Freakonomics Radio - 442. Is it Too Late for General Motors to Go Electric?

Episode Date: December 3, 2020

G.M. produces more than 20 times as many cars as Tesla, but Tesla is worth nearly 10 times as much. Mary Barra, the C.E.O. of G.M., is trying to fix that. We speak with her about the race toward an electrified (and autonomous) future, China and Trump, and what it’s like to be the “fifth-most powerful woman in the world.”

Yes, she is the fifth most powerful woman in the world, according to Forbes. Yes, she is the first big-time female CEO in an industry that's historically as male as it gets. But perhaps most impressive is the success she has had dragging her very tradition-bound company into the modern era, despite a variety of headwinds. Hello, I'm Mary Barra, and I'm chairman and CEO of General Motors. Mary, I understand you've set aside six hours to speak with us today. Is that right? Not quite six, but... I just want to know what it feels like to be the CEO of a carmaker that makes 7.7 million cars a year and has a market cap of $61

billion, while a carmaker like Tesla, which makes only 365,000 cars a year, has a market cap of $473 billion? Well, I think it points to the opportunity that's in front of us. And when you look at that valuation, it is saying there's growth opportunities with electric vehicles. So I think it in one way validates the strategy that we've been on and accelerated yesterday. We spoke with Bara one day after she announced that GM has plans to electrify their entire fleet of vehicles. Climate change is real, Bara told investors, and we want to be part of the solution by putting everyone in an electric vehicle. Just so you know, in the couple weeks since we spoke with Barra, Tesla's market cap has risen another $65 or so billion. That two-week gain alone is about the same amount as GM's total market capitalization.

And a Chinese electric car startup called NIO, even though it sold fewer than 40,000 vehicles this year, again, GM sells nearly 8 million in a year, NIO's market cap, as of this recording, is roughly the same as GM's. Today on Freakonomics Radio, the latest installment in our occasional series, The Secret Life of a CEO. We speak with Mary Barra about China, COVID, Trump, and whether GM's push for electric vehicles is too late, or maybe even just window dressing. The fact that we announced that we'll have 30 vehicles by 2025, it's not window dressing. Also, how long will it really take to produce a new generation of electric and autonomous vehicles? Anytime in this industry we tend to make those projections, we're usually really wrong.

And why is buying a new car still such an ordeal? All that is coming up right after this. From Stitcher and Dubner Productions, this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Duffner. I do have to warn you, the last time we interviewed an auto company CEO was Jim Hackett from Ford, and he didn't last that much longer. Oh, now that seems like a serious warning. Mary Barra's General Motors is the biggest of Detroit's big three automakers, along with Ford and Fiat Chrysler. GM was founded in 1908.

Its major U.S. brands include Chevrolet, Buick, GMC, and Cadillac. It also has two prominent Chinese brands, and it makes cars in 10 countries. From 1931 until 2007, GM was the biggest automaker in the world. At one point, it built more than 60% of America's cars. You've probably heard the old saying, as General Motors goes, so goes America. If that is still true, it's probably not great news for America. GM today has just 17% of U.S. market share. It is now the fourth biggest automaker in the world after the Volkswagen Group, Toyota, and the Renault-Nissan-Mitsubishi alliance. Ford, meanwhile, is down to number six,

and Fiat-Chrysler, number eight. In the old days, and for a long time, American automaker supremacy was a given. Today, it's more of a memory with constant promises that a Detroit renaissance is just around the corner. That was the theme of our interview with Ford CEO Jim Hackett a couple years ago, although there were a lot of doubts over whether he was the right kind of person to lead such a renaissance. For starters, Hackett was not a car guy, as they say in Detroit. He was best known for running the furniture company Steelcase and serving as interim athletic director at the University of Michigan.

