High hopes: An assembly line worker inspecting a Chevrolet car at the GM Orion plant in Michigan. Analysts applaud Barra’s plan but say developing new technologies is not GM’s strength. — AP
DETROIT: Mary Barra’s ambitious plan to double General Motors Co’s (GM) revenue to US$280bil by the end of the decade has a relatively simple premise at its heart: Turn the legacy automaker into more of a tech company.
Barra, the chief executive officer (CEO) of one of the biggest carmakers in the United States, is learning just how hard that pivot really is.
This week, the founder and CEO of Cruise, GM’s autonomous-vehicle company, resigned after a series of high-profile accidents and missteps.
It was a remarkable setback for a company that just two years ago was projected to bring in US$50bil in revenue by 2030, according to an investor presentation.
Now, Barra is pulling back on growth plans for the unit to make sure the cars are safe and achieving that milestone on time is tough to predict, a source said.
Barra has staked her leadership at the legacy automaker on a multibillion-dollar plan to grow GM after decades of downsizing.
Key to that are investments in technological advancements, mainly self-driving cars and electric vehicles (EVs).
To fund her vision, she closed down underperforming overseas business units, leaving markets in Asia and Europe to the likes of Toyota and Volkswagen, while pouring money into the potential vehicles of the future.
Analysts applauded Barra’s plan, but developing new technologies is not GM’s strength.
“There’s a big difference between strategy and execution,” said Sam Abuelsamid, research analyst at Guidehouse Insights.
“They just have not been able to build batteries and they took their eye off the ball with Cruise.”
Jim Cain, a spokesperson for GM said in an email, “we haven’t changed our long-term targets but our immediate focus is on the 2023 to 2025 timeframe when we will be scaling EV production and advancing our other growth initiatives.”
A spokesperson for Cruise declined to comment.
Amid regulatory problems and safety issues, Cruise has paused its driverless taxi operations while an outside law firm and a technology consultant review the business.
Insiders say Cruise CEO Kyle Vogt, who Barra appointed after firing its previous leader Dan Ammann, pushed for growth too fast. Vogt didn’t respond to requests for comment.
In June of last year, two incidents in Cruise’s test market, San Francisco, had some internal managers questioning whether the robotaxis should expand into more cities.
First, a Toyota Prius, which according to police reports was speeding, crashed into a Cruise car.
Then, a dozen Cruise vehicles all stopped and blocked an intersection, which led to a recall of the cars for a software upgrade.
Undeterred, Vogt the next month announced Cruise would enter Phoenix and Austin.
At the time, Vogt said in an interview with Bloomberg News that the technology was safe and the only barrier was how quickly GM could build the cars.
“The technology works, there are people using it,” Vogt said in June 2022.
“We’re putting cars in the cities. Now we just need to build more of them.”
Vogt told executives internally that Cruise had to establish a customer base in metro markets before Google’s Waymo self-driving unit, much like Uber did in its race against Lyft to dominate ride-sharing.
To meet that goal, Vogt started softening internal safety review metrics, according to sources.
Whenever the company was going to expand hours of operation, the number of vehicles driving or its geography, Cruise conducted what it called Launch Readiness Reviews.
A dozen different metrics had to be “green” to get the go ahead, but Vogt started bending the rules, the people said.
Cruise cars would occasionally run through caution tape around construction sites or safety zones.
Vogt decided that was tolerable if it didn’t happen often, the people said.
Past employees say Vogt was known for overriding opposing views from subordinates.
Vogt also wanted GM to start building more of the Cruise Origin, a six passenger autonomous shuttle with no steering wheel or control pedals, before the National Highway Traffic Safety Administration (NHTSA) approved it.
Cruise hoped to have 2,500 of them this year and 60,000 in 2026, a source said.
GM would only make a few test models until NHTSA approved the vehicles for the roads.
A year after the 2022 incidents, the California Public Utilities Commission voted to allow Cruise to charge fares at all hours.
In October, a Cruise vehicle seriously injured a pedestrian. Later that month, Cruise paused operations. At its peak, it had 400 robotaxis on the road in San Francisco. — Bloomberg
