The Journal. - What Happened to GM’s All-Electric Bet?

Episode Date: December 20, 2023

General Motors CEO Mary Barra is 10 years into her tenure and deep into her quest to turn GM into an electric-car powerhouse. WSJ’s Mike Colias profiles the CEO and discusses the challenges she’s faced in getting her big vision for GM’s future on track.  Further Listening: - GM's All-Electric Bet  - The Future of Self-Driving Cars Is Here  Further Reading: - Mary Barra Spent a Decade Transforming GM. It Hasn’t Been Enough.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Mary Barra, CEO of General Motors, has been trying to bring the company into the future. From the start of her tenure, she's set big goals for GM, especially when it comes to two new technologies, electric vehicles and self-driving cars. We're looking at providing electrification and that opportunity for the mainstream customer, for the masses. Part of the road to autonomous is also customer acceptance. So we believe in it. We're on that journey. We have many of the features right now.

And in some cases, we have a leadership position. Our colleague Mike Colais covers GM, which owns car brands like Chevrolet, Cadillac, and Buick. which owns car brands like Chevrolet, Cadillac, and Buick. And he says that now, a decade into her time as CEO, Barra's big moves haven't gone as planned. There were some things that needed to happen this year to show investors that a lot of what she has said over these years is on track.

And there's been some lack of execution this year that she herself has described as really frustrating. She sort of, you know, I'd say has fallen far short of what they had hoped for. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Wednesday, December 20th. Wednesday, December 20th. Coming up on the show, how GM's ambitious CEO is still trying to make her vision a reality.

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I mean, you had to like check some boxes. A lot of times it was we needed to work in the finance department in New York or you needed to have an overseas assignment. And she really didn't have any of that. What she did have was a lifelong relationship with GM. Bara's father worked on the production line at a GM plant in Michigan for 40 years. And Bara followed in his footsteps. She got an engineering degree from a vocational college run by GM.

engineering degree from a vocational college run by GM. While she was there, she started working at GM as a co-op student. She was like inspecting fender panels at a Pontiac factory. It was like her first job as an 18-year-old. So, and then once she got a job at GM, I mean, she spent many years kind of walking the factory floor as an engineer. Barra stayed with the company for decades, taking on various roles. By 2009, she'd become an executive. That same year, GM filed for bankruptcy. The company hadn't made a profit in five years.

There had been just a lot of angst around the bankruptcy. And that was a really scarring time for a lot of people in the years. There had been just a lot of angst around the bankruptcy, and that was a really scarring time for a lot of people in the company. And, you know, there's this government task force, and it's like people are worried about their jobs. And she just had this calming presence. In 2010, GM appointed an interim CEO, Dan Ackerson. Ackerson didn't have a lot of experience in the auto industry,

and he quickly became a vocal supporter of Barra. He saw Mary as a pragmatic, low-ego executive who was also serious about changing the culture. And so when Ackerson departed in late 2013, he advocated to have Mary succeed him. And so Mary Barra becomes CEO. What was first on her agenda? Well, it quickly didn't matter

because weeks after she took over, there was this massive safety scandal involving ignition switches on these older GM cars. For the fourth time, the woman at the helm of General Motors is facing Congress. Lawmakers pressing Mary Barra. Senators grilled Mary Barra. Congress putting the new head of the company in the hot seat. And so this is early 2014. GM announces a recall of these cars.

So this is early 2014. GM announces a recall of these cars. And her whole first year really was dealing with this massive corporate crisis. The cars were eventually, this defect was linked to more than 120 deaths. She testified before congressional hearings. She was made fun of in a skit on Saturday Night Live. I mean, this is like the worst, the harshest spotlight I think you could imagine as a rookie CEO. But I think generally she was viewed as having handled it well. And I think it just reinforced her belief that she needed to change the culture fast. I mean, I just remember being at this

press conference where they were presenting the findings of this big independent report on what went wrong with the safety scandal. And, you know, you show up kind of thinking, OK, well, she's going to say we need to put this behind us. And I just remember one of the first things she said was something along the lines of like, I never want to put this behind us. But I never want to put this behind us. I want to keep this painful experience permanently in our collective memories. And so how does Mary Barra move forward? Like, where does she go from there as CEO? I think you have to look at two buckets. One is just the core carmaking part of the business. Designing, engineering, building and selling cars. She's been very good at taking costs out of the business.

The cars have gotten much better during her tenure. GM's quality is very good according to a lot of rankings. She's held her own in market share, whereas GM had been losing a lot in the decades before. And then that's led to some really strong profitability. I mean, the operating profits at the company are $12 to $14 billion a year in operating profit. That's compared to maybe $7 or $8 billion when she took over. 34 of the last 35 quarters, she's beaten Wall Street estimates for profitability. I mean, just this is like really consistent with the core part of the business. With the company's core business in good shape, Barra could focus on her vision to bring GM into the future.