Let's listen back to a bit of that Hackett interview. Okay, so if I'm looking at your resume, I'm not seeing CEO of an auto firm. Oh, God, you and me both. Ford, like General Motors, is heavily dependent on selling gas-hungry pickup trucks and SUVs. Given new emission standards and the current climate around climate change, this was looking less like a renaissance and more like clinging to the past. So Hackett wanted Ford to evolve into what he called a mobility company. It's beyond vehicles to transportation and actually a transportation operating system. His plan involved monetizing

customer data, just like Google and Facebook do, but in different areas. They don't own the healthcare data market. They're not controlling aviation data today. And where would Ford get that customer data to monetize? We already know and have data on our customers. We know what people make. Now, how do we know that? It's because they borrow money from us. We know where they work. We know if they're married. We know how long they've lived in their house. And that's the leverage we've got here with the data. I am no auto industry expert, but that interview with Jim Hackett left me with a strong impression.

It was this. Lovely man, wonderful leader in the right circumstances, but quite likely not the best candidate to convert a 20th century industrial giant into a 21st century tech darling. In fact, the minute we left the studio that day, I asked our producers to accelerate our editing schedule. Otherwise, I was worried Hackett might be fired before we could get the episode out. It didn't happen quite that fast, but Ford's stock price kept dropping, and this August, Hackett was removed as CEO. The parallels between Jim Hackett at Ford and Mary Barra at GM are, well, they're not very parallel. Mary Barra, even though she's not a guy at all, is very much a car guy. I've been at General Motors for 40 years because I started as a co-op student.

That is, a student in the Cooperative Education Program at what was then known as General Motors Institute. Today, it is called Kettering University. Bara got an electrical engineering degree while working on a Pontiac assembly line as a quality inspector. I was checking fits between hoods and fenders, she recalled last year. I had a little scale and clipboard. At one point, I was probably examining 60 jobs an hour during an eight-hour shift. This was the same Pontiac factory where her father used to work as a dye maker. Stanford along the way. In the late 1990s, when GM was booming, Barra was there. When GM filed for bankruptcy in 2009 during the global financial crisis, she was still there. And in 2014, having held top jobs in manufacturing, engineering, human resources, and global product development, Mary Barra was announced as CEO. She was generally regarded as a good choice.

Barra would make some enemies, primarily the executives and factory workers she would downsize. But people appreciated her GM experience, her can-do attitude, and her candor. At one point, she said what GM needed to succeed was, quote, to stop making crappy cars. GM's stock price hasn't exactly soared since Barra took over, but it's more than held its own, especially when compared to the other Detroit automakers. And investors were very pleased when she declared that GM, rather than grasping at some sort of mobility play, was going all in on electric vehicles. Unequivocally, the whole management team aligned on, we are going to accelerate EVs. If you look through the history of business in the 20th and 21st century, you see that very few firms last a really long time.

GM has obviously lasted a very long time already. But you think of companies like Kodak and Blockbuster that were preeminent just a couple decades ago, and they're now dust. When technology changes, most big successful firms fail to round the corner. What makes you think that GM or really any of the legacy automakers will be able to keep up? I'm not sure that all will necessarily successfully make the transformation. But back in 2014, as I took this role, we knew there were four major areas where technology was changing the way people move, whether it be the way the vehicle is propelled, autonomous, sharing, and connectivity. Because I think to your point, no one has a right to exist, especially as technology is changing almost

everything. If you don't move and have the best customer offering or customer value and experience, you won't exist. So you have been aggressive in remaking GM over the past several years as a CEO with this big push toward electric vehicles, cleaning house at the executive level and shrinking the workforce and operations generally, trying to get, as the Wall Street Journal put it, better by being smaller. But also, one thing that really intrigued me is that it's been noted that you're trying to do away with what have been called bad entrenched habits. Can you talk about some of those habits and how you're trying to change them? Well, I think it's empowering people. I mean, getting subject matter experts that know the

right thing to do. One of the things that we did when I was in HR is we changed our dress code from 18, 20 pages to, you know, two words, dress appropriately. And I think empowering people and knowing you trust them, but you also are going to hold them accountable to do the right thing, I think just creates a different mindset. I understand there were some managers who either pushed back or were just confused without that 18 or 20 page dress code. What did that tell you that there was some reluctance to accept a two word code instead of a multi-page code? Well, it challenged leaders to be the leaders we needed them to be because it's really easy to to point to an 18-page document that says, I'm sorry, I don't care. You know, you could wear jeans, but the rule says you can't. It's a whole other thing to have the judgment to say, well, yeah, that's fine. You can wear jeans or whatever. that we had to empower, encourage, and actually train some of our first-line supervisors and managers of what it means to be a leader. I guess if I were to interpret it in a slightly

