When I was a fresh-faced reporter working for Dow Jones in Canada, one of the first lessons I learned about business journalism was to be on alert for corporate announcements made on a Friday, particularly those late in the day. Companies tend to release bad or controversial news on a Friday afternoon, hoping that experienced beat reporters won’t still be in the office. Even if they are, two weekend days is a lot of time to let bad news marinate and lose impact by Monday morning when reporters have moved on to cover other stories.
It’s possibly a coincidence, or perhaps there was some regulatory reason, but Ford Motor Co. disclosed CEO Jim Farley’s, $21 million obscene 2022 compensation on a Friday, which I’ve previously called out. GM disclosed CEO Mary Barra’s 2022 compensation last Friday, which was even more obscene than Farley’s.
Barra was paid $29 million, a tad less than she was paid in 2021. The compensation would be outrageous even if Barra was good at her job, but by the standards she outlined last year, there’s a compelling case to be made why Barra should be fired.
Barra told analysts in April of last year that GM would tie a “significant part” of executive compensation with the company’s electric vehicle goals. “At GM, our compensation has always been driven by the company’s success. And no one should doubt our commitment to lead in EVs or the passion our team has for that mission,” Barra said during the company’s first-quarter earnings call.
Here’s an overview of GM’s EV performance in 2022.
The company delivered a mere 39,096 all-electric vehicles in the US, which the fawning automotive media hyped as a 57% year-over-year increase, glossing over GM’s paucity of 2021 EV sales. GM’s EV sales in 2022 represented 1.7% of the company’s total sales.
By comparison, Tesla delivered 1.3 million EVs in 2022, up 40% from the previous year. More alarming about the differential is that Tesla makes twice as much money per vehicle than GM and Ford combined. It’s fortunate that EVs didn’t account for a greater portion of GM’s sales because that would have further eroded the $9.9 billion in profits the company made selling its gas guzzling, climate destroying, decidedly un-American SUVs and trucks.
Most of GM’s EV sales were Chevy Bolts, which dealers couldn’t unload until Barra cut the price on the already low-cost vehicles by $6,000. A likely reason for the ugly duckling status of the Bolts was a year earlier GM spent nearly $2 billion to recall the vehicles because their batteries were at risk of catching fire. Fortunately for GM, its South Korean battery manufacturer agreed to reimburse the automaker for the recall, but Barra as CEO was ultimately responsible for the debacle.
Not surprisingly given the price cuts, GM loses money on its Bolt sales, according to the Wall Street Journal. GM will discontinue manufacturing its Bolts at year-end, which will make the electric Chevy Equinox, with a base price of $30,000, the company’s lowest priced EV when it comes on the market. GM proudly notes the electric Chevy Equinox is assembled in Mexico, where under Barra’s watch the company became the largest producer and exporter of vehicles from that country.
That’s the gratitude Barra has shown U.S. and Michigan taxpayers who bailed out the bankrupt company in 2008, allowing her to enrich herself and GM’s top managers with tens of millions of dollars.
GM last October was forced to impose a sales freeze on its high-margin electric Hummers because of a potential problem of water seeping into the battery pack. One might reasonably expect that ensuring the battery pack was properly sealed was a starting point with the monster vehicles’ engineers and designers. The Wall Street Journal reported the issue was resolved in late January, but nevertheless GM only sold two Hummers in the first quarter.
I’ve posted a video of one person’s unfortunate experience who took delivery of an electric Hummer. Here’s a damning review about the vehicle written by an independent writer who wasn’t worried about GM denying her future access. The reviewer, as well as one from Motor Trend, warned the Hummer had insufficient braking power. The vehicle weighs more than 9,000 pounds; the battery alone weighs as much as a Honda Civic.
Then there’s the issue with GM’s Cadillac electric Lyriq, supposedly a luxury SUV. GM last September issued a recall on the few Lyriqs it sold because of a software glitch that could render the vehicle inoperable. GM plans to sell a measly 36,000 Lyiqs in the U.S. this year, 9% lower than its original target. The reduction likely was partly due to GM misjudging the time required to hire and train 1,000 new workers at its battery production plant in Warren, Ohio. The miscalculation forced GM to delay its goal of building 400,000 EVs in North America in 2023 to 2024.
Hannah Elliott, a Bloomberg writer whose expertise is luxury goods, mercilessly trashed the Lyriq in her review last June, advising her wealthy readers that the vehicle, which has been subject to numerous delivery delays, wasn’t worth waiting for.
The GM brand, which once had considerable cachet in China, has lost its luster. The company had a 15% market share in the world’s biggest automotive market in 2015; last year it plummeted to 9.8%. GM’s China sales slid an additional 25% percent in the first three months of this year.
Why the shellacking? China’s communist government nursed a thriving EV industry that’s highly competitive and sells affordable and reliable EVs, which Chinese citizens voluntarily want. (China no longer offers tax breaks on EV sales.) China’s EV transition was well underway when Barra was named GM’s CEO in January 2014, but she didn’t seem to notice.
