Mary Barra, CEO of General Motors, on the Recent York Stock Exchange, Nov. 17, 2022.
Source: NYSE
DETROIT — Monday marks 10 years of Mary Barra’s tenure as CEO of General Motors, ushering in a vital 12 months for the Detroit automaker and for her legacy.
Over the past decade, Barra has been a dynamic executive, guiding the corporate through high-profile crises as the primary female leader of a serious automaker. Under her stewardship, GM has seen record profits, cultural changes and major achievements, including beating Wall Street earnings forecasts in 34 of the last 35 quarters, in response to FactSet.
She’s recurrently ranked as one of the vital powerful business leaders on this planet, with former and current executives describing her as a “visionary” and “inclusive” leader who has at all times remained focused on the duty at hand.
That task, for much of Barra’s time at GM, has been to push the envelope and transform the most important U.S. automaker for sustained success. But her primary business plans of late have failed to satisfy internal or external expectations, including her own.
Initiatives involving electric vehicles and autonomous vehicles have come under pressure, with EV rollout and demand slower than expected and GM majority-owned Cruise in crisis. The EV and AV businesses, together with emerging software initiatives, were major parts of lofty financial targets earmarked for 2025 and 2030.
GM says it may still achieve its goals — amongst them to double revenue by 2030 — by shifting focus, however it’s yet to detail how, without the assistance of its stated growth drivers.
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GM’s stock under CEO Mary Barra’s 10-year tenure.
“I at all times thought the EV and AV strategies were awfully ambitious and were more to indicate Wall Street that they were becoming a ‘tech company’ greater than an auto company, attempting to imitate Tesla an excessive amount of in some ways,” said Michelle Krebs, an executive analyst with Cox Automotive, who previously covered GM as a reporter starting within the Eighties.
Public criticism of Barra has been scant, but Wall Street and investors are speaking through the corporate’s stock price.
Famed investor Warren Buffett’s Berkshire Hathaway, which took a serious stake in GM in 2012, sold all its shares in the corporate without explanation through the third quarter of 2023.
GM stock closed Friday at $35.26 per share, down 10.5% under Barra’s tenure and off by nearly 50% from a high of greater than $67 on Jan. 5, 2022.
Unplugged?
GM seemed to be the front-runner in recent times to challenge U.S. leader Tesla in electric vehicles with its latest EV architecture and billions in investments.
Barra surprised many in 2021 by announcing that GM would end production of traditional internal combustion engine vehicles and exclusively offer consumers EVs by 2035. On the time, GM promised to remodel the corporate and automotive industry through what Barra called “visionary investments,” including what would turn into $35 billion toward electric and autonomous vehicles by 2025.
She touted GM’s growth opportunities, including its next-generation “Ultium” EV architecture, and plenty of other major automakers followed suit and announced similar electrification goals.
But GM has rolled out its next-gen EV models at a snail’s pace amid production snags. And its most up-to-date model — the Chevy Blazer EV — has paused sales as a result of significant software problems.
GM’s EV sales last 12 months totaled 75,883 units, or 2.9% of the corporate’s overall sales. It was third in EV sales behind Tesla, and Hyundai Motor, which incorporates Kia, in response to Cox Automotive. Nevertheless, a overwhelming majority of GM’s EV sales were from its now-discontinued Chevrolet Bolt models.
Broad consumer demand for EVs hasn’t materialized the best way GM or others had hoped, and plenty of automakers have withdrawn or walked back the EV ambitions they set just a number of years ago.
Mary Barra, GM chair and CEO, speaks through the unveiling of the Cadillac Celestiq electric sedan in Los Angeles, Oct. 17, 2022.
Frederic J. Brown | AFP | Getty Images
Barra said in December that while there’s still a path to exclusively offer EVs by 2035, customer demand will ultimately determine the pace of the corporate’s EV transition.
“We still have a plan in place that enables us to be all light-duty vehicles by 2035. But again … we’ll adjust based on where the client is and where demand is,” she said. “But I do imagine this transition will occur over a time period.”
As early as 2017, GM’s EV focus was on getting as many electric vehicles to market as possible, promising to launch a mixture of a minimum of 20 latest all-electric and hydrogen fuel-cell vehicles globally by 2023. Then, in November 2020, that goal post shifted, and the automaker said it will introduce a minimum of 30 latest EVs by 2025 and spend $27 billion — an amount that was later upped to $35 billion — on electric and autonomous vehicles.
GM has not released exact details about that spending, but executives last 12 months confirmed the automaker was pushing back or cutting EV spending by billions.
In October, GM pulled its near-term EV targets that included selling 400,000 electric vehicles in North America between 2022 and mid-2024 in addition to producing 100,000 EVs in North America through the second half of 2023.
The Detroit automaker and Honda Motor also canceled plans to jointly develop inexpensive EVs, which might have been a $5 billion capital project, and GM opted to as a substitute revive the canceled Chevrolet Bolt as a latest model in 2025.
GM maintains it is going to achieve low profit margins on EVs by 2025 in addition to increase North American capability for the vehicles to 1 million units by then. The automaker expects to keep up an 8% to 10% adjusted profit margin in North America through the transition.
Taking the wheel
If EVs have been struggling to capture consumer attention, autonomous vehicles and GM’s Cruise unit have been commanding it — but not for the explanations Barra would really like.
Late last 12 months Cruise transformed nearly overnight from one among GM’s best business opportunities right into a growing liability.
