General Motors’ restructuring has sent shock waves throughout the auto industry, the political world and, most of all, in the communities of the five plants the company will shut down. Some observers see the move as driven by technology that’s forcing old-school automakers to become more like what Tesla has been doing all along.
Back in 2006, Tesla (TSLA) co-rounder Martin Eberhard declared Tesla’s electric vehicles “the future of cars.” That assertion carried more weight after Tesla introduced autonomous driving feature to its cars. Old-school automakers were slow to wake up to this change, but have since raced to catch up. Ford now calls itself a “mobility company.” Automakers are partnering with companies like Google and Uber that have been developing self-driving technology.
GM’s moves to restructure the company mark one of the most aggressive move yet by a big automaker to transition from making cars powered by internal combustion to ones built around software and electrically charged batteries. GM (GM) said Monday it’s laying off 15% of its workforce and retiring models such as Chevrolet Cruze, the Cadillac CT6, and the Buick LaCrosse.
GM’s stock rose nearly 5% on the news Monday, then fell 2.5% Tuesday as President Trump threatened to cut federal subsidies to GM because of the layoffs.
Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland. Nothing being closed in Mexico & China. The U.S. saved General Motors, and this is the THANKS we get! We are now looking at cutting all @GM subsidies, including….
— Donald J. Trump (@realDonaldTrump) November 27, 2018
Others are blasting GM for the layoffs, with the United Auto Workers union calling it “profoundly damaging to our American workforce.” On Wall Street, some analysts praised the restructuring as a painful but necessary move. Barra is “pushing GM into the 21st century,” one analyst said. Morgan Stanley said investors now see GM as “a winner in Auto 2.0.”
For her part, Barra told the AP that the company needs more coders now, and fewer mechanical engineers. “The vehicle has become much more software-oriented,” she said. “We still need many technical resources in the company.” On Twitter, GM also pushed back at critics of its restructuring, saying it will add “technical and engineering jobs that will support the future of mobility.”
…That includes adding technical and engineering jobs that support the future of mobility. We’re on a journey to create a better world today, and for generations to come.
— General Motors (@GM) November 27, 2018
If Tesla is the future of cars, however, it’s facing a rocky road to get there. Its CEO Elon Musk said recently that the company came “within single-digit weeks” of facing its own corporate death. A retooled GM could help blunt its competitive edge in the future. It could also prompt other automakers like Ford (F) to make similar layoffs.
That the future of cars is coming seems as certain as ever, but for all automakers, the near-term outlook looks more and more uncertain.
