Mary Barra spent a decade transforming GM. It hasn’t been enough
The CEO pushed GM hard into electric and driverless cars. The finish line keeps moving further away.
At a 2018 meeting with a senior General Motors, chief executive Mary Barra stunned the room with a sharp U-turn. She killed plans for a new high-end Cadillac that already had gushing reviews from the automotive press.
Her reason: the car’s petrol-guzzling V8 engine. Barra, deep into her quest to turn GM into an electric-car powerhouse, decided it would send the wrong message to showcase another splashy Cadillac – the GM brand known for innovation – that leant on fossil-fuel technology.
Barra was named CEO 10 years ago this week with a mandate to rattle cages. GM was still emerging from its 2009 bankruptcy and the 115-year-old carmaker’s plodding corporate culture needed a shaking up – one that Barra, who cracked the glass ceiling with her appointment, could bring.
That’s just what she did. But now, the twin engines of her growth strategy – electric vehicles and driverless technology – are stalling out.
Barra has stood out among her peers, placing one of the industry’s most decisive bets on EVs and self-driving cars. The Michigan native, whose father worked at GM for 40 years as a die-caster, has spent years doing the once unthinkable: shrinking GM’s sprawling global operations to free up capital to fund the astronomically expensive transformation.
But factory setbacks have prevented the company from getting EVs out the door. The delays disappointed customers and caused the company to squander an opportunity to seize on early enthusiasm for new electric models. Lately, Barra has said not as many consumers have been willing to make the switch to electric as the company had expected, clouding the future pay-off for her EV bet.
Under Barra, GM has been out in front of many legacy car companies in the race to develop driverless cars. GM spent more than $US8bn investing in the San Francisco driverless start-up Cruise. Now, the business, 80 per cent-owned by GM, is a costly headache with an uncertain future. Cruise in October pulled about 400 robot taxis off the streets of San Francisco and a handful of other cities after one of its driverless vehicles collided with a pedestrian who had been struck by another car, and dragged her 3m. Cruise announced on Thursday it laid off about a quarter of its workforce.
“We haven’t executed the way we had planned,” Barra told investors in late November, referring to Cruise. On EVs, she said GM’s production would significantly improve in 2024. She is awaiting findings of an independent law firm into the handling of the incident, and has stressed the need to work better with regulators and regain the public trust.
Barra last week said she continued to have confidence in both the electric and driverless-car parts of her strategy. She was sticking with a goal of producing one million EVs in North America in 2025, and still had faith that Cruise could lead the driverless race.
“As you go through a technological transformation like this, there’s going to be ups and downs,” she said.
Shares hit a multi-year low last month, but have rallied back since GM disclosed plans in late November for a $US10bn ($15bn) stock buyback, paid for in part by slashing expenditures on EVs and Cruise robotaxis. The stock price is down about 11 per cent from its level when Barra took the top job.
Even so, GM’s bottom-line performance has surged under Barra, as GM leaned into higher-margin business lines such as trucks and SUVs and pulled back in low-return areas. During her tenure, operating profit nearly doubled from previous levels and consistently tops rivals. GM has beaten Wall Street earnings forecasts in 34 of the last 35 quarters, according to FactSet. Volkswagen, Ford and other car companies – still miles behind Tesla and China’s BYD – are dialling back investment in software-laden, automated cars propelled by batteries as they face consumers who aren’t ready to make that leap. Automated-driving efforts are faltering as well, including at Tesla, which this past week recalled more than two million vehicles over concerns its Autopilot assisted-driving system can be misused by drivers.
Barra, who turns 62 on Christmas Eve, seemed an unlikely force for cultural change at GM. After all, she had spent her entire career immersed in the culture. She got her electrical-engineering degree from General Motors Institute – a four-year, auto industry-focused school once owned by GM and now named Kettering University – and started at GM as an 18-year-old undergrad, inspecting fender panels at a Pontiac factory.
In the late 1990s, she took a job as an executive assistant to the CEO and later became head of human resources.
As HR chief, she scrapped GM’s 10-page dress code in favour of two words: “Dress appropriately.” Later, as head of product development, she removed the security keycard swipes between her and the engineering staff, viewing them as needless barriers.
