GM wants to drive the future of cars that drive themselves
DETROIT — The chief executive of General Motors, the Detroit automaker, saw the future of driving not in the Motor City but on the streets of San Francisco.
Mary Barra, a GM lifer who had worked her way from engineer to the top, was in the back seat of a prototype self-driving electric car as it wound its way through the city’s downtown a year ago.
She wanted to see for herself whether automation was ready to take over from a driver — safely, and on a mass scale. How would it react, for example, when it reached an intersection as a light turned yellow?
Driving in a situation like that, “you have to make a decision,” she recalled in a recent interview. “Generally if you decide to go, you decide to speed up. Or you stop.” If the technology works, she said, it will make the right decision: “The car knows.”
After that drive, Barra made her own decision to speed up, convinced that such cars were worth betting the company on. Within six months after what she called her “aha! moment” in San Francisco, a fleet of self-driving Chevrolet Bolts, the company’s new electric car, was being built at a GM assembly plant in Michigan, the pace accelerated at the direction of Barra and her senior management team.
Momentous occasion
It was a first for any major car company, and the first leg of a race she is determined to win. The question now is whether a company identified with the industry’s bygone glory days can be a trendsetter in 21st-century transportation — and beat out Silicon Valley rivals like Google, Tesla and Uber with no legacy business to encumber them.
“The auto industry is on the cusp of significant change, and GM has to prove that a longtime established player can be up to the task,” said Michelle Krebs, a senior analyst with the car-shopping site Autotrader, who has followed the company since the 1980s. “If you look at their past performance, their record has been spotty at best.”
General Motors is making a big wager that it can succeed, shedding overseas operations while investing $600 million this year in self-driving cars and other advanced technologies. It spent $1 billion on Cruise Automation, a Silicon Valley startup that developed the driverless technology powering Barra’s ride in San Francisco.
It is a perilous challenge — balancing the demands of a global automotive business with an aggressive push into expensive high-tech models — that has already claimed victims. Last month, Ford Motor ousted its chief executive, Mark Fields, aiming to send a signal that it could keep pace.
But GM is making a case that it can be a leader in the auto industry of both today and tomorrow. “We are very, very serious and intent on putting something on the road,” Barra said of the company’s automated vehicles. “We definitely want to be first.”
Like its rivals, GM has ridden the economic recovery and low gas prices to record demand and profits. But it faces headwinds as sales flatten and new technologies increasingly cast a shadow over its traditional business. Tesla, the electric-car upstart, is now valued more highly than any Detroit automaker.
In shaping its future, GM is betting on products that have yet to gain a foothold in the marketplace and could take years to develop fully.
It is doing so while enduring criticism from President Donald Trump for building vehicles in Mexico and for laying off workers at home. At the same time, Barra has built a closer relationship with Trump than other auto executives have, serving on his business advisory panel and taking the lead for the industry in talks on fuel-economy rules.
Dissident shareholder
The company is also fending off a campaign by a dissident investor to create two classes of stock, aimed at increasing GM’s value to shareholders. One class would pay a steady dividend, while the other would appreciate based on the company’s growth. The fight will culminate Tuesday at the annual shareholder meeting.
In a letter to investors last week, the hedge fund that floated the dualclass proposal, Greenlight Capital, called GM’s board — including Barra, its chairwoman — “uninspired” for opposing its proposal. “After seven years of a flat stock price, how much longer must shareholders wait?” the letter said.
While she agrees the company is undervalued, Barra insists that GM’s performance will pay off in better returns. “Does it frustrate me?” she said of the stock price. “Yes, but I want to do the right things over the long term to improve the business.”
In beginning to assemble fully automated Bolts in January, GM was a step ahead of Google and Uber, which are converting mass-market minivans and sedans into driverless models. It went beyond what Tesla has achieved with autonomous controls on its own models. And it reflected the feverish competition underway.
“We don’t go in to compete,” Barra said. “We don’t go in to have an entry. With every new product we’re doing, we are going in to win.”
“The auto industry is on the cusp of significant change, and GM has to prove that a longtime established player can be up to the task.”
Michelle Krebs, senior analyst at Autotrader shopping site