General Motors is at a crossroads, as the automaker is preparing for an onslaught of green cars after discontinuing the Chevrolet Volt. Because it’s getting reading to develop a slew of electric vehicles, supposedly 20 by 2023, but after laying off over 1,200 at its Warren Tech Center. We’re told that these painful decisions are being made to help GM retool its business model in order to finance its future. General Motors is navigating a massive restructuring, replacing low-profit models such as passenger cars with higher profit models. These encompass crossovers, sport utility vehicles, and lucrative full-size pickup trucks, the last of which GM needs to fuel its electric vehicle development in the coming years.
A report from Bloomberg’s David Welch last month shows just how important pickup trucks—the Chevrolet Silverado and GMC Sierra—are to General Motors. According to his math, aided by Morningstar Inc. analyst David Whiston, GM makes at least $12,000 per heavy-duty pickup. With GM selling 210,000 truck last year, that equates to about $2 billion in pretax income. With that, GM’s combined truck sales bring in an estimated $65 billion in annual revenue – just under half of the $147 billion in revenue GM posted for 2018.
That’s a significant amount of cash to reinvest in things like Cruise Automation, its self-driving subsidiary, and it’s new scalable EV architecture that’ll underpin future electric cars, the first of which will be an electric Cadillac. A slew of electric crossovers of various sizes will follow.
Should electric and autonomous become the norm, eventually, pickup trucks will continue to sell well. Trucks will be vital to GM’s bottom line in the coming years, which is probably why the automaker has been coy about the idea of an electric Silverado. The last thing General Motors wants to do is disrupt its moneymaker, which sells to an audience not looking for much of a change. That’s why investing in a company like Rivian could help the automaker see how the market reacts to an electric truck without the risk, even though the automaker has yet to confirm it’s even considering such an investment.
Should the all-new Chevrolet Silverado and GMC Sierra family not catch on, the all-electric future hyped by GM could be in trouble. The sales results will tell the story.
Comments
Killing the Volt to invest in a green future. Right. The only green GM cares about is profit money. So they build trucks and SUVs, all but end car sales. In an economy that is now showing signs of a downturn. The last time they did this they ended up running to the government asking for money in part because there “just wasn’t enough time to switch to production of efficient cars, which is what the consumer suddenly wanted. It was so unpredictable!”
They are doing the same thing over and over expecting different results? I actually don’t believe it is pure incompetence, amnesia; the financial world runs a quarter at a time, there are no long term goals or any pride in products or people. It is as simple as “product A makes more profit today than product B makes today, so we will increase our income by cancelling product B and increasing product A. We will feed the public information that increasing product A is for the future so we don’t get bad PR. If it all goes down the toilet again, well we will have our golden parachutes, and the public might even support another bailout.”
Trucks will fuel our all electric future or else. Or else what Mary? Enlighten us
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Maybe they should fuel better interior designs first.
Mmm…….not sensing a big reception for electrification here….I guess GM should go all in.
That’s the modus operandi of GM- throw some crap on the wall and see what sticks.
When GM had 50 percent of the market, they could get away with telling the customer what they were going to drive. Now with 17 percent of the market and Ford, Toyota and even FCA nipping at GM’s heels, Barra is really stupid to think she can play that old card and get away with it.
Too bad no one in their right mind would buy a new GM full-size truck.
If they have that kind of margin on each truck, why didn’t they spend a few more dollars and make it the best of the domestic trucks? With so much riding on thses trucks, you would think they would ensure that they would maintain at least second place in sales instead of possibly sliding back to third by going all in.
Corporate executives will continue to exploit the unassuming customer and employee ranks and increase their personal profits until someday, it will all implode. Nothing lasts forever. Ten years ago it should have been over for GM, Chrysler, and Ford. During the last two years it has been the end of General Electric, Dupont, and Dow. Next it will be Google, Apple, and Facebook. As the pace of technology changes increases parabolically, the timespan between corporate highs and lows is diminishing.
I bet the person dropping $50K+ for one of these machines feels really good that they are putting up with cheap interiors and a product that has been cost cut to death so that Barra can fund her unicorn world vision.
General Motors. Is soon to be
Corporal Motors !