less generous way than you did, I might say, if you can't handle this without the strict rules, without the rules to back you up, then maybe you're just not, I don't know, creative enough or smart enough or devoted enough to handle the important things of being an executive. Is that too ungenerous? I think it's a little ungenerous, but here's why. Because the people were capable, but if you, as a company, have a culture that has all these rules, people are going to follow them. And so part of it was almost giving permission. And so I don't blame it on the individual. I think it was freeing them.

GM's recent news about electrifying their entire fleet over time wasn't much of a surprise. In January of this year, Barra announced a lineup of forthcoming EVs that would join the Chevy Bolt, which went into production in 2016. The first new EVs set to arrive in 2022 are an electric Hummer and an electric Cadillac SUV called the Lyric. But shortly after this announcement of forthcoming EVs came the COVID-19 crisis. It disrupted GM's manufacturing, sales, and theoretically, at least, their electric future. As we got into the crisis, you know, that first started in January when we saw the implications in China to Korea and across the globe. And so once we did some of the things we had to do to make sure the company was going to be strong through this, then we started saying, okay, how do we accelerate the critical parts of the business during this crisis?

Did the crisis accelerate GM's EV plans specifically? It absolutely did. Because we saw the teams coming together and doing great work, even in a remote instance. And we saw that, hey, if we just empower the team, give them really clear directions and get out of their way, they can take time out of the process. As much as it may seem that General Motors is playing catch up with Tesla, the fact is that GM began prototyping electric vehicles in the 1980s, well before Tesla existed. Spurred on by new emission laws in California, GM came out with the first mass-produced electric vehicle

called the EV1. It had a battery range of about 60 miles. By the 1990s, GM was running ads like this. How does it go without gas and air? How does it go without sparks and explosions? GM built more than a thousand EV1s. And then you will ask, how did we go so long without it? It seemed a sure bet that the future had arrived.

The electric car, it isn't coming. It's here. arrive. But in 2003, GM shut down production of the EV1. Their explanation? Production costs were too high and demand was too low. GM began backing away from electric vehicles just as Tesla was getting started. Their technology and styling have since attracted many fans, despite their relatively high prices. Over the past several years, Barra dearly wanted to get General Motors back in the EV arena. And that's what led to many of the announcements yesterday, because those weren't knee-jerk announcements. And this decision to accelerate, was it mostly supply-driven, demand-driven, macro? Well, I had been pushing for a while of, can't we go faster, can't we go faster?

But we started to see some really interesting customer trends. I mean, if you look at the Cadillac Lyric, when we did the confirmation clinics with customers, we even included non-EV and tenders. And when they saw the vehicle, they were like, I would buy that vehicle. I want that vehicle. So one part of it that really reinforced our need to accelerate was consumer perceptions changing about EVs and their willingness to own. When you say consumer perceptions, is a part of that the simple fact that Tesla has been so prominent and successful, albeit on a much smaller scale than GM,

but still it seems to have captured the public's imagination, yes? Well, I think that's a piece of it, but we've been talking to customers for several years now about electric vehicles, and what they've always told us is it's got to have the right range. They start to lose range anxiety at about 300 miles of range. They needed a robust charging infrastructure. And so we've been working on that, hence the partnership with EVgo and other partnerships. Customers all along have been saying, you know, make my ease of ownership better and I'll consider an EV. And that's why you have to look at it as an ecosystem, not just buy the vehicle. But then they also said, the vehicle's got to meet my needs. It's got to be the vehicle