Groundbreaking role
Her appointment as CEO was groundbreaking not only because she was the first woman to lead a major carmaker, but also because unlike many of her predecessors she had never worked in finance, been stationed overseas or run a division with a profit-and-loss statement.
“She was willing to take measured risk to gain competitive advantage, rather than being the follower that GM was prior to the bankruptcy,” said Dan Akerson, the previous GM chief who worked closely with Barra and advocated for her to succeed him. “And people like and respect her, so they’re willing to stick with her when she makes tough calls.”
One of Barra’s favourite expressions, current and former colleagues recall, is: “The best time to solve a problem is the minute you know you have one.”
Barra has faced a slew of them. She confronted two activist-shareholder campaigns, two costly labour strikes and months of blowback from president Donald Trump in 2019 over plans to close some factories. Shortly after taking over as CEO, she was called to testify before congress about why GM waited so long to recall vehicles with defective ignition switches that were later linked to more than 120 deaths.
“I’ve talked to her many times about those trials and tribulations, and she never complains,” said former IBM chief executive Ginni Rometty, who has been Barra’s close friend for a decade. The two met near the start of Barra’s CEO term, when Rometty called Barra unsolicited to offer support during the safety crisis. Rometty later got Barra into golf.
“She has this way of dealing with the real underlying problem, without getting distracted by the noise or theatrics around it,” Rometty said.
Barra wanted her executive team to take greater accountability and address conflicts head on. That started with a sort of group therapy. With the help of an outside facilitator, Barra led her team through personality tests and had them tell their life stories, dredging up past traumas. There were also one-on-ones, where participants would hash out conflicts with one another.
“They were tough, emotionally exhausting sessions,” said John Quattrone, GM’s HR chief before his 2017 retirement. “We weren’t hugging at the end of them.”
For Barra, who tended to flip between introvert and extrovert in those personality tests, it has taken years to get more comfortable in front of TV cameras and on countless conference panels, people who have worked closely with her say.
In early 2016, Barra made one of the most consequential deals of her tenure, paying about $US1bn for Cruise, then a 40-employee start-up. Uber and Lyft were emerging as potential new competitors, unnerving car executives worried the next generation would rather skip car ownership altogether. Big tech players including Google and Apple, and a number of start-ups, were pursuing driverless cars.
Cruise, founded in 2013 by a group of 20-something entrepreneurs, was a mostly unknown company experimenting with a system of sensors and radars on used Audis. But the San Francisco-based firm had the glow of Silicon Valley, and GM shares rose steadily in the deal’s wake.
GM’s vision was for Cruise to operate fleets of driverless taxis in cities across the US, undercutting Uber on price as the technology scaled. Executives projected the business could deliver profit margins far greater than the typical 8-10 per cent margins on its manufacturing business. In 2021, Barra’s team said $US50bn in revenue was a possibility by 2030.
“Cruise has an enormous mission,” said Devin Wenig, a former eBay CEO who has been on GM’s board since 2018. “It won’t get done overnight and it is inevitable that at times it will be hard. She gets that and is committed to it.”
‘Zero emissions’
In 2017, Barra began weaving into her public presentations GM’s new vision for “zero crashes, zero emissions and zero congestion”. That would require a full switch to electric, driverless cars, and she said the company was putting in place the industrial building blocks to get there.
GM, unlike many of its competitors, decided to largely forgo hybrids, leaving it without a key fallback plan if sales of pure EVs didn’t take off. Many analysts and dealers see hybrids as an important bridge to warm consumers to electrification. Barra this month said GM would consider adding hybrids, based on the market.
Barra’s big bet put GM ahead of most rival carmakers and came shortly before Tesla’s emergence as a mainstream car company in 2018, when it began producing its Model 3 in large numbers.
Barra pledged to spend $US35bn on development of EVs and driverless technology from 2020 to 2025. She outlined a strategy to use a common mechanical layout to build electric models of all shapes and sizes, branded as Ultium. By this point, most of GM’s capital for future models was being directed towards EVs, even though they accounted for less than 2 per cent of revenue.
Some executives on her team weren’t buying into the aggressive push, questioning how the company could make money on EVs, given the high cost of batteries. Barra at times would express frustration at meetings that some weren’t fully on board.
