GM CEO OUTLINES FIXES FOR STRUGGLING EV BUSINESS AMID SAFETY CRISES, TOP EXEC RESIGNATIONS, AND STOCK WEAKNESS
As General Motors (GM) grapples with a plethora of challenges from a decelerating electric vehicle (EV) business, battery manufacturing hiccups, a safety crisis with its Cruise robotaxi unit, and financial woes due to an enduring autoworker strike, the once-dominant automaker is forced to reassess its bearings and redirect its focus towards the future.
GM CEO, Mary Barra, confronted these tribulations head-on, outlining her strategies for the company to investors. These plans encompass cost mitigation, deferment of factory inaugurations, and purposing cash towards stock repurchasing initiatives.
A significant factor of concern within GM's infrastructure is the sluggish development of the Ultium battery. Pivotal to GM's future EV lineup, the Ultium's extended production timeline serves as a prominent hurdle to overcoming. Coupled with the grim incident of Cruise's rider-less vehicle colliding with a pedestrian, Barra's irritation with GM's EV progress is evident.
In the wake of the accident, GM has strategically seized Cruise operations, causing a seismic ripple through the company and leading to the resignation of two pinnacle executives, alongside a looming announcement of redundancies. The company has thus appealed to external legal entities to rigorously analyze Cruise's safety procedures and investigate assertions of withheld crucial video footage from California's DMV.
Despite the $8.2 billion losses amassed since 2017 through the Cruise venture, GM remains steadfast in its intent. Rather than a radical withdrawal, the auto titan plans to recalibrate its focus on safety and the expansion potential in the autonomous vehicle industry.
A further bone of contention impeding GM's stride is the poor execution of its EV development. The flawed delivery and demonstration of its EV capability resulted in stalling the roll-out of its electric trucks in Michigan, thanks to the Ultium's manufacturing issues. However, despite the dampening pace of EV growth, Barra holds firm in her conviction for the sector's impending growth, projecting a boost in demand leading to the sale of 1 million EVs this year in the U.S. alone.
Simultaneously, new contracts inked with the United Auto Workers union have inadvertently jacked up costs, with future repercussions envisioned as added labor expenses estimated to touch $500 per vehicle by 2024. Moreover, higher battery prices deepening to approximately $3 per kWh add to the toll.
Despite the present turbulence, GM's roadmap charts a trillion-dollar ride filled with cost slimmering endeavors through 2024, aiming a net $2 billion reduction derived fundamentally from trimming salaries, overheads, and curtailing marketing expenditures.
GM's long-term vision for a sustainable future remains sharp as it aims to achieve total carbon neutrality by 2040. As the present trials throw the automaker’s resilience into the spotlight, GM's prospects of impacting the future grow ever more dependent on not just addressing these imperative challenges, but their subsequent mitigation and swift resolution to take full advantage of a transforming auto landscape.