I would normally buy to drive mass adoption. Because if you look at it right now, a lot of the EVs, you know, we have the Bolt EV, which is the most affordable EV with over 250 miles range. But people were saying, I'm not going to compromise the functionality of the vehicle. I'm not going to just buy any electric vehicle. If I drive a truck, I want a truck. If I drive a SUV, I want an SUV. As I understand it, electric vehicles currently account for only about two and a half percent of all car sales. What do you think that number looks like in five years, at least for GM? Well, we've said by 2025, we all have over a million AVs on the road in North America and China. When you look at a lot of external projections,

and you go out to 2030, there's quite a huge range. But one of the forecasters just went from saying 30% by 30 to 35%. So I don't think it's going to necessarily be linear. What's going to be key to unlocking it is having affordable vehicles across multiple segments, not just in high end. As much as you're pushing EVs, you're also scaling up production of pickup trucks and other big vehicles, mainly because that's where the demand is. The best-selling GM vehicle is the Chevy Silverado. If one is an environmentalist, EVs may just look like window dressing. Persuade me they're not? Well, the fact that we announced yesterday that we'll have 30 vehicles by 2025, two-thirds of them in the United States and a goal to have over a million, it's not window dressing.

The way I look at it is our strong truck business is funding our ability to go fast in EVs. I would also say every single truck, every time we put a new generation out, it's more fuel efficient. So again, we have to recognize the consumer in this equation, but the faster General Motors solves some of consumers' concerns or challenges as it relates to EVs, the faster that transition will happen. GM's push to develop this new line of electric vehicles will be expensive. They've just increased their budget to manage the accelerated timeline from $20 billion to $27 billion by 2025. They had planned to invest another $2 billion in the electric truck company Nikola, but they just

backed out of that deal after the company became the target of a fraud investigation and its founder resigned. Nikola, by the way, is the first name of the Serbian electricity wizard Nikola Tesla. So if you are planning to start a new electric vehicle company, you might have to name it after one of Tesla's parents or maybe one of his three sisters, Milka, Angelina, or Maritza. Although there is already a beauty supply company in South Africa called Maritza and a Swiss chocolate company named Milka. In any case, General Motors, in order to afford its electric reinvention, has had to become much leaner. Mary Barra has cut GM's global workforce from 219,000 to 164,000. This led to a showdown

last fall with the United Auto Workers and the biggest auto industry strike in a decade. And while GM still manufactures vehicles in 10 countries, that number was 26 not so long ago. But at least from a financial perspective, Bara's smaller, better plan seems to be working. GM just reported good third quarter numbers, and it seems to have weathered the pandemic, at least so far, in terms of both production and sales. We work very hard to put protocols in place to enable people to return to the workplace safely. I've been in over a dozen plants since we resumed working in North America, and they, to a person, say they feel safer at work than they do at the grocery store. What can you tell us about, and I realize it's a moving target and COVID has been

wildly disruptive and unpredictable, but what can you tell us about overall demand for autos at the moment? Because of COVID, some people are driving a lot less and others are driving a lot more. So what are you seeing? We're seeing actually very strong demand. We've seen China recovering. We're seeing very strong demand in the United States. We're not all the way back to where we were, but we're definitely seeing a recovery.

And I think some of it is people, regardless of how often they need transportation, they want their own vehicle. As I understand it, and please correct me if I'm wrong, but auto dealers, in your case, GM franchisees, make a tiny profit from new car sales with the bulk of their profits coming from financing and repairs. Why is that model a desirable one, or is it just an accident of history? I think it's evolved over time, but we believe our dealers are a true asset. The knowledge, the relationships they have in communities, and again, you've got to put

the customer at the center of this. So we're working hard to create a customer experience that's centered around making it easy and exceptional for the customer. I think most people would say it's certainly not easy or exceptional at the moment. Buying a new car remains, I think, a frustrating experience for a lot of people. And I've heard even you say that some haggling on price is to be expected. Why does the auto industry do that? What's wrong with just setting a price for their goods like just about every other industry does, rather than forcing the customer to negotiate with a salesperson? Well, if you go back in history, I don't know if I've

ever said some haggling is going to be a part of it, but I think I might have acknowledged it is, not that it necessarily needs to be. I mean, we've got to follow dealer franchise laws. Franchise laws require auto dealers in many states to operate as a third party, separate from the manufacturers. Tesla, by the way, has found ways around many of these state laws, prompting a host of lawsuits. Manufacturers like GM earn their money when they sell their cars to the dealers, and the dealers' prices aren't always fixed. Here's how Barr responded when the private equity investor David Rubenstein asked her in a recent interview about car pricing. So if I'm going to go buy a car today,

should I negotiate a little bit or I just basically say whatever the state price say it is, I should just take that price or a little negotiation? Is that OK? I think a little negotiation is probably recommended. As Bara told us, that's because of these dealer franchise laws. That's a piece of it. But I think we can make it much simpler for the consumer. I would say through COVID, that's another thing that got accelerated, working with our dealers to do almost the entire transaction online. Most customers seem to like it too, she says. And again,

our job is to meet them where they want. And if they want a complete online experience and contact list delivery, we're doing that today. Coming up after the break, EVs are one thing. What about AVs, autonomous vehicles? And why are they taking so long to get here? Also, GM does a great deal of business in China. Would Mary Barra have preferred a second Trump term? It's coming up right after this. Mary Barra has spent 40 of her 58 years at General Motors. She was born in Michigan to parents of Finnish descent.

Both of them grew up during the Great Depression and neither went to college. But their kids did all right. Their son is a gynecologist, and their daughter runs America's biggest automaker. So in 2009, during the financial crisis, GM declared bankruptcy with $172 billion in liabilities. But it wasn't just the crisis. You'd been losing billions for the preceding years. So the federal government came in and became a 60% owner in what was called the new GM. What was your role at the time? And did you consider leaving the company at the time? I was running manufacturing engineering as we were entering that phase. And then coming out of it is when I took on the HR responsibility. And when the company you've worked for for a

couple decades is going through those difficult experiences, of course, you do some soul searching. But at the core, I knew we had great people, and I wanted to be part of the team, having no idea I'd be CEO, but I wanted to be part of the team that caused General Motors to reinvent itself and be significant and lead again. So the decision to bail out GM from the federal perspective was not unanimous. There was at least one prominent White House economist who thought it was a bad move that would set a bad precedent. I don't expect you to take his side. But if a company is that deep in debt, why shouldn't it have been allowed to just die off? The way we looked at it is we are grateful for the fact that we received the aid that we needed.

And we recognize that that wasn't something we necessarily were entitled to, nor ever will be again. But since 2009, General Motors has invested $29 billion back in the United States. Think about the job creation. And we paid back our loans. And I think when you look at it on balance, the benefit to the economy and jobs, you know, I think it turned out to be a good decision. When Barra became CEO in 2014, she was eager to reinvent GM's technology and refresh its car and truck lineup. But first, there was a crisis. Last week, General Motors said it was recalling more than 700,000 vehicles because of a problem with the ignition switch. The faulty switch could power down a car's electrical system, including the airbags.

A number of GM models included this switch, most prominently the Chevy Cobalt. Ultimately, it was found that 124 people had died as a result of GM's faulty switches. The problem was first discovered in 2004. it was found that 124 people had died as a result of GM's faulty switches. The problem was first discovered in 2004. The recalls came in 2014. In one of her first major acts as CEO, Barra was hauled in to testify before the Senate Commerce Committee. They went hard at her. It might have been the old GM that started sweeping this defect under the rug 10 years ago, but even under the new GM, Banner, the company, waited nine months to take action.

The U.S. Department of Justice considered criminal charges against GM, but settled for a fine of nearly a billion dollars, as well as a nearly 600 million dollar settlement fund for the victims of the crashes. GM's internal report on the fiasco concluded that GM's, quote, inability to address the ignition switch problem for over 11 years is a history of failures. Although everyone had responsibility to fix the problem, no one took responsibility. Mary Barra attributed this failure to what was called the GM nod. That's what happened in meetings where some issue would be brought up and everyone would nod in agreement that, yeah, something needed to be done, and then nothing would get done. Barra fired 15 employees

who were involved in the ignition switch failure and cover-up, and she created a new position at GM, vice president of global vehicle safety. I'd like you to talk about what that ignition switch experience was like as a brand new CEO and how that set you up to be a CEO in slightly less tempestuous times. As we got into the crisis, we quickly realized we had to demonstrate our values. And so we agreed that we were going to be guided by doing what's right for the customer,

being transparent, and doing everything in our power to make sure nothing like this ever happens again. And we met every day because in a crisis, you don't know everything on day one. You don't even know sometimes how big the problem is. We went and looked at every vehicle we had to make sure we didn't have an issue. And that caused us to recall a number of vehicles, even though there had never been an issue. And the vehicle might have been in market eight, 10 years. I mean, no offense by this, but those values that you just listed, doing what's right for the customer, being transparent, do what you can to never repeat that same problem. Those seem like they should be the values or mission of every company and indeed every human. How had GM gotten to the point where

that wasn't the case? I think there was a time earlier where maybe some of our success, we didn't listen to the customer as well as we should. But then I also think the transparency piece, sometimes people don't realize the way the world works today. You have to share what you know. And sometimes people get frustrated because they'll be like, but I want to know this and that. I'm like, I don't know that yet. And then doing the right thing, I have to say, I think underrepresented in STEM fields, and they're also underrepresented in C-suites. You, meanwhile, are a CEO who earned more than $20 million last year. Congratulations. I hope you're saving some of it. And you've got a math-heavy engineering background. So, what do you have to tell the rest of us? What's your secret? Well, I was always interested in math and science when I was in high school, and I had parents who told me I can do and be anything as long as I worked hard, which then led me to pursuing an engineering degree, which I think has served me well in all of the positions I've had at General Motors, because really engineering is about logical problem solving. I think education is so fundamental to solving many of the issues that we have as it relates to inequity and encouraging young girls and young boys to pursue technology

because technology impacts every single industry in the world today, whether you know it or not. How do you feel about all the attention paid to you, not just for being a successful CEO, but for being a successful female CEO? Is it a bother? You know, it's funny, when I first got this job, people would say to me, so you're the first woman CEO of a large automotive company. And it was a statement. I was like, yes, that's true. I think like everyone, you want to be judged by your contributions and your results and your behaviors and how you treat people independent of gender. But what I have learned in this role, when people come up to you and say, you know, my

daughter's now going to pursue an engineering degree because she sees your success. I think that's so powerful. But I think the day that we'll be in a much better place is where gender is not highlighted. I'd like you to make your best argument for why an increase in female leadership is not just the right thing morally, but also from a business perspective. So what does a female CEO or any leader do potentially, at least differently, and what kind of results stem from those differences? Well, I think it's hard to just say, you know, women maybe are more collaborative because

I think it's very independent on the individual leader. But to me, it's the broader diversity. You will make better decisions when you have diverse thoughts and inputs and debates. And I've seen that already with having different, you know, gender, race, background, nationality experiences. I think it helps you create better strategies that are, frankly, better balanced for what could go wrong or what opportunities you could seize. Let's talk about China for a moment. First of all, would you just characterize the relationship and history of GM and China in terms of manufacturing and selling autos? So General Motors was the second global OEM to enter China in the mid-90s. An OEM is an

original equipment manufacturer. And so we're very proud of our long track record there. We're number two in market. You know, they're going through a bit of a recession even pre-COVID, but we still think over the medium term, if the market is around 24, 25 million units, and you think about that compared to a very strong market in the US would be 17, 18. We still think China has the ability to grow to over 30.

So very significant market in size. I see that GM sold more cars last year in China, 3 million, than in the U.S., 2.8 million. But then I look at their revenues and I see that GM North America brought in $106 billion, and GM International, including China, brought in just $16 billion. So explain what accounts for that huge discrepancy. How are you selling so many cars in China and generating relatively such small revenue? Well, there's a couple of things. First, as you combine it with GM International, there's still some markets that we're working to improve. Meaning some are in the red.

Like South America. South America, for instance, due to macro issues, exchange rate, etc. So that's one driver of it. A second driver is a portion of our business is with our other joint venture that has a lower price vehicle that they sell. So that's just a different price point. And then what drives the U.S., one of our true franchises of this company is our full-size truck franchise. So different product line is probably a big piece of it as well. I gather that the median General Motors car that's bought in China is much, much, much, much, much cheaper than the median General Motors car that's bought in the U.S., correct? I would say that the range varies because we also sell, you know, Cadillacs and Buicks and Chevrolets along with Baozhen and Wuling products. And so the range of prices is far greater in China than it is in the United States. So what is the least expensive new General Motors car I can buy in the U.S. and what's

the least expensive new GM car I can buy in China? Well, it'd be probably one of the new Baozhen products in China. And very affordable is the Hanguao EV that we just launched in China. And in the U.S., one of the most affordable vehicles is the new, well, there's the Chevrolet Trax, but also Trailblazer. Is the entry level the cheapest car in China, maybe in the $4,000 to $5,000 range, and in the U.S., more like $10,000 to $12,000 or $12,000 to $15,000? I think it's a little higher in the U.S. You know, so much depends on how the vehicle's contented. I don't have off the top of my head the lowest, lowest price. So what accounts for, I mean, you can think of a lot of reasons why. There's labor costs,

there's supply chain costs, there's currency, etc. But can you just describe why can't I buy some kind of entry-level GM car in the U.S. for $5,000, $8,000, $12,000? Well, there's also regulatory differences between the two countries of what's required in the vehicles. There are different standards, and we obviously comply with every safety standard in any country we sell vehicles. In many cases, we far exceed those. For instance, there's things that we put in a U.S. vehicle that aren't even required in Europe. What's a for instance of U.S. regulation that doesn't exist even in Europe? Well, the standards that we have to meet for an unbelted passenger.

So there's requirements in the U.S. that I believe, and I'm not an expert on this, but I know there's some countries in Europe where there's the assumption made you're going to wear your safety belt. So overall, cars have become so, so, so much safer over the history of auto travel. But there are still more than 35,000 traffic deaths per year in the U.S. And globally, the number is, to me, almost unbelievable, 1.3 million traffic deaths a year globally. What is the next big advance there? Maybe it's autonomous. Maybe there are 10 answers, but I'm curious to hear what you've got to say on that. Well, I do think there's 10 answers because every year we're improving the safety of our vehicles with technology on a whole host of issues. But I do think autonomous is an ultimate part of the

solution because when you look at the number of deaths that we've studied in the United States, 90% of them are caused by human error. And an autonomous vehicle is going to follow all the traffic laws and regulations. It's not going to drive drowsy or drunk or impaired. And it has AI technology that allows you to understand when the light's going to turn green or red. So I happen to be a fan of autonomous vehicles, and I'm kind of frustrated that they're not further along than they are. What do you think have been the biggest drivers in, well, why do you think they're not further along than they are now, and what's it going to take for them to be fully deployed? Well, I think technology will continue to advance. It's one thing to go on a road and have an autonomous vehicle in a demo. And it's another thing to, for instance, be on the streets of San Francisco and go to, there's a famous intersection that's got like five different streets coming together. And so, you know, in the coding world, it's the corner cases. And you've got to solve for all of those. We will solve it. We will have vehicles that could be autonomous and handle any situation as we continue to move forward. one very visible tragedy, an autonomous vehicle plows into a playground. I'm curious how you see

juggling balancing the public response. Well, of course, any loss of life, whether it's technology or human driven, is going to be tragic and is tragic. That's why we're so focused on the safety standards that we're holding ourselves accountable to demonstrate before we would take the driver out of the vehicle. And then I think with adoption, you know, one example is in vehicles we have on the road today, we have a technology called Super Cruise. And Super Cruise, you can take your hands off the wheel, feet off the pedals, even now change lanes. The vehicle will do that for you.

And I have to admit myself, when I've been in the vehicle the first time, you're like, oh, this is a little strange. But five minutes in, you're like, this is good. And 85% of our customers who've experienced that technology say for their next vehicle, they'd either require it or they'd strongly desire it to be in the vehicle. So I think it's one of these things you have to experience, and then you have to trust the company putting it forward. What share of vehicles on the road in the U.S. in, let's say, 2025 will be primarily autonomous vehicles? Can you take a guess? Oh, I think at that point it would still be fairly small. You know, anytime in this industry, we tend to make those projections, whether it's EV or AV, we're usually really wrong.

But I'll just say, when you look at the way we believe AVs will first roll out, it will be in dense urban environments, thousands of vehicles in each of those cities, but really changing the way mobility is, because it changes a lot of things. Think about how much space in New York City is designated for parking. So I don't know if the number is going to be as significant as the impact it's going to have on communities with the efficiency and the changes it drives. In 2016, GM bought a San Francisco startup called Cruise Automation. Cruise is still based there, but they now have access to all of GM's capital and scale. They recently partnered with Walmart to test autonomous delivery vehicles in Arizona,

and the city of San Francisco has approved testing on city streets before the end of the year. From General Motors' perspective, how would you assess President Trump's approach to China when it comes to trade and manufacturing? There are issues that need to be addressed as the company has grown. I sit on the U.S.-China Business Council, along with some advisory boards in China. My whole point is give us a level playing field and let us compete. So I think there are some issues that are being addressed, will need to be addressed as we go forward. If I recall correctly, you were originally a member of President Trump's business forum, but you quit following his response to the Charlottesville protests. What was your relationship with him like after that?

Well, I think what we looked at is, you know, when I was asked to serve, I think it's always important to have a voice and have a, you know, have a voice in decisions that are being made. I think when, you know, that group decided it wasn't productive because it had just taken on a tone that frankly wasn't allowing it to had just taken on a tone that, frankly, wasn't allowing it to be an effective place to provide input. Purely from a business perspective, especially considering how much business General Motors does in China, would you have preferred to see Trump serve a second term? Oh, you know what? We're open to work with anybody. We're, you know, so I,

what I think of that is immaterial. It's the American people have spoken. And Mary Barra has spoken. A quick postscript. A few days after this interview, Barra announced that General Motors would no longer work with the Trump administration's legal team to fight emissions regulations in California, as they had been doing. California has ruled that vehicles must get more than 54 miles per gallon of gas by 2025. The Trump administration wanted this lowered to 37 miles per gallon. The fact is, the California standards may become moot if the Biden administration increases federal emissions standards, which it is expected to at

least attempt. One more thing to add. I'm sure you know the concept of the glass ceiling, which describes how women can have a hard time rising to the top of organizations. There is a related, even more insidious concept called the glass cliff. That's the idea that women who do make it to the top of an organization are often elevated in part because that organization is already in trouble, which makes the new female leader more likely to fail and to fall off or be shoved off the glass cliff. We made an episode about this a few years ago, number 319, it's called After the few years ago, number 319.

It's called After the Glass Ceiling, the Glass Cliff. Anyway, when you talk to academic researchers about the glass cliff phenomenon, as we did for that episode, the evidence is fairly persuasive. Mary Barra became CEO of General Motors. A recent bankruptcy, a huge safety scandal, and related cover-up. It'd be easy to put Barra in the glass cliff category, too. Barra herself has always shrugged off this theory. Whatever the case, when the next academic researchers come looking to survey the wreckage of the latest glass cliff candidates, they will have a useful counterexample to consider in Mary Barra. We will be back next week with another episode of Freakonomics Radio.

Until then, take care of yourself, and if you can, someone else too. Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Zach Lipinski. Our staff also includes Allison Craiglow, Mark McCluskey, Greg Rippin, Daphne Chen, Mary Duke, and Matt Hickey. Our intern is Emma Terrell. Special thanks this week to Jason Stein from Automotive News for sharing his considerable expertise with us. Our theme song is Mr. Fortune by the Hitchhikers. All the other music was composed by Luis Guerra.

You can get Freakonomics Radio on any podcast app. If you want the entire back catalog, use the Stitcher app or go to Freakonomics.com. Freakonomics Radio can also be heard on many NPR stations across the country. As always, thanks for listening. This is why you're such a good CEO and why I'd be terrible. I don't know about that. I do. I do. No, no question.