Cruise, of which GM owns greater than 80% and which Barra chairs, has confronted a wave of problems and investigations sparked by an Oct. 2 accident wherein a pedestrian in San Francisco was dragged 20 feet by one among the unit’s self-driving cars after the person was struck by one other vehicle.
Investigations into the incident are ongoing, GM said Friday.
For the reason that incident, Cruise’s robotaxi fleet has been grounded, pending the outcomes of independent safety probes. Local and federal governments have launched their very own investigations. Cruise leadership has been gutted: Its cofounders resigned and nine other leaders were ousted. And the enterprise laid off 24% of its workforce.
Beyond all of that, GM is massively cutting spending and growth plans for the business, including pausing production of a latest robotaxi.
Mary Barra, chair and chief executive officer of General Motors, during an Automotive Press Association event in Detroit, Dec. 4, 2023.
Jeff Kowalsky | Bloomberg | Getty Images
Barra said during an Automotive Press Association meeting in Detroit in December that GM is “very focused on righting the ship” at Cruise.
Cruise was considered to be among the many leaders in autonomous vehicles alongside Alphabet-backed Waymo, outlasting many other firms which have abandoned the segment.
The turmoil at Cruise also calls into query GM’s own plans to supply personal autonomous vehicles by as early as mid-decade, in addition to the corporate’s next-generation driver-assistance system Ultra Cruise.
The Ultra Cruise system was initially planned to debut in 2023 and eventually be able to driving itself in 95% of scenarios, but progress has been unclear.
Two sources aware of the system told CNBC that the automaker is ending the Ultra Cruise program. One source said GM has decided to as a substitute deal with the present Super Cruise system and expanding its capabilities reasonably than having two different, similarly named systems.
Darryll Harrison Jr., GM vp of worldwide technology communications, declined to comment on specifics of Ultra Cruise but said: “GM continues to expand access to and increase the potential of Super Cruise, our advanced driver assistance technology. Our focus stays on safely deploying this technology across GM brands and more vehicle categories while expanding to much more roads.”
Transformative legacy
Barra took over as CEO of GM in January 2014 when the corporate was still emerging from government ownership in consequence of a 2009 bankruptcy and many years of mismanagement. She was brought in each to take care of the ghosts of GM’s past and to guide the automaker right into a cleaner future.
“Mary was one among the few people in the unique team that I assumed understood that this thing was broken,” Barra’s predecessor Dan Akerson told CNBC in 2022.
GM Chairman and CEO Dan Akerson, left, pronounces he’s stepping down during a town hall meeting on the GM Renaissance Center Global Headquarters in Detroit, Dec. 10, 2013. Listening are Mary Barra, the brand new CEO; Dan Ammann, the brand new president; and Mark Reuss, the brand new executive vp for global product development, purchasing and provide chain.
Photo by Steve Fecht for General Motors
Barra’s philosophy as CEO and chair, a position she’s held since 2016, has been to deal with problems head-on. She routinely says the “best time to resolve an issue is the minute about it.”
That philosophy has served her and GM well to this point, as Barra has navigated what looks as if an unending string of crises prior to now decade, the second-longest tenure of any CEO in the corporate’s 115-year history, after its founder.
Barra managed a recall of roughly 30 million vehicles starting in 2014 after an ignition switch defect caused 120 deaths and led to a whole restructuring of GM’s safety operations.
“The best way that she took the ignition switch recall and used it to actually drive some deep change into the organization — she shook some things up,” said Stephanie Brinley, associate director of research at S&P Global Mobility. “And I feel they’ve made a difference.”
Barra guided the corporate through the 2014 parts crisis and initiated several company restructurings across the globe, including exiting many unprofitable markets. That fat-trimming was in preparation for an expected disruption from the “mobility” or tech industries and the likes of Lyft, Uber, Apple and Google.
And, she fended off two activist-shareholder campaigns, including from David Einhorn’s Greenlight Capital, which pushed for seats on GM’s board and to initiate a split of GM’s common stock into two classes to assist boost its share price.
Einhorn declined to comment through a spokesman on those efforts, Barra or GM, which the firm exited in 2020.
General Motors CEO Mary Barra testifies during a House Energy and Commerce Committee hearing on Capitol Hill in Washington, April 1, 2014.
Getty Images
The newer challenges facing GM — Cruise, EV uncertainty, shifting priorities — play to Barra’s strengths. She’s discerning within the face of crisis and swift to cull where needed.
“She’s an excellent leader, and she or he’s an excellent listener. But she’s also tough relating to making difficult decisions for the shareholders. To date, what I’ve seen, she’s done an excellent job,” former GM executive Gary Cowger, a mentor of Barra’s who died last 12 months, previously told CNBC.
But because the headwinds compound and a few on Wall Street lose confidence, 2024 is shaping as much as be either the cherry on top of Barra’s profession or an unexpected dent in her track record.
“The shift to EV and autonomous is one which’s just not that easy,” Brinley said. “It will be a struggle for awhile and the success or failure on that might be probably not going to be known thoroughly until well after her tenure.”
When asked in December about her tenure and legacy, Barra, 62, said she doesn’t give it some thought an excessive amount of. She’s more focused on what’s in front of her.
“I’m an engineer, problem solver, let’s move forward,” she said. “I’m humbled and it is a privilege to guide General Motors at this time limit. We’re within the midst of this really once-in-a-generation transformation and there is a lot that might be done.”