In the past, General Motors truly was “general” in its product offerings, producing a wide-range of vehicles for just about every segment and niche out there. Now, things are different, with the latest GM strategy instead looking at each individual product’s immediate profitability as the determining factor in bringing it to market. The reasoning behind this is clear – future electric vehicles and autonomous vehicles.
Let’s briefly talk about how things used to be. In the past, the overarching GM strategy relied on offering the full gamut of vehicles, and although some of those vehicles would show a loss for the automaker, the strategic thinking was that it was more important to get buyers into a GM vehicle now in order to make money down the line.
Now, however, every model must either live or die on its own profit. This new GM strategy has resulted in the automaker exiting a number of segments recently, including the large luxury sedan segment (Buick LaCrosse, Cadillac CT6, Buick Regal, Buick Verano, Chevrolet Impala). The small car segment is also dwindling following the exit of the Chevrolet Cruze compact, while the Chevrolet Sonic is expected to exit in the near-term future as well.
The exceptions to this “profit or die” GM strategy are electric vehicles like the Chevrolet Bolt EV. And that leads us to the motivation behind the strategy’s implementation in the first place.
General Motors is currently spending billions of dollars to develop electric vehicles and autonomous vehicles, which seems to fly in the face of the “profit or die” GM strategy outlined above. However, the reasoning behind this is simple – GM wants to go it alone with EVs and AVs.
Essentially, GM is playing the long game with EV and AV technology, banking on predictions that they will become the determining factors to success in the auto industry of the future. As such, GM is spending heavily to develop the tech on its own, with funding coming from the lean, profit-generating vehicle portfolio we see today.
Granted, GM isn’t completely alone here, taking investments from SoftBank and partnering with Honda with regard to its AV and EV development. Nevertheless, the GM strategy still maintains the tech as belonging to General Motors. For example, Honda may have partnered with GM, but it will source GM’s EV platform and Ultium battery technology for future Honda vehicles.
Critically, the “profit or die” GM strategy also applies to specific markets. If a market doesn’t make money, then GM is out. The automaker’s exit from Europe is one good example – after spending two decades striving to make a profit in Europe, and instead losing hundreds of millions per quarter, GM left. The same could be said for Australia, South Africa, and Thailand.
All told, GM is driving hard for the hoop when it comes to EVs and AVs. Whether or not it’ll pay off remains to be seen.