One thing you might not know about Detroit is how big it is. At 142.9 square miles, it’s not as big as Houston (599.6 miles), but you can spend hours cruising around the Motor City.
The auto industry still dominates here, including GM (GM), which has its downtown headquarters and assembly plants in the area. In addition, there is GM’s Technical Center, the cradle of GM’s engineering work for nearly 70 years. It’s a campus worthy of an auto giant. Designed by Eero Saarinen, the site spans 710 acres, with 11 miles of roads, over a mile of tunnels and two lakes (one is about 22 acres) used as emergency fire reservoirs.
The campus is also home to 38 buildings, including the famous GM Design Center with its distinctive Design Dome, “a secret, enclosed space where company executives evaluate designs and decide which vehicles to build,” according to the Detroit Free Press in the year 2015 put it. That’s also where I sat down with GM CEO Mary Barra (pronounced BAR-ah) on Wednesday.
Barra, who has been CEO for eight and a half years, has a tough job. GM, once the largest company in America and the world, is now the 25th largest company in the US by revenue, according to Fortune. It is #64 on Fortune’s global list. It is the eighth largest automaker in the world behind VW, Toyota, Stellantis (the old Fiat Chrysler plus Peugeot), Mercedes-Benz, Ford, BMW and Honda.
GM is still big enough to be a giant global jigsaw puzzle to complete, which keeps Barra busy. I last met with Barra in May at the Milken conference, where she focused on overcoming COVID and alleviating global semiconductor shortages. Those challenges remain, but now Barra is even more determined to overcome them all and transform GM into an electric vehicle company.
Here are some highlights of the interview (edited and abridged) that will air in full this Monday, October 17 at 9:00 am EST at the Yahoo Finance All Markets Summit.
I started by asking Barra about the company’s new GM power business, but we also delved into GM’s EV lineup, the stock price (about $33 per share as of this week), and the broader economy.
Serwer: GM Energy, can you tell us what this is all about?
Barra: Sure. We want people to understand that an electric vehicle is not only your mode of transportation – how to get from point A to point B – but it can also be a source of energy. And I think that’s going to be very important as we strengthen the grid in every country that we work in. Also, we can use the technology. We have the battery technology to provide clean energy, store energy and can also complement the grid. So we are very excited about the business opportunity.
Serwer: How big is this business opportunity?
Barra: You know, we haven’t released those numbers yet, but we consider them significant. Not only are we moving into EVs, which we believe will be growth areas in the short to medium term, we also have an opportunity to do better on the coasts where EV adoption is happening faster. Entering the business with electric commercial vehicles is also a growth area for us.
[Travis Hester, vice president of GM’s EV growth operations, told CNBC the total addressable market here is “is between $125 billion and $250 billion…” And yes this is business that both Ford and Tesla have entered.]
Serwer: Which GM vehicles on the road are currently EVs and which are coming next year?
Barra: Well, right now we have the Bolt EV and the Bolt EUV that I drive. We also have the GMC Hummer EV and the Cadillac LYRIQ that is just beginning production. That’s all out now. We’ve had such strong demand for the Hummer and the LYRIQ that we’re going into next year, in some cases even beyond, from an order perspective. But then in Q1 we’re launching the Silverado EV, and if you go a little longer in Q2 and Q3 we have both the Chevrolet Blazer EV and the Chevrolet Equinox EV. So when we get to that point next year, we’ll have a lot of models in the heart of the market, the biggest segments of the market.
Serwer: Mary, GM’s stock has lagged a bit over the past year, and I wonder what you would say to shareholders. Why would anyone buy the stock or own the stock going forward?
Barra: I think earlier this year there was so much attention given to how many EVs are you selling today? And we’ve been in a tough spot because we’ve done the right thing for the consumer and for safety. When we discovered the Bolt had a manufacturing defect [battery] cell, we stopped production so that we could produce the replacement cells for our customers. As we moved through the year we were able to start building the Bolt again. And we actually had two record straight months of Bolt sales, but I think that affected the early view.
What I would say to shareholders is look a little longer because this is not a year-long race. We are in a very early stage of driving EV adoption. And if you look at the vehicles we’re releasing next year with the Silverado EV, the Equinox and the Blazer, I think it’s going to allow us to grow. And that’s why we’re confident that we’ll produce one million units by 2025 and see strong demand for our vehicles.
Serwer: Turn the switch, where is the economy now Mary based on where you are and what do you see for the future?
Barra: It’s very difficult to know exactly what’s happening in the market because our supply has been limited for so long. So we know there is pent-up demand, but also challenges in logistics and transporting vehicles once they are built. We’re still dealing with semiconductor shortages, but getting vehicles to dealers was also a challenge. We continue to see strong demand for many of our products, particularly our full-size trucks, which are mid-size crossovers. So it’s an interesting time.
We’re gearing up next year for a year that will actually see more demand, but a little less demand than we think. We will be conservative. Make sure we set up our cost structure so that when things get better, we’re in good shape. But most of all we want to make sure we can fund our future no matter where the economy is – downturn, recession, all those words being used as we have so many major EV launches next year. We want to be prepared regardless of the environment.
Serwer: You mentioned the chip shortage and the supply chain. Does this improve? And then what about some other supply chain issues you might have with batteries and the inputs there?
Barra: We’re seeing semiconductor supply improving quarter over quarter, but we’re still seeing more volatility than we’re used to. I think one of the reasons for this is that the supply chain has been stretched so thin that we are looking for improvements as we go along. But it’s still an issue. One of the things that will be crucial to unlocking more Hummers, more LYRIQs, and all of our vehicles are battery factories. And we actually operate the battery plant in Ohio now. And with that being able to ramp up, more cells will give us more opportunities to deploy more EVs. We have actually signed agreements for the production we need by 2025 to reach our million units in 2025 in the United States and more than that in China.
Serwer: You’re an engineer and I understand that you really go into detail when it comes to the specs and making sure the features of the car are something that you think consumers will like. Right?
Barra: Well, absolutely. We have a very talented team at General Motors and we do the right research, but yeah, I’m a consumer too. So our management team comes into this room or plant. And we’re looking at the vehicles to make sure they’re what the customer is looking for and that we’re going to win the segment.
This article was published in a Saturday morning brief on October 15th. Get the Morning Brief delivered straight to your inbox by 6:30am ET Monday through Friday. Subscribe to
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