One thing you might not know about Detroit is how big it is. At 142.9 square miles, it’s not as vast as Houston, (599.6 miles), but you can spend hours motoring around the Motor City.
The auto industry still dominates here, including GM (GM), which has its headquarters downtown and assembly plants in the area. In addition, there’s GM’s Technical Center, the cradle of GM’s engineering efforts for almost 70 years. It is a campus befitting of an auto giant. Designed by Eero Saarinen, the grounds cover 710 acres, with 11 miles of roads, over a mile of tunnels, and a pair of lakes (one is some 22 acres) that are used as emergency fire reservoirs.
The campus also houses 38 buildings, including the famed GM Design Center with its distinctive Design Dome, “a secret, enclosed room where the company’s leaders evaluate designs and decide which vehicles to build,” as the Detroit Free Press put it back in 2015. It’s also where I sat down with GM CEO Mary Barra (pronounced BAR-ah) on Wednesday.
Barra, who’s been CEO for eight and a half years, has a tough job. GM, once the biggest company in America and the world, is now the 25th biggest by sales in the U.S., according to Fortune. It’s No. 64 on Fortune’s global list. It’s the eighth-biggest automaker by sales in the world behind VW, Toyota, Stellantis (the old Fiat Chrysler plus Peugeot), Mercedes-Benz, Ford, BMW, and Honda.
GM is still large enough to be a massive global puzzle to manage, which keeps Barra plenty busy. I last checked in with Barra in May at the Milken Conference, where she was focused on coming out of COVID and mitigating the global semiconductor shortage. Those challenges remain, but now Barra is even more intent on moving past all that and transforming GM into an EV company.
Here are some highlights of the interview (edited and condensed), which will air in its entirety at the Yahoo Finance All Markets Summit this Monday, Oct. 17, beginning at 9 a.m. EST.
I started off by asking Barra about the company’s new GM Energy business, but we also delved into GM’s EV product line-up, its stock price (roughly $33 a share, as of this week) and the overall economy.
Serwer: GM Energy, can you tell us what that’s all about?
Barra: Well, sure. One of the things we want people to understand is not only is an electric vehicle your mode of transportation—how you get from point A to point B—but it can also be a power source. And I think that’s going to be very important as we strengthen the grid in whatever country we’re doing work in. And in addition, we can leverage the technology. We have the battery technology to provide clean energy, energy storage, and can also supplement the grid. So we’re really excited about the business opportunity.
Serwer: How big is that business opportunity?
Barra: You know, we haven’t put those numbers out yet, but we see it being significant. Not only are we moving into electric vehicles that we think in the near to medium term will be growth areas, we have an opportunity to perform better on the coasts because that’s where EV adoption is happening more quickly. Getting into the electric commercial vehicle business 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: What GM vehicles on the road right now are EVs and which ones are coming out next year?
Barra: Well, right now we have the Bolt EV and the Bolt EUV, which I’m driving. We also have the GMC Hummer EV and we have the Cadillac LYRIQ that is just starting production. So that’s all out right now. We’ve had such strong demand for the Hummer and the LYRIQ that we’re into next year from an order perspective, in some cases beyond. But then in the first quarter we’ll launch the Silverado EV, and then if you go a little bit longer into the second and third quarter, we’ll have both the Chevrolet Blazer EV as well as the Chevrolet Equinox EV. So when we get to this point next year, we have a lot of models in the heart of the market, the largest segments in the market.
Serwer: Mary, GM stock has lagged a bit over the past year or so, and I’m wondering what you would say to shareholders. Why should someone buy the stock, or own the stock going forward?
Barra: I think there was so much attention earlier this year to how many EVs are you selling today? And we were in a difficult situation because we did the right thing for the consumer and for safety. When we found there was a manufacturing defect in the Bolt [battery] cell, we stopped producing so we could do the replacement cells for our customers. As we’ve moved through the year, we were able to, to start building the Bolt again. And we’ve actually had two record months in a row of sales of the Bolt, but I think that impacted the early view.
What I would say to shareholders is, take a little bit longer view, because this is not a one-year race. We are at the very early stages of driving EV adoption. And when you look at the vehicles that we have coming out next year with the Silverado EV, the Equinox and the Blazer, I think it is going to allow us to grow. And that’s why we’re confident that we’re going to produce a million units and see strong demand for our vehicles by the time we’re at 2025.
Serwer: Switching gears, where is the economy right now Mary, based on where you sit, and what do you see going forward?
Barra: It’s very hard to know exactly what’s happening in the market because we have been supply constrained for so long. So we know there’s pent-up demand, but also there’s challenges in logistics and moving vehicles once they’re built. We’re still dealing with semiconductor shortages, but getting vehicles moved to get to the dealers has been challenging, as well. We still see strong demand for many of our products, especially our full-size trucks that are mid-size crossovers. So it’s an interesting time.
We’re preparing next year for a year that will actually have more demand, but a little less demand than what we would think. We’re going to be conservative. Make sure we set our cost structure up that way, so then if things turn out better, we’re well positioned. But most importantly, because we have so many important EV launches next year, we want to make sure that we can fund our future regardless of where the economy is—downturn, recession, all those words that are being used. We want to be prepared regardless of the environment.
Serwer: You mentioned the chip shortage and supply chain. Is that improving? And then what about some other supply chain issues you might have with batteries and the inputs there?
Barra: We do see semiconductor supply improving quarter by quarter, but we still see more volatility than we’re used to. I think one of the reasons for that is the supply chain has been stretched so thin, so we’re looking for improvement as we go forward. But it’s still an issue. One of the things that’s going to be key to unlocking more Hummers, more LYRIQs and all of our vehicles, is battery plants. And we’re actually running the battery plant in Ohio now. And as that is able to ramp up, more cells will provide us with more ability to provide more electric vehicles. We actually have signed agreements for the production that we need between now and 2025 to get to our million units in 2025 in the United States and more than that in China.
Serwer: You are an engineer and my understanding is you really get down in the details when it comes to the specs and making sure that the car’s features 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 amount of research, but yes, I’m also a consumer. So our leadership team comes into this room or at the plant. And we’re looking at the vehicles to make sure that they’re going to be what the customer is looking for, and that we’re going to win the segment.
This article was featured in a Saturday edition of the Morning Brief on Oct. 15. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe
Follow Andy Serwer, editor-in-chief of Yahoo Finance, on Twitter: @serwer