When Barra assumed command of GM more than nine years ago, China-based BYD was still primarily a manufacturer of gas engine vehicles. BYD delivered 264,647 all-electric vehicles in the first quarter of this year, up about 85% from the same time a year ago. BYD delivered 283,270 plug-in hybrids in the same period, up just more than 100% compared with the first quarter of 2022.
BYD at the recent Shanghai auto show unveiled an electric EV with 251 miles of range and a base price of 11,000. Fortunately for Barra, the company doesn’t plan to export the vehicle to the U.S. BYD stopped selling gas engine vehicles a year ago last March. Barra says GM under her watch needs until 2035 to achieve that goal.
News out of GM so far in 2023 hardly inspires confidence. The company recently announced it was recalling 40,000 Chevrolet Silverado trucks over concerns that brake fluid could leak, raising the risk of fire. The Silverado is GM’s top selling vehicle.
GM is among the biggest, if not the biggest, advertisers in the world. Barra promised that 2023 would be GM’s breakout year selling EVs, but the company’s chief marketing officer inexplicably opted to “retire” last month. The announcement came in wake of GM’s disastrous Super Bowl ads, which drove traffic to Tesla’s website.
Despite years of fawning and uncritical media coverage, GM’s stock, despite some surges, has remained depressed throughout most of Barra’s tenure. GM’s shares have declined more than 13% in the past 12 months. About 56% of analysts covering GM stock rate GM shares a “Buy,” compared to 80% a year ago. The stock closed today at $33.08; it was trading at near $40 a share when Barra assumed command in January of 2014.
Maybe Barra for once will fulfill all her lofty promises and predictions and make good on her claim that GM will sell more electric vehicles than Elon Musk by mid-century, but she’s a long way off. No reasonable and honest person would dare argue that based on GM’s 2022 EV performance, Barra was even remotely deserving of $29 million.
Marshall, MI Does Communist China Proud
“Breaking Away” is among my favorite movies of all time. The 1979 coming of age flick was about a working-class cyclist named Dave from Bloomington, Indiana, who romanticized Italy’s cycling team only to discover they were a bunch of cheaters. These days I can especially relate to Dave, except its Michigan’s political and business leadership that’s burst my bubble.
On Sunday night I posted this column about the city council in Marshall, Michigan, holding a public meeting to hear comments from residents before voting on whether to rezone portions of a mega site for heavy manufacturing to allow Ford Motor Co. to build an environmentally destroying electric battery plant. The site, occupied by farms and historic homes, was zoned for agriculture and light industrial. The planning commission with oversight of the mega site reviewed the application and last week concluded it didn’t meet the requirements to justify a rezoning.
Ford maintains it will own the site, but it will pay a 12% royalty to a China-based battery company to license its technology. It’s well known that companies of strategic importance are ultimately controlled by China’s communist government.
Marshall residents overwhelmingly oppose construction of Ford’s battery plant, and they were lining the hallways at last night’s hearing to register their anger. The opposition was so stiff the hearing dragged on till 1:30 in the morning.
A Kalamazoo television station covered a portion of the hearing, some of which I watched. I was touched by the passion and love opponents expressed for their rural community and their heartfelt pleas not to have it destroyed because of Ford’s greed and disregard for their surrounding environment and Gov. Gretchen Whitmer’s political ambitions.
While Marshall is a historic rural area, local residents are clearly not country bumpkins. They did their homework and educated themselves on the grave environmental risks that an electric battery plant would pose near their homes. They also demonstrated quite a familiarity with China’s environmental record, as well as that of the company Ford is partnering with.
It was all for naught. The city council voted unanimously to give Ford the rezoning it requires, giving the company the green light to move forward and continue making a farce of its sustainability claims.
When I lived in Michigan in the mid- to late 80s, it was an amazing place, with some impressive political and business leaders, as well as competent civil servants. The state under Gov. Gretchen Whitmer is on a steady downward trajectory, underscored by the fact that Michigan is among the top states whose residents are getting the heck out. Things are going to get much worse as GM, Ford, and Stellantis are slashing their workforces.
Whitmer’s solution to stem the tide is to shower GM and Ford with billions of taxpayer subsidies to build electric battery plants on Michigan farmland. Peter Hoekstra, a former Michigan representative who served as chairman of the House Intelligence Committee and opposes Ford’s plant because of national security concerns, told Marshall protesters last weekend that the subsidies Whitmer has given to GM and Ford amount to $400 for every Michigan resident, including children.
Notably, Ford CEO Jim Farley’s family lives in the UK and Whitmer will be long gone from Michigan within a few years as she pursues her Washington ambitions. Whitmer was recently named co-chair of Joe Biden’s reelection campaign and the entrenched media touts her as a viable 2028 presidential candidate.
I’ve interacted with some of the Marshall protesters, and they reaffirm my long-held belief that the nicest people come from Michigan. Unfortunately, Michigan has also become a place that reaffirms the proverb, “Nice guys finish last.”