In 2020, GM linked up with Nikola, a start-up that had been generating buzz with plans to sell electric trucks that run on hydrogen, a technology that GM and others had dabbled with for years but never commercialised at scale. GM was to receive $US2bn in equity to supply technology and factory work under the proposed partnership. Barra appeared on CNBC with then-Nikola CEO Trevor Milton to tout the deal.
The deal unravelled. Days later, a short seller accused Milton of fabricating details of Nikola’s business. Nikola’s shares plummeted, and GM pulled out of the agreement a few months later. Milton soon stepped down, and in 2022 was convicted of securities fraud.
Despite some misfires, GM kept dribbling out news about its EV strategy, and investors sent its shares to new heights.
In early 2021, GM surprised people with an announcement that it would phase out nearly all of its petrol and diesel-engine vehicles in favour of going all electric by 2035. News of a new electric-delivery-van business at the time lifted shares 8 per cent in a day.
By the end of that year, though, GM was falling behind due to scarce battery supplies, and assembly line problems. Its lone EV in the US, the Chevy Bolt, was taken off the market that autumn because of fire risk. And the new entries, including the GMC Hummer, were slow to arrive.
At a year-end media gathering in Detroit in December 2021, Barra sounded a defensive tone when asked whether GM’s lead was evaporating.
“We’re ahead,” she said. “What everybody’s announcing that they’re going to do now, we started doing over three years ago.”
The manufacturing delays continued in 2022. GM couldn’t get enough batteries, as its suppliers, facing higher than expected demand, were having trouble filling orders, the company said.
At times, the Detroit factory where the Hummer is built was churning out just a dozen of the hulking pick-up trucks a day, despite a reservation list that GM said approached 80,000 people. The company sold just 854 Hummers in 2022. Tesla cranked out that many EVs in the US on a given morning.
In October of that year, Barra said GM would miss its goal of producing 400,000 EVs over a roughly two-year stretch ending in 2023. Despite the setback, she assured investors 2023 would be “a breakout year” for EV production as GM’s first battery factory in Ohio started humming.
The breakout never happened. In July of this year, Barra disclosed that GM was having trouble with an automated system used to sort and stack keyboard-sized battery cells ahead of installing them into a large battery pack that goes under the vehicle floor. GM installed manual assembly lines to supplement the automated system, and dispatched GM engineers to the system’s supplier to help. The problem persisted.
In September, Barra got involved. She and her manufacturing chief, Gerald Johnson, huddled with two engineers on the floor of a GM factory in Detroit, where Barra had been the plant manager two decades earlier. The engineers said they had an idea to ease the bottleneck that they planned to present within two weeks.
“We need to talk about this tomorrow,” Barra told them, according to Johnson.
By contrast, the Cruise business was moving faster. Driverless Chevy Bolts ferrying passengers had become a common sight in San Francisco, and the company was laying the groundwork to expand to other US cities.
The troubles for Barra’s tech bets culminated on October 24. That morning, Barra reported relatively strong third-quarter earnings. But in an analysts call, the CEO disclosed that the battery bottleneck would linger until mid-2024, constraining output.
Barra told analysts that consumer demand for EVs had cooled, and GM would be pushing off some EV projects in response.
That afternoon, California regulators suspended Cruise’s autonomous-driving permit, effectively halting the robotaxi service. Regulators later said Cruise had not been forthcoming with the details of the incident with the pedestrian.
Regulators said Cruise officials showed the agency a video of the accident captured by the autonomous vehicle’s cameras that didn’t include footage of the car pulling over while the woman was pinned underneath. Days later, Cruise voluntarily pulled its remaining cars in other cities from the roads.
Barra said GM will rein in its spending on Cruise next year. She says the tech is safer than a human driver and can improve the way people get around.
On EVs, Barra framed the production troubles as a typical pitfall for a company moving quickly into a new technology. She has faith in the long-term future for EVs, and said it was expected that consumer adoption would ebb and flow.
“It’s not going to be ‘If we build it, they will come.’ We’re going to be led by the customer,” she said. “But I do believe this transition will happen.”
The Wall Street Journal
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout