GM Chairman and CEO Mary Barra addresses investors on October 6, 2021 at the GM Technical Center in Warren, Michigan.
Photo by Steve Fecht for General Motors
DETROIT — In September 2017, General Motors CEO Mary Barra and her top executives visited the automaker’s design dome, considered a hallowed place within the company for its role in creating GM’s most iconic vehicles.
On display under the showroom lights were about 10 life-size clay models of electric vehicles, including designs like the automaker’s Chevy Corvette and numerous crossovers and SUVs. At the time, much of Wall Street’s attention was focused on the $70 a share price of Tesla, whose celebrity CEO Elon Musk promised to lead the world’s transition to more sustainable energy.
The showcase at GM’s sprawling technology campus in suburban Detroit gave executives a glimpse of how they can outpace Tesla and longtime rivals such as Ford Motor, which have also been eyeing the tumultuous market for electric vehicles. The clay models were examples of the range of electric vehicles GM could build through a new platform the automaker was developing.
Mary Barra’s Electric Vision
GM’s strategy for an “all-electric” future was forged at meetings in September 2017, according to executives in attendance.
At the heart of the plans was a new platform, now known as Ultium, dedicated to the electric vehicles the company was developing.
Production at GM’s first plant with the new technology started late last year.
GM’s work on electric cars accelerated after executives traveled to Silicon Valley in 2015 to study emerging trends and meet with Apple CEO Tim Cook, Google officials and others.
In the days that followed, the executives met repeatedly to discuss the platform’s potential and come up with an electric vehicle strategy, according to several people who were at the previously unreported meetings. That was the week GM’s path was decided, said the people, who declined to be named because the discussions were confidential.
Next week, GM publicly declared its belief in an “all-electric future,” marking a pivotal moment that will begin the legacy automaker’s most ambitious turnaround since its founding in 1908.
GM shares that week jumped more than 11% to about $45 a share — marking the biggest weekly gain at the time in Barra’s tenure as CEO. The gains would only last a few months, but they deepened the executives’ conviction that they had chosen the right path.
Last year, GM said it plans to invest $30 billion in electric vehicles by 2025, including renovating existing plants, building battery plants in the U.S. and launching 30 electric models globally, such as the GMC Hummer EV .
“No one has as many vehicles as we will have by 2025,” Barra said in an interview with CNBC in January. GM has repeatedly fallen behind the mark.
It’s been nearly five years since GM made its big announcement, but the numbers still aren’t in GM’s favor — at least not for now. Tesla still has a commanding 66 percent of the small but fast-growing U.S. electric vehicle market, according to LMC Automotive, while GM has just 6 percent as production ramps up slowly. It has also been overtaken by Ford and Hyundai Motor.
Overall, only 8% of GM’s sales are estimated to be electric vehicles. That includes vehicles made with Chinese joint ventures such as SAIC-GM-Wuling, which makes a small car that was the best-selling electric car in China last year.
But Barra, who in 2014 became the first woman to lead a Detroit automaker, remains confident that will change and her legacy will likely hinge on whether she can transform the automaker into an electric leader.
Growing differently
Electric vehicles weren’t always a priority for Barra, who started at the company as an 18-year-old machinist at the now-defunct Pontiac division in 1980. In her early days as CEO, she was busy putting out fires from the company’s past.
It was originally the result of a disastrous recall that came after misfires caused people to lose control of their older model cars, resulting in more than 120 deaths. Then Barra — haunted by the near-death experience of the automaker in 2009 during the financial crisis — focused on making the company more economical.
Mary Barra, CEO of General Motors Co., introduces the new Silverado vehicle of choice during a live event at the CES 2022 trade show in Las Vegas, Nevada, U.S., Wednesday, Jan. 5, 2022.
Bridget Bennet | Bloomberg | Getty Images
During his tenure, Barra would eventually cut headcount by 27% to 157,000 employees and dramatically shrink the company’s global footprint by exiting markets including Australia, Europe and Russia. The moves, taken over several years, would prove deeply unpopular with politicians and the United Auto Workers.
“This was all about getting the company in better financial shape, in better operational shape, to be able to actually start the next journey,” said Patricia Russo, independent lead director on GM’s board of directors. She added that the board supports the changes Barra and her team are making.