And she made some bold moves. In 2018, Barra stunned senior executives at the company by killing plans for a high-end Cadillac. Her reason? The car was a gas guzzler at a time when she wanted to move the company away from fossil fuels. And that, I know, was an emotional thing. A lot of people felt like it was urgent that Cadillac needed something like that. And so it's just one example of, I think, how she's not going to shy away from making a tough decision in this transition to electric vehicles. She's had to do that a lot. Barra continued to redirect GM's resources.

In another move that shocked executives, she pulled the company out of European markets to create more capacity to build EVs in the U.S. She also spent big money on new technology. In 2016, Barra spearheaded a $1 billion purchase of a startup called Cruise, which was trying to build self-driving cars. And the bets seemed to be paying off. Barra had positioned GM ahead of other traditional car companies on both EVs and driverless cars. But big speed bumps were on the horizon. That's next. We'll see you next time. should be too. Whether you're a shop owner, a pet groomer, a contractor, or a consultant, you can get customized coverage for your business. Contact a licensed TD Insurance advisor to learn more.

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Please drink responsibly. Carlsberg Canada Inc., Waterloo, Ontario. In 2022, Barra made another bold announcement. GM would deliver 400,000 electric cars over the next two years. Well, we are well on our way to executing to make sure that not only can we deliver 400,000 EVs when you look at 22 and 23, on our way to a million by 2025. But Barrow was already running into problems getting EVs to market. GM's only available EV, the Chevy Bolt, had a major glitch. In 2020, people were reporting that their new Chevy Bolt EVs were catching on fire.

Another important consumer alert for Chevy Bolt drivers. General Motors is now recalling all Bolt electric cars over fire concerns. Just last month, GM... Barra was forced to issue a recall of the roughly 142,000 Bolts GM had made since the car's launch. And the company paused production of new Bolts. Here's Barra giving an interview on Bloomberg. And I believe the lessons learned that we have through this experience are really going to benefit the entire industry and the importance of the manufacturing processes.

At a time where GM is trying to convince people that they're the ones to lead this EV transition, the only EV on the U.S. market they had to pull because of fire issues. It was a dark time for their sort of EV. The EV vision that Mary was trying to convey became much tougher after that. Already, that lead that GM had built up thanks to Barra was shrinking. I think Tesla, right around that time, shot past a trillion-dollar valuation. You had a lot of enthusiasm around some startup,

some newcomers like Rivian coming into the market with an electric pickup truck going sort of right at the heart of what GM makes its money on. And probably the most irritating for Mary and her team was that Ford was getting a lot of cred now, had kind of come out of nowhere, had been seen as sort of this also-ran, kind of lost on their EV strategy. But around this time, end of 21, they were getting a lot of buzz around their Ford F-150 Lightning. And again, this is like that pickup truck is the category that is the most important to these companies. And so I think it was at that point that Mary started getting a lot of questions like, you know, you guys started talking about this so early on, and it seemed like you were so out front. What happened? Where are the EVs?

Why are your EV sales now passed by Ford and Hyundai Kia and some of these other companies that hadn't even really been talking much about this. And it wasn't just the Bolt recall and competition from Ford. Bara's big bet on cruise and its driverless cars was also about to face some major challenges. In the middle of 2022, they actually did launch that service in San Francisco in a small area and started to gradually expand that over time. There were issues. There were reports of, you know, it would stall out in the middle of an intersection

and cause a traffic jam or impede a fire truck trying to get somewhere. I mean, those anecdotal problems cropped up. And then there was the incident with the pedestrian that happened recently. Can you talk about that? So in early October, there was a pedestrian in San Francisco that was hit by a motorist, a human-driven car that happened to be driving next to a cruise driverless car. And the pedestrian was hit by that motorist and thrown into the path of the cruise car, which slammed on the brakes as it was programmed to do. But the car was also programmed to, when an incident happens like that, to slowly pull over to the side of the road. And so as it did that,

the pedestrian was then dragged underneath for about 20 feet at a slow speed. The company said it is actively working with the police and expressed concern for the victim, who survived the incident. survive the incident. Barra had been optimistic about delivering 400,000 EVs, but as of October, she said things had changed. She assured investors that 2023 would still be a breakout year for the company, but it would miss that target. So it hasn't been very easy for GM or Mary Barra. How has she responded to some of these setbacks? What is sort of her outlook for the coming year? Yeah, I think she's expressed frustration around, you know, on the electric vehicle part of it,

the lack of execution, because she's become so known for doing what she says she's going to do. And she's been very reliable and consistent in the performance on the core part of the business. And so I think it's been hard for her to miss milestones. Like that's not something that she's had to deal with very often. I think she really feels like this is just a pause. And GM is very well positioned to be a major player as the transition happens. What's at stake for Mary Barra here? Like what happens if this does not work out or if GM is

unable to fulfill some of its goals with regards to these two industries? For as solidly as she's run the core part of the business, everything she's talked about and pushed the company toward over the last really eight or nine years, most of her tenure has been these two growth visions of the future, which are electric and driverless cars. So I think she really wants to put this vision back on track. And that's probably how she's going to spend the remainder of her tenure there. And I think it is a bit wrapped up in what her legacy is going to look like. If this can look like it's going to, it's going to pan out. That's all for today, Wednesday, December 20th.

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