A $240-million investment at the Warren transmission plant will enable General Motors to make the electric drive for the next-generation Chevrolet Volt here in Michigan, rather than Mexico, CEO Mary Barra will announce today as part of a sweeping commitment to southeast Michigan.
GM also will invest an additional $300 million at unspecified Michigan locations by the end of the year, Barra will say at a speech at the Detroit Economic Club. The moves could create new jobs but those announcements will come at a later date.
In a wide-ranging interview Monday ahead of today’s news, Barra acknowledged the $2.5 billion in recall-related charges will impact the formula that decides profit sharing for UAW workers based on North America profitability. She also discussed the steps leadership is taking to create a more accountable and customer responsive culture.
The Warren investment reinforces GM’s commitment to electrified vehicles.
“In the next two to three years I think it (electric car demand) will continue to expand,” Barra said in an editorial meeting with the Detroit Free Press on Monday. “We’re going to continue to work on improving the technology, improving the cost. The customers who have a Volt are some of the most satisfied customers in the industry.”
Despite the recent decline in gas prices and slow pace at which consumers embrace new technology, Barra said electric vehicles are needed to comply with aggressive regulatory standards for better fuel economy.
“As you look at regulatory requirements around the globe, electrification is a key part in making those targets,” she said. “But doing it in a way that is focused on the customer.”
GM also wants to retain customers as the industry embraces batteries and electric motors, autonomous driving and shared transportation.
Barra said she expects the auto industry to change more in the next five to 10 years than it has in the last 50.
“We have to be part of defining the future. We don’t get to decide what it is because ultimately the customer will,” Barra said.
Young, well-funded companies such as Uber, Lyft and ZipCar are providing new choices for getting from point A to point B, especially in large cities.
“I don’t underestimate any of those companies or think they are just passing (fads),” she said.
As the mother of two teenagers, she’s also aware of how automakers must adjust to the social and buying habits of millennials, the generation born after 1980.
“When I was young I wanted to get a car so I could go be with my friends and get away from my parents,” she said. “Now young people are always on their smartphones. They don’t have to get away to be with their friends. They have instant connection.”
So GM is putting 4G LTE Wi-Fi connectivity in more than 30 models beginning with the 2015 Chevrolet Malibu. Technology will help, but understanding how people live and their changing transportation choices is essential.
Part of GM’s approach is to work with MTV Scratch, a unit of media giant Viacom, that helps brands reach the 16 to 34 demographic. For example, research shows that millennials are staying longer in college, getting married later and starting families later.
“You may be fine doing Uber or taking public transportation until you’re carrying an infant’s car seat and a diaper bag,” she said.
On other issues, Barra firmly defended GM’s commitment to Detroit that some local critics questioned after the recent announcement that Cadillac would move its operational base to New York.
“The announcement of 100 people total, of which only a portion are coming out of Detroit when not only a year ago we moved the whole New York treasury office here,” does not weaken GM’s confidence in its hometown, she said.
“This is our home. The amount of money we have dedicated to nonprofit organizations. One example is the effort (GM head of global product development) Mark (Reuss) led where we gave $27 million to the (Detroit) school system,” Barra said.
She also described how 3,000 GM employees and 55 company-owned vehicles worked over five days in August to board up vacant homes, cut brush, improve school athletic fields and spruce up dozens of blocks in the city’s Cody Rouge neighborhood.
Moving Cadillac to New York is part of a long-term strategy to elevate Cadillac to the level of its German luxury competitors.
“New York is where the luxury brands are. You see a lot of Cadillacs on the road here, but go to the East Coast or the West Coast. We need that stark reality,” she said.
Regarding GM’s public support last week for House Bill 56 in the Michigan Legislature, that prevents Tesla Motors or other automakers from bypassing traditional franchised dealers, Barra said the company simply wants a level playing level, even against an upstart electric car manufacturer that has sold fewer cars in the U.S. this year than GM has sold of the Chevrolet Volt alone.
“I see our dealers as assets,” she said. “When I look at dealing with the recalls we’ve had this year I can’t thank our dealers enough.”