The layoffs set the stage for GM to grow differently.
As GM works to become more nimble, Barra is increasingly sensitive to the signs of change bubbling through the industry. Tesla — which until 2015 was trading at about $50 a share, higher than GM’s stock price, which was stalled below $40 a share — was drawing more attention and threatening to make the legacy automakers’ fuel-guzzling fleets to look like relics. Others believe that popular ride-hailing companies like Uber and Lyft could further diminish the importance of the Big Three automakers.
“We started saying, well, we don’t want to be interrupted. We want to lead the transformation,” said Barra, now 60.
In 2015, Barra took a team of executives on a field trip to Silicon Valley to identify potential disruptions on the horizon. The executive team met with people including Apple CEO Tim Cook, Google employees, venture capital investors and officials from Stanford University, where Barra received her MBA.
GM President Mark Reuss announces a $2.2 billion investment in the automaker’s Detroit-Hamtramck Assembly Plant in Michigan for new all-electric trucks and autonomous vehicles on January 27, 2020.
Michael Weiland/CNBC
“We needed a fundamental change in some of the businesses we were involved in,” GM President Mark Reuss, who led product development from 2014 to 2018, said in an interview.
GM executives decided to focus on areas they believe can change the way people get around, including self-driving vehicles and car sharing. Another major category: electric vehicles.
After the trip, GM took action on the potential outages it identified. This included working to race ahead of Tesla, which promised to deliver the first affordable mass-market electric vehicle.
In late 2016, GM beat Tesla to the punch with its Chevrolet Bolt, which went on sale at $37,500. But like GM’s similarly named Volt plug-in hybrid introduced a few years earlier, the Bolt didn’t have the same stamp as the cars of Tesla and its sales remain minimal.
A new platform
As GM ramped up production of the Bolt in 2017, the company stepped up work on a secret project that executives believed could boost the company’s push for electric vehicles.
The new platform – now known as Ultium – was essentially a base that could be used to build a range of electric vehicles, with the company’s batteries built into the frame. Until then, GM and other old car makers were pushing EVs by essentially stuffing batteries into modified vehicle frames. It was a cumbersome process that could turn out cars and trucks quickly, but it didn’t unlock the vehicles’ full potential.
“When we started designing Ultium, we really took a big leap,” said Royce. “That was the beginning of how we put together a plan for that and transform into an all-electric future.”
By the fall of 2017, GM executives were in the design dome looking at clay models of electric vehicles, many of them for the first time. They are an early step in sculpting the car’s potential design.
Electric Chevrolet Silverado on display at the April 2022 New York Auto Show.
Scott Mill | CNBC
One was similar to a modified Corvette. Another was a crossover like the Chevrolet Blazer. SUVs like the Cadillac Escalade were also present. The bubble-like vehicle didn’t look like any of GM’s products, but it would eventually become the Cruise Origin self-driving shuttle.
Almost five years later, Barra still believes the Ultium platform and supporting technologies, including its batteries and its Ultifi software system, are the foundation for doubling the company’s revenue by 2030. Production from GM’s first plant with the new technology began last year year, with the Hummer EV pickup truck.
“We realized that to really scale with EVs, we needed to have a dedicated EV platform,” Barra said. “That’s what allows us to go so fast and have this broad portfolio of vehicles.”
Other legacy automakers, including Ford, BMW and Toyota, are not expected to begin production with dedicated EV platforms for several years due to the time required to develop and build plants. Meanwhile, Tesla and other electric car startups don’t have the same scale as legacy automakers.
“We already have what other people are just talking about they’re going to do, and I don’t think the world realizes that yet,” said Barra, who is pushing to make GM a “platform innovator” and leverage its Ultium technologies in various industries, including aviation and autonomous ride-sharing.
Mark Wakefield, co-head of the automotive and industrial practice at AlixPartners, said having a dedicated EV platform is critical to reducing production costs and increasing scale, as Tesla has done.
“To reach that mass market, it absolutely has to be a mainstream EV design,” Wakefield said.
GM’s Ultium platform has already helped launch the Cadillac Lyriq…
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