have become increasingly commonplace, including as a result of the intensification of state-sponsored cybersecurity attacks during periods of geopolitical conflict, such as the ongoing conflict in Ukraine.

The occurrence of any of these events could compromise the confidentiality, operational integrity and accessibility of these systems and products and the data that resides within them.

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These systems control various vehicle functions including engine, transmission, safety, steering, navigation, acceleration, braking, window, door lock functions and battery and electric motors.

We have designed, implemented and tested security measures intended to prevent

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unauthorized access to these systems.

We have designed, implemented and tested security measures intended to prevent unauthorized access to these systems.

However, hackers have reportedly attempted, and may attempt in the future, to gain unauthorized access to modify, alter and use such systems to gain control of, or to change, our vehicles’ functionality, user interface and performance characteristics, or to gain access to data stored in or generated by the vehicle.

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These regulatory requirements, among others, could significantly affect our plans for global product development and, given the uncertainty surrounding enforcement and regulatory definitions and interpretations, may result in substantial costs, including civil or criminal penalties.

In addition, an evolving but un-harmonized emissions and fuel economy regulatory framework that could include specific sales mandates may limit or dictate the types of vehicles we sell and where we sell them, which can affect our revenues.

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affect our revenues.

Refer to the “Environmental and Regulatory Matters” section of Item 1.

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Any of these actions could have a material adverse effect on our profitability, financial condition and operations, including facility idling, reduced employment, increased costs and loss of revenue.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

In addition, many of our advanced technologies, including AVs, present novel issues with which domestic and foreign regulators have only limited experience, and will be subject to evolving regulatory frameworks.

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The costs we incur in connection with these recalls typically include the cost of the part being replaced and labor to remove and replace the defective part.

The costs to complete a recall could be exacerbated to the extent that such action relates to a global platform, such as the Chevrolet Bolt EV recall.

The costs to complete a recall could be exacerbated to the extent that such action relates to a global platform.

Concerns about the safety of our products, including advanced technologies like AVs, whether raised internally or by regulators or consumer advocates, and whether or not based on scientific evidence or supported by data, can result in product delays, recalls, field actions, lost sales, governmental investigations, regulatory action, private claims, lawsuits and settlements and reputational damage.

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Internal Revenue Service and other tax authorities, which may not agree with our tax positions.

In addition, our tax liabilities are subject to other significant risks and uncertainties, including those arising from potential changes in laws and regulations in the countries in which we do business, the possibility of adverse determinations with respect to the application of existing laws, changes in our business or structure and changes in the valuation of our deferred tax assets and liabilities.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

particular with respect to full realization of the incentives contemplated by the Inflation Reduction Act), changes in our business or structure and changes in the valuation of our deferred tax assets and liabilities.

Any unfavorable resolution of these and other uncertainties may have a significant adverse impact on our tax rate and results of operations.

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and changes to regulation, supervision, enforcement and licensing across various jurisdictions.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

In addition, GM Financial has certain floating-rate obligations, hedging transactions and floating-rate dealer loans that determine their applicable interest rate or payment amount by reference to the London Interbank Offered Rate (LIBOR).

Financial Conduct Authority, which regulates LIBOR, has announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021.

In March 2021, the ICE Benchmark Administration Limited, the administrator of LIBOR, extended the transition dates of certain LIBOR tenors (including all U.S.

Dollar LIBOR tenors other than one-week and two-month U.S.

The United Kingdom Financial Conduct Authority, which regulates LIBOR, has announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR.

In March 2021, the ICE Benchmark Administration Limited, the administrator of LIBOR, extended the transition dates of certain U.S.

Dollar LIBOR tenors to June 30, 2023, after which LIBOR reference rates will cease to be provided.

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Dollar LIBOR should be entered into after December 31, 2021.

It is unknown whether any banks will continue to voluntarily submit rates for the calculation of LIBOR, or whether LIBOR will continue to be published by its administrator based on these submissions or on any other basis, after such dates.

At this time, it is not possible to predict the effect that these developments or any discontinuance, modification or other reforms may have on LIBOR, other benchmarks or floating-rate debt instruments, including GM Financial’s floating-rate debt.

Any such discontinuance, modification, alternative reference rates or other reforms may materially adversely affect interest rates on GM Financial’s current indebtedness.

There is a risk that the discontinuation of LIBOR will impact GM Financial's ability to manage interest rate risk effectively without an adequate replacement.

It is unknown whether LIBOR will continue to be published by its administrator based on continued bank submissions or on any other basis, after such dates.

There is a risk that continued developments, modifications, or other reforms effecting the discontinuation of LIBOR may impact GM Financial's ability to manage interest rate risk effectively.

Further, as an entity operating in the financial services sector, GM Financial is required to comply with a wide variety of laws and regulations that may be costly to adhere to and may affect our consolidated operating results.

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Risks related to defined benefit pension plans

Our defined benefit pension plans are currently underfunded and our pension funding requirements could increase significantly due to a reduction in funded status as a result of a variety of factors, including weak performance of financial markets, declining interest rates, changes in laws or regulations, or changes in assumptions or investments that do not achieve adequate returns.

Our pension funding requirements could increase significantly due to a reduction in funded status as a result of a variety of factors, including weak performance of financial markets, declining interest rates, changes in laws or regulations, or changes in assumptions or investments that do not achieve adequate returns.

Our employee benefit plans currently hold a significant amount of equity and fixed income securities.

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Examples include implementation of significant changes in investment policy, insufficient market liquidity in particular asset classes and the inability to quickly rebalance illiquid and long-term investments.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Factors that affect future funding requirements for our U.S.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors