Good morning Grid Connections listeners.
And for those of you who may be listening for the first time, the Grid Connections
podcast is the show where we unravel the complexities of electric transportation,
renewable energy, and our electrical power grid that ties all of this together.
I'm your host Chase.
And today we're joined by David Welch, a Bloomberg Bureau Chief based in Detroit.
David shares his knowledge of the automotive market and perceptions of the
market being based in the Motor City.
Especially around electric vehicles, a topic he's extensively covered and is
passionate about.
Our conversation with David takes us on a journey through the automotive industry's
transformative shift towards electrification and autonomy.
We delve into the heart of General Motors guided by David's book, Charging Ahead,
which is waiting for you in the show notes.
Should you want to learn more and get a copy yourself.
Make sure to check it out.
The book highlights CEO Mary Barra's leadership in steering the 120 year old
company into a new era.
This episode on packs the challenges GM faces from industry, along with even
serious corporate change to dealings with the UAW and how they're navigating the
roadmap they've set out for electrification.
But before we dive in a little housekeeping, if you find today's
discussion enlightening, please share this episode with someone who will appreciate
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Now buckle up as we explore the electrifying road ahead with David Welch.
Tune in to discover the innovations, challenges, and milestones defining the
automotive industry's race towards a greener, more autonomous future.
With that,
I'm joined today by David Welch.
He's the Bureau Chief of Detroit for Bloomberg.
Thanks for joining us today, David.
I think we're going to be covering a lot of really interesting subjects.
And I know you've recently come out with a book kind of talking about GM and some of
the challenges
but real briefly for anyone that might not be familiar with you can you share a
little bit of your background and what you've been kind of doing in the space
around automotive and how you got into it.
Yeah, so covering the auto beat on and off for more years than I care to recount, but
20 something years for Bloomberg and before that Business Week, which was
acquired by Bloomberg, it was the Detroit Bureau Chief there too, actually started
covering the auto beat in Texas, covering the plants down there.
And this was late 90s.
So he had like AutoNation and CarMax that used CarMega stories before they all
morphed into something else.
So I covered the retail side of it as well and taking some breaks, going to New York,
covered Wall Street for a bit.
And, you know, back in Detroit as Bureau Chief covering the auto industry.
And yeah, the book Charging Ahead about Mary Barra's effort to try to transform GM
into an electric vehicle maker.
And, it was tough.
It was tough sledding when I wrote the book.
book a year ago and it's even tougher now and some of it was sort of pre-saged and
we can get into that whenever you want to talk about it.
But that's what the book's about.
It's not saying GM's the EV hero, it's sort of Mary Barra as this character
trying to fix the company, change the company.
And it's really tough to do that with an automaker that's 100 years old.
No doubt.
I think that's a topic we've discussed quite a bit here.
And I know a few episodes back we had John McElroy on, and that was definitely a
subject that we touched on was the challenges that GM and others kind of the
big three have definitely dealt with that, with that disruption in the industry.
I think let's start off as someone who has been in journalism, specifically on the
focus with automotive for so long.
I think there's a lot of people who listen that who have been following and in the
electric vehicle space, especially,
have been kind of maybe disappointed, it's not the right word, but it has been
interesting to see kind of gaps in coverage of electric vehicles,
specifically around like the knowledge base of them.
And recently we had kind of John Volcker and we've had, as I mentioned also, John
McRoy on, and one of those topics we've really discussed is obviously the
education at the dealership part.
But I do think another part is around the actual journalism and coverage of the
automotive space right now.
What do you think are maybe some of the gaps that you've seen, at least around the
knowledge base of electric vehicles, or are there other areas that you think that
kind of need to be improved to kind of help make it a lot easier for the average
person to understand and get into the electric vehicle experience?
Yeah, I think in some ways there's this idea out there that EVs are really tough
to own.
And it is different.
There are a lot of things EV owners need to learn, particularly with charging.
The charging network isn't great, but I think people dismiss the charging network
as practically non-existent.
The fact of the matter is, it does exist.
It's just, it's not on every street corner like filling stations are.
You live with EVs differently.
And I've seen some really good stories done on that.
It's just not the prevailing narrative for electric vehicles that you can live with
them.
And you can live with them pretty easily.
It's just you're going to have to change habits to do that.
And that's sort of a consumer journalism bit that I think could be told better.
And the other part of it, and I've pushed pretty hard internally at Bloomberg to
make sure our coverage reflects this, EV sales aren't in retreat.
Sales growth is declining.
And that's an important distinction because...
Before EVs came around, it was, well, the auto industry sells 110 million, roughly,
vehicles a year globally.
And that's why they're not very good stocks on Wall Street, because there's no
growth there, right?
It's not like AI or something that's new, and there's going to be a bunch of revenue
growth unless you steal it from somebody else.
And that's still true, but with EVs, EV sales are growing rapidly globally.
And it has slowed down for a variety of reasons that we'll talk about.
But...
It's not in retreat.
It's not like suddenly nobody wants them.
I think sometimes media coverage as a whole can get bipolar on something.
You know, everything's great until we decide it's not, and then we hate it.
Um, this is, you know, there's some nuance here and the nuance is it's, you know,
it's still growing.
It's just, we're, we're hitting this flat part of a classic technology S curve.
I think so.
And you do see that reported.
It's.
It's just, it sort of gotten this narrative kind of took on a life of its
own that nobody wants an electric vehicle anymore.
For sure.
And I think you're totally right.
I do.
Unfortunately see why it's probably taken off more.
Just it is kind of chasing clicks and the narrative sounds more interesting and gets
people to kind of tune into it.
But I agree with you there.
There's a challenge I think just with the automotive industry in general, with
interest rates and many other things kind of going on right now that makes just new
car sales in general harder.
Are there any trends in particular that you think are the biggest headwinds or
things that you don't think are getting enough coverage around that?
It's something that I've said this on Bloomberg TV a couple of times, actually
several times, and that's not shameless self-promotion, but I think when people
talk about EVs and whether or not consumers want them, and by consumers we
generally at this point in history mean people who aren't luxury buyers, who
aren't early adopters for technology.
Do they want them or not?
EVs get a lot of consideration.
I think they've captured the imagination of a lot of people.
The challenge now, and this is the subtlety I don't think always gets picked
up, is first of all people are happy with their gasoline powered cars.
It's not like they're walking around kicking empty cans and grousing about
those vehicles.
So it's the industry's job to dislodge them from that.
But how do you do that?
Well, if you really think about it, there's not a lot of variety out there.
compared to gasoline vehicles.
In the US market, there's one vehicle, now that the Chevy Bolt has discontinued
temporarily, that's less than $40,000.
That's a Nissan Leaf.
And a Nissan Leaf is a compact hatchback.
Americans hate compact hatchbacks.
They've never bought them in big numbers.
And it gets about, I think, 210 miles of range might be the max on it.
So, you know, that's not a great proposition.
for people, for most American consumers, but it's the only vehicle under 40,000
right now.
Now that's not counting tax credits.
I think you can get a Model 3 now, certain configurations with the tax credits under
that, but they're still pretty expensive is the point.
And there isn't nearly the variety that you have with gasoline-powered vehicles
where you can get anything from a compact on up to a Hummer.
You can get a Hummer electric actually, but.
Right, right.
There's just more variety, more variety, under $40,000.
So, I remember having, here's my analogy, conversations back in the early 2000s when
Nissan and Toyota came out with full-size pickup trucks.
I was writing for Business Week.
My editor said, well, here it is.
This is the end of Detroit because now the Japanese are taking their last stronghold.
And they said, they took...
the sedan and compact market away from the big three, why wouldn't they also take
pickups?
And I said, you know, because of a variety of reasons, the quality of those family
sedans and compacts made by the Detroit companies were truly terrible.
And those consumers were really angry and they were happy to leave.
They actually left with two middle fingers in the air for the most part.
But the people who bought pickup trucks, those trucks were made pretty well and
those people loved them.
It's not going to be that easy for the Japanese to just steal those buyers.
So what does that mean for the EV market?
You have pretty happy buyers.
I think when people drive EVs, they realize they're faster, smoother, quieter,
and there's a lot about them that's really cool.
But that's the industry's job is to tell them why they should leave their regular
cars right now.
And, but they are happy with them.
So for the same reason, you know, that...
then Dodge, now Ram, Chevy, and Ford didn't lose the pickup market.
The gasoline-powered vehicle market's not going to just surrender itself so easily.
Consumers, they like what they like.
I think a lot of people will come around.
It's going to take longer than the industry thought.
And I'm kind of curious since you are based in Detroit, are there, what do you
think is kind of the perspective and what you hear being kind of in the hub of
Detroit versus maybe the more common narrative or maybe misperceptions people
have about how electric vehicles are doing or that transition to them across the
country.
Yeah, you're hearing more skepticism from inside the companies.
And honestly, that was kind of always there.
There were a lot of engineers and people working in the companies who would see
these big plans from Ford and GM, big investments and wonder, okay, is this
really that smart, is that market going to be there?
And.
You're hearing more of it now because you've seen investment reigned in, you've
seen vehicle plans delayed, and you've seen sales, not just from these companies,
but from others disappointed.
You see Tesla discounting massively over the past year.
So, you know, there is, there was already some skepticism.
Because people don't necessarily love change, especially within their companies.
Right.
And so you,
You have Mary Bar or Jim Farley coming in saying, we're going to invest all this
money.
And in Ford's case, we're going to split the company in two.
And the people in the new co are the cool kids and the people in the old co are in
this, you know, maybe a dinosaur of a company.
And it turns out that, you know, the dinosaur is going to live longer and new
co doesn't, you know, is getting defunded in some ways.
And so there's probably an, I told you so too, happening from people.
It's, you know,
So I think what's happening in the EV market, the slowdown, and also the
slowdown in investment, which by the way drives a lot of the narrative we were
talking about earlier, that has some skeptics saying, I told you so.
You know, it's kind of funny you mentioned the Ford blue and Ford, uh, model E
program because that got so much attention when it was first kind of announced and
obviously when the market and kind of the Evie, uh, momentum was much higher.
And now it seems like we don't really hear too much about the delineation of those
programs unless it's maybe some sort of like quarterly report or kind of a smaller
news story related to it.
Do you think that
Or I guess one, I'd be curious if you've been hearing any more of, uh, from kind of
the inside of people that have seen that firsthand and how that actual, uh,
execution of that business model has gone.
And do you think it's more kind of taken a backseat just for the financials or do you
have any sense of how that, how successful that program has been to kind of delineate
into two countries, uh, two companies at Ford.
Um, I'm not sure.
I, you know, I was, when they did it, there was a lot of pressure on GM to do
the same thing and GM had said basically that they had kind of already done it.
It just, it wasn't as aggressive.
They, they, because it's still reported to the same top executives.
Um,
And actually, you mentioned John McElroy earlier, John and I had this debate at one
point.
Like John thinks that any company, or at the time he did, I don't know what he
thinks now because a lot of these things are going in reverse.
He said, any company that has, doesn't have its own separate EV company run by
somebody from Silicon Valley, like they're going to die.
And I said, wait a second, you're talking about word charts here.
You know, like at the end of the day, Jim Farley runs Ford.
And he makes the decisions for the Blue Oval side of the company and the EV side
of the company.
And that's that.
And there are people working on just EVs at General Motors and Stellantis.
At the end of the day, they report to the same CEO.
And I can guarantee you when...
Ford decided to reduce investment by 12 billion.
That wasn't decided by one person on the EV side of the company.
It was Farley, it was the board of directors, just the same way it would be
if they never split the company like that.
And when Mary Bar decided to delay the Orient Township pickup truck plant, that
wasn't decided by...
the executive who runs the EV truck group that builds vehicles in Hamtramck that was
decided by her leadership team and the board.
Does it help them getting people to develop technologies?
Short answer is I don't know.
I've always wondered about it because there's a lot about both vehicles you
still need like basic guts of the car, the interior, the design, the chassis, all
that kind of stuff.
where you're having the same people engineered, you still have to work with
them.
So you know, one of the things historically that got General Motors into
trouble was they used to have all these, all the vehicle divisions had their own
engineering groups.
This goes back many decades.
And for efficiency's sake, they put it all together.
And a long retired GM executive told me that actually caused a lot of problems
internally because, you know, it used to be, you know, you're, you're a power train
engineer and the transmission guy for Buick sat next to you or worked on your
floor.
And if there was an issue, you'd go over there and talk to him.
And then once they reorganized everything, you know, the, the expertise went hither
and yon and it really caused a lot of problems.
I'm not saying that's that happened at Ford, but.
Right.
know, it's just, you know, these things can work or they can not work.
And, you know, I never saw that as a deciding factor.
I mean, the bottom line is like these companies have to figure out how to make
batteries and the software that makes all this stuff work and get the vehicles
produced.
Well, and that is what's kind of interesting.
I mean, in that example, especially, I mean, that has been one, one of the things
that the startups and even some of the Chinese companies, when asked about how
they run their business or what has kind of led to the flatness of their
organization and their speed is actually kind of that old model where they will
have the engineers and the designers and all of them close to where the cars are
actually being manufactured.
So it's, it is kind of interesting to see that is that traditionally was.
And it seems to still be a very cost effective and, uh, time efficient way to
move vehicles forward.
And I, I'm kind of curious with, has there been talk of trying to move back to that
style of manufacturing more with some of these companies?
I know there have been talk.
They were going to do that with, uh, speaking of the Ford, uh, model E and blue
programs.
But I'm, I'm just kind of curious if that actually ever materialized or you've seen
that even with GM or it's more just from a
in house basically.
Uh, bring more stuff in house and just also bringing, um, I mean, I can think of
a couple of examples for Ford that they've kind of looked at, like, I mean, the Ford
GT and some of these where they, they take a very small, dedicated, uh, group of
people and just throw them at the problem and let them handle it versus kind of some
of the larger teams that we've traditionally seen from like the big three
for the last couple of decades, are you seeing any or hearing much about that
across?
being in Detroit from like the traditional automakers about going more to these
smaller kind of focus teams and almost more like a software style of product
management.
You know, they definitely did with, like, take the Electric Hummer.
Um, they, they did that program in, I remember writing about this.
It was like, you know, typically these programs were like four years and they did
it in like 23 or 27 months, something like that.
It actually might have been 27.
It was a little more than two years.
And they had a very small team and they used to meet, you know, all together in,
in like one.
one building in GM instead of like, you know, different departments all over the
company.
And the guy ran it was guy named Josh Tavill, who's sort of co-head of product
development at GM now.
And he, I did a story on this.
He, he borrowed from Amazon though, like the, I think it was the one, it was the,
the pizza rule where if you had a meeting, you know, you should never have more
people, like one pizza should feed everybody in the meeting.
Otherwise you've got a bunch of people who probably don't need to be there.
And then he had time limits on meetings.
Like this is how long we're going to spend meeting to like get decisions made.
But it was a very small group and that's how they got that vehicle done quickly.
Now they've had problems with it.
I don't know if it's related.
I don't think it's related to the size of the management teams.
I think it's just switching from making vehicles with engines and transmissions to
EVs pretty hard.
The whole industry is having a tough time with this.
Well, and that is something I do kind of want to talk to you about because for the
longest time, I felt like the traditional big three is like, oh, Tesla is doing
their little thing.
These startups are doing their little thing.
When we want to make electric vehicles, we're going to be able to make electric
vehicles, we made cars for decades.
And a lot of people were saying that.
Probably, but it is a different beast altogether.
And now we are kind of seeing whether that's through, uh, I think for more, for
forward, they've actually been pretty effective, but it's been the cost
challenges.
Trying to get those and supply chain But then you look at GM and it does seem to be
that there have been some pretty big issues just across the spectrum of
Electric vehicle development and actually the manufacturing What do you think?
I?
Mean, I think this could be its own podcast episode alone.
But what do you think have been kind of the big takeaways from this?
Experience or I don't know if hubris is the right word but kind of the experience
that
Maybe making electric vehicles wasn't as easy as they thought it would be and how
that might be affecting their decision-making
I think it's true across the board.
So, you know, take GM, they've had this issue assembling battery packs, right?
The Ultium pack, the Ultium pack, by the way, it was never like that.
There's no secret sauce in terms of battery chemistry or form factor or
anything like that.
What Ultium is, is it's an industrial strategy.
It's, you know, you're taking your cells and you're putting X number of them into a
box that's a module and X number of modules into a pack.
and the number of modules that go into that pack, that's your Lego set.
So you can make everything from a Chevy Bolt on up to a Hummer, right?
Or a Cadillac Escalade.
And it's basically the same basis of the vehicle, the same platform.
And, so it's almost a manufacturing strategy.
And that's the part where they've fallen down, right?
Like the Ultium cells plant is doing fine.
It's getting those, the battery packs made.
And then they've shown some progress there, but then they've had all these
software issues that have grounded the Chevy Blazer EV.
They're not alone, right?
Like Toyota had wheels falling off of the BZ4X.
And that's saying something like Volkswagen's or Volkswagen.
Toyota is one of the best, if not the best manufacturer in the industry.
And they're having those issues.
The Germans Volkswagen and I think Porsche.
They both had issues with software, kind of like GM is.
I think maybe different software problems, but software problems nonetheless.
So.
Well, and I think it's kind of interesting to mention that now, uh, with kind of the
ability of hindsight, it almost seems like the Germans knew, especially the VW group,
they knew they had problems.
So they just delayed all their vehicles.
Whereas it seems like GM continue to just move forward with these.
And now that they're out or supposed to be out, they're really realizing how many of
these software issues they have.
But I, I'm sorry, what were you going to say there?
Well, you know, they're I think in the case of GM and maybe a lot of these
companies and Ford too, right?
Like they just recently stopped F-150 production because of quality issues.
They all they were so far behind Tesla and they were in the Chinese for that matter.
And they were in such a rush to catch up.
And they had to be that they probably will definitely get off more than they can
chew.
And they might deny that, but they've all had production quality, software issues,
you name it, and have had to stop production, ground vehicles for some
period of time because of this.
So yeah, I think the software side of it was probably underestimated.
They might not have had the right talent in place to do it.
And same with battery, you know, the US...
battery infrastructure, battery industry.
It's like there really isn't much of one, right?
We're relying on Korean and Chinese partners for the technology and the
know-how.
We gave it all away and now we're rapidly trying to catch up.
And there's a lot of software that goes into that too, the battery management
system.
And, you know, do we have the expertise there?
I don't think we do, I think we can get it.
I mean Silicon Valley is extremely adaptable and a lot of people great at
writing code and I think that'll come but Tesla has it, right?
So we can, as a nation, our companies can get there but it's really competitive to
get the talent and everyone's in a hurry.
In a weird way, the fact that adoption and EV sales, the growth has slowed down a
bit.
It kind of gives some of the established old line car companies maybe a bit of a
time out to figure out the industrial and the software and the technology side of
this before the market really takes off.
Because look, if the growth rates kept going at the way they were going, these
guys would be in serious trouble because they wouldn't have the vehicles and they
wouldn't have the production to meet it.
So
sure.
In a way, they should be thankful that this is slow down, even though it's making
their lives difficult because you know, if you're You're Mary Bar and Jim Farley and
you've delayed factory plans or you've reigned in investment for EVs You know now
your decision is do you have to do that more based on what the market does or if
not Like when do you know hit the accelerator again?
These are all tough decisions for them.
Now they make more money than you and I do so I have no sympathy for them They have
to make them.
That's the job, right?
But, you know, that's, it's all going to be pretty tough on them, but they do have
this, maybe a bit of a market reprieve to figure it out.
Well, and that's interesting you bring that up because that's something I've
talked to with a few people about and my take on it, and I'd be curious if anyone's
kind of shared this is what we're seeing is yes, the, some of the, I think the
demand for new cars in general is often, but a lot of it is that focus on electric
vehicles and the domestic three, two and a half, whatever you want to call them are
looking at moving kind of back to hybrids, plug in hybrids.
So you're, there is a
But my question, what I'm kind of curious and would like to hear your thoughts on is
do you think it's a reprieve in the short term?
Because by going back to what they're kind of comfortable with and know more about,
to me it just seems like it gives Tesla and some of the other startups, but
especially the Chinese the ability to kind of just keep leaning into what they're
doing.
So once that moment or that interest catches up or we kind of see some kind of
growth return,
they're going to be actually, I think in an even better position, supply chain
wise, technology wise, scale wise, uh, to be ready to kind of just kind of turn up
the factories versus being, if you're making just plug in hybrids and now you're
seeing more of a demand to go to full electrics or other things that you have to
change a lot more, at least that's my opinion.
And I'm kind of curious if you've heard any other kind of people talking about
that locally.
Um, well, it's, so it's not like it's not either or like, it's not like, with the
exception of Toyota, right?
They're only making a couple of these, but they do have more coming and they're heavy
on plug-in hybrids.
I'll tell you, like, here's what I know, at least with the US companies and to a
degree with the European companies.
They really don't want to do plug-in hybrids in big numbers.
I think they want to do just enough in some key segments to meet the demand
that's there and to meet...
fuel economy and greenhouse gas regulations that are going to get tougher.
Because Toyota is great at making those.
The Koreans are pretty good too.
But they are expensive vehicles to make because you still do have this electric
system on board and you still do have gasoline and exhaust and all of this stuff
on board.
So it's not a great and long-term business model.
They're doing it because they feel they have to.
And so I think...
They're all still going to lean into the development of their EVs.
Just a little less so, but the less isn't like emphasis on developing their supply
chains and developing the software talent they need and the battery operations.
The less is just like how much of it they're doing all at once.
Now, the distance, so they're still going to be working on developing all of this
stuff.
They will be, I think they're going to be developing less volume because they're
selling less volume, right?
None of them do well in China where the real EV volume is, so they're not going to
get it there.
And Ford does okay in Europe, GM is barely there, so they're not going to get it
there.
So they're going to have to rely on volumes in the US market to get it.
You know, GM in China is going to be interesting because they're struggling
over there.
Yeah.
they do have this partnership with Wuling and Shanghai Automotive.
SAIC was their long-term partners, but they make small, really cheap EVs.
The Honglong Mini has been a really big success for GM.
But that's where GM can get some knowledge on how to make cheap EVs.
in that market without having to like sell them under the Buick brand or, or develop
their own operations.
So that, that helps them there.
But, you know, so can they replicate some of the learnings over there?
Like, I think the biggest risk here is, and this is what the IRA, you know,
Biden's Inflation Reduction Act is all about is telling everybody, look, you can
get all these great incentives to build and for your customers to buy EVs, but you
have to do it here.
And it's because like,
The US industry sort of writ large needs to develop an EV industry.
And Tesla has, but nobody else has.
And so that's to your point.
I think that that's where they can fall behind specifically the Chinese because
the volume there is going to keep growing.
And here it's going to fit and starts.
And scale is one of the things in the auto industry and scale is so important.
Well, this, uh, this can also goes back to the conversation with John McRoy, where he
was saying, I mean, the only reason Tesla got successful was it hit like 80,000 of
the model three, and then it kind of takes off.
If you don't have those numbers, then you're just burning money for a long, long
time.
And I think.
Yeah.
Right.
you know, they're making, I mean, Rivian's making 50, 60,000 a year last year and
forecast for this year.
Um, and they lose a lot of money and they burn a lot of cash and Lucid does even
fewer vehicles.
But you know, those business models don't work.
Uh, those companies, I, you know, they're probably going to have to raise money and
find investors who are willing to kind of.
towering losses for a long time until they can get real volume.
Chinese are well past all of that stuff.
Tesla's well past all of that stuff.
Ford and GM still aren't close to that and they're a lot closer than those startups.
So we kind of have three auto industries right now.
We've got Tesla, BYD, and these Chinese companies that have a lot of volume.
Then you've got Ford, GM, and the Germans and the Japanese who don't have a lot of
volume and stuff to go up that curve.
Then you have these startups that are even further behind.
and probably will be for a while because they don't have the distribution and the
sales numbers to get there.
Well, and they have a much worse market and also much more competition than Tesla
did during its growth phase.
So even same with the Chinese, at least in their market too.
So it is kind of interesting.
I'm a big fan of the Rivians.
I think they're great looking vehicles.
They're spendy.
But yeah, but I even just saw a chart just a couple of days ago that kind of blew my
mind that Rivian.
is actually in a worse financial position than Tesla was kind of going through like
the scale of model three and all this stuff.
So it was, I'm sure there'll be, I think of the startups, they're probably in the
best position.
Um, having the Amazon backing of that money behind it is something if you need
to get more funds, isn't bad, but yeah, it's, I mean, it's, it is a, uh,
incredibly difficult time, I think for everyone right now, uh, outside.
up in an era when raising cash was easy, right?
Easy Wall Street money, their interest rates were super low.
He could borrow money for next to nothing.
And Elon Musk is just, you know, a lot of people hate him, but got to give the guy
his due.
He's, you know, great technologist.
He's, and he's great at raising money.
And, and he did it at a time when it was pretty easy.
Rivian and Lucid don't have that luxury right now.
Um, and.
And the, and the Chinese kind of did too, just by being in China, having the
government backing back then for what they were doing.
So I, I completely agree with you in that standpoint.
I don't think that's something that gets enough, um, kind of perspective is like,
even when you overlay the graphs of these startups and how they're doing compared to
Tesla during its similar phase, it's just a much different sales market, much
different supply chain, much different everything.
Um, but let's, uh, we're in agreement on pretty much all that.
It sounds like so.
Let's kind of finally jump over to your book and really kind of go through what
you're you've seen and discovered through GM and the whole process it's gone for.
So I, I haven't been able to finish the book yet.
I started reading it.
I really enjoyed it.
So it's really interesting, but I would love to hear kind of, um, for those
listening, what the book is about, what got you started on it, and then we can
kind of go through some of the topics and the things you learned.
Sure.
It started with a cover story in Businessweek, trying to remember, I think
it was 2019 or 20.
This is basically looking at what Mary Barra had done with, it must have been
2020 because it was after the 2019 strike.
And she had...
She had downsized this global footprint, right?
Like she closed down Europe, closed down their operations in Russia, India,
Southeast Asia, all these places GM lost money.
And the idea was they were spending billions of dollars on new products there
and losing money anyways.
And they just weren't well positioned in the market and it would take years to fix
that.
So her huge decision, and this is one of the biggest retrenchments in corporate
history, not just the US, but worldwide.
She closed down all that stuff and took all that money.
and plow it into some of it into cruise and getting into autonomy, but most of it
into developing the ultium battery and all of these vehicles.
And by doing that, you know, there's an old saying in baseball, you can't steal
second and keep your foot on first.
So she seeds all of those markets to Toyota and Volkswagen and some others, but
primarily Toyota and Volkswagen.
Just says, look, you guys can have all of those low margin sales in India.
And you can have.
you know, the mess that is Russia and you can have the overheated market that is
Europe and whatever is left in South Africa and Southeast Asia, fine.
We're going to sell vehicles in Brazil, China, the US, and we're going to make a
lot of money doing it, and then we're going to call that money into EVs and
become electric vehicle kings.
Now, and she also restructured the US business to make it more profitable.
And so what that left us with is the GM of today, which is a cash machine.
They generate a lot of money.
Um, but you know, on her way there, she got in big fights with Donald Trump,
right?
There's a couple of chapters that there's one chapter just about the war with Trump,
but he sort of, you know, she'd be, Mary Barr became one of Trump's favorite
targets.
Um, you know, she leaned up operations in the U S which meant a war with the UAW,
uh, which, you know, was really got hot in 2019, but reared its head again, uh, late
last year with another strike.
So, you know, you start bringing out change and closing certain operations and,
you know, presidents who promise people in Ohio that their jobs are coming back get
very angry.
And the union gets very angry.
So she had to fight all of them in order to restructure this company.
And then internally, there was pushback.
You know, a lot of executives and engineers were questioning.
There's some, you know, inside meetings with debates on that about how much they
should plow into electric vehicles and...
whether or not they should just do like one or two token EVs to say we're here.
But her vision was to catch Tesla.
Her vision was to make sure that, you know, Google via Waymo did not become the
next generation of automaker.
And, and she pushed really hard.
Now the book, I had to finish the book in, geez, I think May of 21.
June, May, June of 21.
And, um.
I couldn't foresee all that's gone wrong today.
However, I stand by everything in this book because the last chapter of the
epilogue basically looks at what was going on at the time I had to finish this book
was she fired Dan Ammon as head of crews because things weren't working there.
The Chevy Bolt was on fire and they still didn't have any of these out there to
challenge Tesla.
And, you know, on Wall Street parliaments, its GM has execution risk, which is, you
know, that's very fancy banker language for these guys who might not be able to
get this done.
And so with all these problems they were having, I asked Mary in the last interview
right before I finished the book, I said, do you ever feel like this company suffers
from some kind of generational curse?
Because I actually use those words in the book too, in that last chapter, because
Here at GM is with the Volt, which was actually a pretty successful product.
It had some oil buyers, sold in pretty good numbers.
The technology was pretty good.
I mean, 280 miles of range on a small vehicle that sold for that price, pretty
good.
But then it's on fire.
And she had a bit of a sense of humor about it.
She said, no, we're not cursed.
And we're not explained that when you run a big company, there are always issues.
But that did sort of...
You know, pre sage the fact that, you know, this company has, does have often
have a lot of these problems.
They, they, they just kind of, you know, they, they seem to open doors and have
doorways collapse on their head at times.
And, and that's kind of what's happened with EVs.
You know, look, she had, she freed up money from lousy operations to put it into
electric vehicles.
And she had this platform that was going to give her something, you know,
categories that represented 70-75% of the US market volume, right, all smart, and
get there before Tesla did, except that they, you know, they haven't been able to
execute.
They haven't been able to get the cars out the door for the reasons we were talking
about earlier.
And it's not, I don't think it's anything particular to GM's ability or inability to
do it compared to the other legacy car companies.
I think they push so hard with so many vehicles all at once.
And I do think they underestimated how tough it was going to be to make electric
vehicles.
Because they had done the EV1 before.
They did the Volt.
This should be pretty easy.
They've been making cars for 100 years.
Why is it so hard?
But it has been.
And I think part of it is they were doing a lot all at once.
And part of it is the games changed, right?
These are much more high tech EVs than they did in the past.
And and by the way, like the Volt or rather the Bolt, you know, that was kind
of heavily used.
see what you just did there.
I think even with the strip, uh, part of the problems I had with their strategies,
the bolt, the volt people would always like, there's even marketing.
I think that's what's been so surprising to me is how you're talking about, like GM
had so many issues.
Like I feel like marketing, all these things that traditionally has been
strengths for them, they even failed with like, it has been kind of a cross support,
but I I'm sorry, what were we going to say there?
Um, you know, with the, with the bolt, um, you know, that, that vehicle was, and I
think one of the reasons that they, they did all right with it in terms of quality
was it was basically a Chevy Cruz heavily retrofitted to fit a battery and become a
Chevy Bull.
It wasn't an all-new platform and that platform was the battery pack in the floor
the way it is with Ultium.
And you know go back about 15 plus years, Nissan opened the plant in Mississippi and
they had an all-new minivan platform.
They had an all-new, they had the pickup truck which was new to them and they had
an all-new platform for the Ultima.
Even though they've been making minivans and Ultimas before, it's an all-new
platform.
They had tremendous quality and production problems there.
And these are kinds of vehicles Nissan have been making forever.
There's nothing special about them.
They were just new platforms, but they built off a lot and all at once and had a
real, you know, and they choked on it.
And, and I think in GM's case, yeah, they did the Volt and the Volt and they did the
EV1 years ago, but this, even this, this new stuff is so different.
And, um, yeah, it, it was a, you know, it was more than
Clearly more than they could do because the past year has been a big problem.
You bring up marketing.
I'm not sure GM is a great marketing company.
Like the GMC brand is, you know, has one of the best brand names in the business.
Um, actually, I guess Chevy does, you know, is very consistent too.
They've had a Cadillac's been a problem for a long time.
I agree with you there too.
I think what I meant was specifically around marketing their electric vehicles,
like doing the bolt vault and just kind of some of this name-branding and then having
these huge Superbowl ads and stuff.
Um, obviously the big stuff of kind of like having Biden coming in and say
they're leading the way.
And I think that totally all adds to what you were talking about, about having all
this pressure on them to get out the door and it just can almost push them to go
faster and
Unfortunately, probably at their own detriment, but
Yeah, look, I think they saw it as an existential fight.
And, uh, you know, and you think about it, you know, four or five years ago,
everybody, analysts, investors, the think tanks, the car companies, they all thought
that there was going to be a somewhat linear, I don't think anyone thought EV
growth is going to be totally linear, but I don't think they started leveling off
the way it is now.
Um, and they really, people thought autonomy would be
because it's been, has it been about a year since your book came out?
A little more by a year, a year and three, four months.
gotcha, what would be the chapter that you would have written to make it like
relevant to today or like what are the things that maybe have surprised you or
kind of stand out moments that have led since that book came out?
I mean, it sounds like a lot.
I mean, everything I've read still seems relevant and it almost seems like the
stuff I've read so far has just kind of come to fruition.
But I'm curious if there's anything else you would add to it.
You know, yeah, definitely.
So look, if I could, if I could do another chapter on this, then I would make the
epilogue just chapter, I think it's 12.
And then I would have a new epilogue that gets into all these struggles that the
company has had just making battery packs and writing the software and everything
with crews and that, by the way, the other companies have had too, I think it's worse
at GM because GM pushed harder.
They sold this harder and they've had all the problems ever.
So sometimes they had just software, some of it production issues and GM's got them
all.
So there'd be a chapter just looking at all these problems that have been way
worse than they thought.
And there's been some reputational damage at GM about this for sure.
And from an investment standpoint, what they've done, they've bought back shares
and they've
raise their dividend.
That's telling investors we're not a high growth company with our EV plans right
now.
We're a value company that returns cash to shareholders.
So they've sort of thrown in the towel on being rapid growth until they get their
hands on this thing.
It doesn't mean they won't be at some point, but that's where they are.
So yeah, I would have written a chapter on that.
And if I could change anything about it, the only thing that would probably really
change is there was some...
The title is still pretty cool, Charging Ahead, because Mary Barra really did
charge ahead.
The cover language was maybe a little more optimistic than I'd like it to be at this
point because they've had such a tough time with the challenge.
I wanted the cover language to be more, she's betting, making big bet on this
thing.
It's a fight that I lost.
Yeah.
Now that's interesting though.
But you decide in your core business, you're going to give up all these overseas
markets and let Toyota, Volkswagen, and other domestic players in those countries
have that sales volume and whatever business you can do there.
And by the way, you know, Peugeot, which is now Stellantis, has done pretty well
with Opel since GM sold it to them.
It can be done.
So, you know, it was a big gamble and so far it hasn't paid off.
I still.
McElroy and I were talking about this on his show.
We still think her vision is the right one, but the last thing she has to fix is
can this company, does this company have the chops to see it through?
That's the big question.
And I still don't have an answer to that.
Well, and one of the things you guys kind of alluded to or kind of threw out there
that I think I watched this episode, the one that was maybe a month ago or so, and
I'm kind of curious about...
how long she has to make those changes before the pressure is like, we might need
someone else in charge.
Cause one of the interesting things I kind of indirectly got a lot of attention
towards her in a negative way was the whole Elon Musk pay package thing that I
was like, Oh, this got struck down.
He made $60 billion, but like, well, he only made that money because of the
agreements that, and I think to some extent there's pros and cons to it.
maybe unrealistic for someone who isn't a founder, but the idea that, yeah, he got
paid out a bunch, but it made a bunch of money for the shareholders.
And there's also other variables involved in that.
But then it kind of brought in the, even in the news cycle, some attention, like
they were looking at Mary Bar.
It's like, well, the stock prices essentially, it went up, maybe doubled at
one point, but now it's back to where it was after 10 years.
They've paid her $200 million.
And when you include inflation, it's less than what it was worth when she started.
And obviously that is an uphill battle for anyone to fight.
I think being the CEO of GM might be a more difficult and less like job than
being president even right now.
But I'm kind of curious on what your thoughts are on like that forward looking
and how much time she really has to make a change to kind of guarantee she stays in
her role much longer.
Yeah, she's 62 now, right?
So she could retire in three years.
Um, and.
You know, I think the only way the board would throw her out.
Um, I mean, look, it's, I think the optics of, of the, you know, the first and only
female CEO of an auto company, um, not saying they keep her if she wasn't doing
the job because of that, but, um,
You know, it's be tough for them to make that call if there wasn't like a serious,
like something seriously wrong with the company.
Like they can't just say, yeah, we need a change in direction.
You're not quite it.
I mean, look, they can do whatever they want, but I don't think, I don't think
that's why they do it bottom line.
Bottom line.
going to say that's fair.
And I mean, she's been CEO for a decade now, which is a lot longer than some other
former GM CEOs.
And look, the so, you know, if the board wants to make a case that they keep her in
place, and the company's profits and cash flow are really, really strong.
Their core business does great.
And they, you know, and so her vision, which started with making this a better
run, more profitable car company, look, their vehicle quality and productivity,
all the stuff that had to be fixed when she got in has been fixed.
So there are a lot of things on that side of the ledger that the board would point
to say, you know, that this is why we don't throw her out.
I'm not saying that because she's a woman, they wouldn't fire her if she needed to be
fired.
I'm saying it's that it's, there would just be more of a magnifying glass on any
decision they made like that.
So they would
The only thing I could see is, let's just say, you know, this issue with getting the
vehicles out, if this persists or if there's like some terrible situation where
there's a bunch of fires and some nasty recall like we had with Bolt or with the
ignition switch over a decade ago, you know, something like that and, you know,
she had mishandled it or was responsible for it or if they just decided they needed
somebody else who could do...
could fix that sort of thing.
I think something like either just failure to get the EVs out the door and see this
mission out or some other kind of cataclysmic sort of thing.
Cause she's got three years and look, I think she would want to stick around to
fix these problems and at least see this part of her vision out.
That's what I think.
Yeah, I think those are really good points.
And yeah, I think you're totally right.
Like if it was an ignition level issue, like essentially what kind of is the
reason she got on the job previously, that level of optics, that negative where they
kind of have to make some big changes, I could see that.
But I think you're right and had what we have discussed around like the electric
vehicle growth trajectories stay the same.
I think there'd be a lot more pressure on her around that.
But since we have kind of seen that pulled back a bit.
Um, I think the points you're talking to exactly kind of put her in a pretty safe
space for that.
I just wanted to ask him to get your thoughts on this.
So he's been covering it for sure.
years from turning 65.
Like, how long does she stay?
And, you know, because they've had these problems, do they throw her out?
I mean, there's no indication they would.
And, you know, look, you know, they've approved this $10 billion share buyback
and the financial moves that she's made and, you know, some of the, you know,
promoting some young stars at the company at the end of last year.
So, you know, they have to be behind her if they're approving some of these big
moves.
So she's, you know, she's got time.
Now, look, if, if the board comes out and issued a statement soon saying they fully
back her, that probably means she's going to get fired.
Now I'm being sarcastic, but it's like, you know, whatever, whatever puts out a
statement saying that the C we love the CEO, they're doing a great job.
They're usually gone within a month.
Right.
No, right.
You know, I.
I could see her finishing the job at 65 pretty easily.
I mean, we're already less than three years from that.
Right.
And I think when we've talked about very briefly, but obviously we've been focused
more on the EV challenges they've been having.
But as you mentioned earlier, cruise and the autonomous vehicle program there, when
you were writing the book and just going through that, obviously.
I don't know enough about the team.
I don't know enough about what their program is doing or what the state of it
is.
As far as autonomous ride hailing services, it was good.
It seems like Waymo even before they, uh, kind of shut down cruise was, I think had
to kind of the better long-term strategy, just personally looking from the outside.
And now that there's so much kind of negativity, autonomous vehicle space,
especially has really cooled off in the last 18 months, just from what we've seen
externally about like the head goes, then they move all these other people.
And now it's like every couple of months, there's a new announcement.
Now they're laying off another 24%.
What do you think the future for that program is?
Like is it they're just kind of slowly trying to just say, you know what, we gave
it a good shot and we want to get rid of it and try not to make as big a hubbub
about it.
I mean, with even Apple just the other day announcing that they're stopping their
program.
Like what in your research and kind of like connections there do you think is the
current sentiment and maybe future for that program at GM?
Yeah, we just broke a story last week that they were resuming testing with safety
drivers.
Probably Houston or Dallas, they're looking at those two markets.
Texas is a pretty easy place to run AVs.
The regulatory environment is pretty lax, particularly compared to California.
So they're going to put their foot back in the pond here and see what they can do
with it.
If they were going to shut it down, I think they already would have, because
they were spending a lot of money on this and their investors did not like that.
You know, when they, one of the things that pushed their share price up recently
was the earnings were good.
You know, they had done all these share buybacks and everything and they reduced
spending in Cruz.
And if you look at the valuation of GM, in fact, Paul Jacobson, the CFO has been
saying this for about a year.
He said, look, if you buy GM now, you're getting GM at a cheap price historically
and you're getting Cruz for free.
Which.
What that says is investors place no value on it.
Um, and really, if you look at the other autonomous vehicle stocks like Aurora, and
these are all trading at next to nothing and, you know, none of the privately held
AB trucking companies, some of which are doing some pretty interesting things,
they're not going public right now because the market doesn't like any of this stuff.
So, um,
If so, point is if GM wanted to shut it down, they could, they could shut it down
right now.
And I think their investors would like it.
The reason I don't think they will is one, they do believe in the technology and in a
way, you know, what GM shutting the whole thing down and a lot of the bad PR and
problems they've got governance problems.
It's almost because they've had one incident that was horrific, also really
rare.
And now that's sort of their line.
That's not what I'm trying to do.
It's just like the technology was actually working fairly well.
I don't think it was working as well as way most, but it was working fairly well
in terms of safety and being able to do its job.
So they see something worth saving.
And then look, the other part is when you spend 10 billion dollars in buying back
your
What you're saying is we don't have a good place to put that money that will grow the
business.
So, if they didn't spend whatever I think the remaining is going to be one and a
half between one and a half and two billion a year on cruise instead of two
plus, they would just buy back more shares or raise the dividend, right?
And I don't think that's going to do much for investors.
When you're already returning 10 billion, returning 11 is not going to get them that
much more in love with your stock.
So, you know, they've done what they need to do to return money to their owners.
And, you know, other than continuing the EV push, Cruz is really the one other
place where they see some potential growth in revenue, along with software services,
but that's a different issue and was never as big a part as Cruz was supposed to be
in this big plan they had to grow.
So, you know, and look, there aren't that many, there are two Robotech mouth, May
Mobility, there are three Robotexy companies in the US left standing.
If you got the money,
Why not keep trying to develop it?
They're just gonna have to do it slowly.
I also think long-term, if RoboTaxi doesn't work out as a business, and that's
different than the technology working, the technology could work, but you still have
to have a business that makes money.
That means managing the fleet has to be cheaper than what you can get people to
pay you.
And I'm suspicious of that, by the way, because I don't think consumers care.
whether it's, you know, Vinny Romano from Queens in the yellow cab or Uber and Lyft
drivers or a robot driving that car.
They don't care.
As long as it's safe on time, get somewhere they want to go.
Um, and I'm an Italian American so I can see Vinny Romano.
Um, and so I, you know,
I mean, one of my favorite things, I used to go to New York all the time for work
trips.
And so like, if it was between a yellow cab or I always had infinitely more fun
taking the cabs in New York than doing an Uber.
But for the most part, consumers don't really care.
And so, you know, what's the draw for the Robotex unless it really is cheaper, and
then if it's cheaper, you have the cost of running the business has to be cheap.
So it's got to be more than that.
And what could end up being if Robotex just isn't a great business is, you know,
GM is theirs, being the first car company to sell, you know, personally owned self
driving vehicles.
And, you know, consumers do like stuff like autopilot, like GM supercruise, like
Ford's blue cruise.
You know, they like those systems and they pay extra money as a subscription for them
in most cases or for the hardware.
So there's a business there.
And if you have something that's closer to fully autonomous, I think people will pay
for that.
And there are other things, you know, there are shuttles at certain places, you
know, airports, entertainment venues, the Bourbon Trail, you name it.
There are places where that stuff makes a lot of sense.
And there is a potential business for fleet owned or personally on self-driving
vehicles.
And so I think they're developing it for that reason too.
So if they don't have a robo taxi in every city, so what?
They'll be selling these vehicles somewhere somehow.
You know, Dan Avin, who used to run crews for GM said something to me once.
And I think.
It's still probably right, which is, and this is back when we had like, you know,
more than a dozen autonomous vehicle companies getting funding.
He said, look, we don't need 12, 14, whatever AV stacks.
It'll end up being like operating systems where you've got Android and iOS, right?
You need like two or three.
That's not counting trucking.
Um, but so maybe you need a couple of trucking and a couple for personally owned
vehicles.
So when you label, why didn't you,
you have commercial, I mean, that makes sense.
Yeah.
So, it could go that direction.
Interesting.
Uh, I, I do realize we're kind of coming up on an hour here, but there are two
areas I didn't want to talk to you.
We focused so much about GM as the company internally, there's been two big
headwinds, especially in the sales of, uh, electric vehicles and also just the
manufacturing that are kind of external, but two things they GM has to work with.
And that is the UAW and dealerships with the most recent, uh,
kind of strikes and stuff, the union challenges, where, where do you see, do
you see that there is a viable way?
Should electric vehicles kind of get that momentum again?
And if we do see Chinese and other cheaper vehicles come in, do you think that there
is a strong or do you think they're the current path is can be done with the UAW
or do you think that's going to cause?
a lot more headwinds and fighting between GM and the UAW to get to those cost
competitiveness and the traditionally less manufacturing needs of EVs.
I mean, so coming out of the strike, we just had one of the big things that I
think kind of set the union's nerves at ease a bit is, you know, the basically
brought the union into the battery plants.
And that was their one big fear is that all these engine and transmission jobs
and, you know, fuel systems, emission systems, all that stuff, they go away and
then they buy batteries and electric motors from Asia or something like that.
So
between unionizing the battery plants and the Inflation Reduction Act, which is
mandating that in order for all this money to come in from the government, you have
to build it here.
That cut the union on that part of the deal.
Now, the other part, will EVs be easier to make?
There are a lot fewer parts and they're doing things with how Tesla does vehicle
bodies.
And I think over time, that could reduce the amount of labor needed.
That's kind of always happened through efficiencies and automation and everything
else.
Does that accelerate that?
I'm not so sure, but I mean, if I had to guess and say, yeah, probably will.
So, you know, that could be the fight for down the road.
The way that car companies have always handled this, they just, they retire
people out and don't replace as many of them.
And although with this one, you know, this union contract was a pretty good one for
the union.
It was pretty rich.
And John Fain, the UAW president kind of, you know, he...
some very tough rhetoric for these companies and things got pretty tense.
So I think what you'll probably see over time is that companies remember these
things and if they have to downsize it, wouldn't be their Mexican operations, put
it that way.
But look, if Chinese vehicles get here in big numbers and they're a lot cheaper,
then Katie bar the door for everybody because that's...
That's going to be a problem.
Look, Mary Barra said on the earnings call, when she was asked about the Chinese
companies coming here, said there are certain things about the Chinese market
that make building and developing vehicles apparently cheaper, something to that
effect.
And it's not just labor.
So would the Chinese vehicles be at as big a discount here as they are there?
I'm not sure.
I think they will be cheaper.
I think we can.
We can rest assured on that because they've got more scale and more expertise
with EVs.
But yeah, if they can get into the US market for a lot less money, you know, the
union's going to have a problem and so are the companies.
Yeah, that's what's kind of been interesting with the recent announcement
of BYD and others kind of moving to Mexico.
So it kind of gets around a couple of the challenges of selling into the US.
BYD even said they're like, oh, no, we don't have any interest in doing that just
yet, we're just selling to the Mexican market.
But it is hard.
Yeah, that's true.
That's that's true.
I think this thing I saw, she was in Mexico City town, but you're right.
It's it is kind of south of the border and then some.
But it's hard to believe that, okay, maybe that's the case for the next few quarters.
But once those factories are up and running, they're not going to start
seriously looking more at moving into the US and trying to really compete there.
you saw what Biden said the other day where, you know, EVs pose a national
security threat.
So, you know, that's, that's a way to levy more tariffs.
Are you giving what, but the Biden administration strategy looks like it's
going to be, it's used protectionist measures to safeguard the U S industry
until they can get caught up and, and compete because right now it doesn't look
like they can compete.
Otherwise you would need protectionist measures.
Yeah.
And given that we're going into an election here, it's kind of all up in the
air as to what that's going to be for the future.
But, uh, re real briefly, I guess the last thing would be just to talk about the
dealerships real quickly and your thoughts on, obviously, uh, when GM was, Ford
obviously saw this too, when they were kind of pushing some of the programs for
their electrification and being, uh, certain dealerships that would push
electric vehicles or others, you saw a bunch of dealerships drop out, especially
with Cadillac.
And so I'm kind of curious as to what you think that means for GM long-term.
I mean, a big part of the actual, it's one thing to you, they're having trouble
making the EVs.
Once you start making them, then you have to actually be effectively moving them.
And that falls to something out of their, a whole lot of it out of their control
with the dealerships.
And where do you think the future of that is and possibly what GM can do to help
ensure their.
EVs that they start making are successful and start moving other than just saying
they have a great starting price.
look, it's a great question.
And it's something they need to really get on top of because, you know, we've seen
skepticism from the dealers, right?
You know, they were, uh, they were already pushing the federal government, uh, on
this thing.
You know, if dealers, dealers don't like change, cause that means they have to
invest more money and change how they do work on, on the showroom floor.
Uh, they've, you know, they've been that way.
However, if something sells and they can make money on it, they'll be all over it.
So.
You know, we get down to, you know, the big challenge for the legacy car companies
is once they presumably get to the point where they're building a lot of these,
they do have to market them.
They really have to, which is a challenge.
They have to get people who shop EVs to look at their brands.
Right.
Right now it's mostly Tesla and it can be done.
Ford did a very good job getting awareness for the Lightning.
So it certainly can be done, but they're having issues keeping demand up for that
as well.
I think it's a function of price.
But, and look, they're not going to like this because they've never had to do
marketing for BP and Exxon and the filling stations, but they're going to have to do
something to get awareness for charging.
So, and it can't just be, look, we're working with 12 different apps you can use
to charge.
They're going to have to convince people that charging is not going to be a problem
for them.
So, you know, this is a different marketing challenge than they've had, but
they have to do it.
Because I don't think they're not going to be able to solve any resistance from
dealers on selling EVs just by talking to the dealers.
I mean, there are dealers who are into it, especially those who are in markets where
people like EVs.
And luxury dealers are into it because they know luxury buyers like EVs.
But they, you know, they're really, as we try to, as we see them try to penetrate
the mass market.
that they're just going to have to have vehicles that sell because, you know, if
you asked a dealer 25 years ago, do you want to invest a bunch of money in, uh, in
Hyundai, you know, after it wasn't the Excel that had all those quality problems
in the nineties, um, you know, 25, 30 years ago, how can I use you in this
Hyundai franchise?
They'd say, no, you have one crappy compact with bad quality problems.
Forget about it.
But now, you know,
Hyundai sales are pretty strong, they're a big piece of the market and a lot of
dealers are investing in those franchises.
Those guys, you know, the money talks and those guys follow it.
So you know, they've just got to make products people want, they have to market
them, they have to market the whole charging experience, get people used to it
and that'll solve any issue with the dealers.
Those guys like selling cars and that's all there is to it.
Well, it's interesting you mentioned Hyundai and Kia because yeah, both of them
have had pretty successful electric vehicles just from a product standpoint.
And so it makes it a lot easier to then sell them.
One thing I've heard, and I became a curious on maybe your thoughts of this is
like a lot of very electric vehicle advocates are pushing for the idea.
Well, the OEM should just spiff electric vehicles more instead of the regular
combustion engine cars at dealerships.
And my immediate thing is like, well, okay, so they have to now even pay more.
what thin margins and challenges they had with EVs just becomes even that much more
exponential.
I think it totally goes to what you're saying about like, yeah, a salesperson is
going to be incentivized.
If they have to do more work, but there's a bigger payoff, yeah, that probably would
work.
But do you think that is a realistic possibility with just the other financial
challenges I guess that some of these companies are having with just getting the
EVs off to the dealerships?
You know, they may have to invest some money here and, you know, maybe, you know,
they add incentive.
I mean, look, there's a lot of government money incentivizing these things already.
But to get dealers on board, do they have to raise the markup that the dealers get
to keep?
I mean, it's a possibility.
The dealers don't like when they kind of they do stuff like that.
The dealers want to kind of manage that side of it.
But.
I mean, that's one thing they could do.
And look, the car companies have been cutting the markup that the dealers get to
keep for a long time.
And so, you know, if you push that in the other direction for EVs, that could move
the needle.
Um, I think they've got programs to help them invest the money they need for the
repairs and service base and that sort of thing.
Uh, but it is an investment for these guys.
So, um, you know, it.
to get them all onside, they're going to have to do it.
Look, you've seen GM with its Cadillac and Buick dealers, you've seen them thin the
herd because some of them, they just basically bought them out if they didn't
want to sell EVs.
And in some ways it's better because their dealer network was too big on some markets
anyway.
So the surviving dealers just sell more cars and they're happy, because they're
getting more throughput in their store.
more profit for them.
So, you know, I think they may have to create these incentives, but you know,
look, the biggest thing they can do is just make a cool EV that people want.
And I mean, it would sound simple, but you do that.
And the dealers, the dealers, if something, if customers want to move it,
when I talk to dealers, the biggest complaint is that a lot of them will tell
me the same thing.
You know, people aren't coming in here asking us for EVs.
And I mean, the good or bad is if it's a hot car, they can mark it up.
And exactly.
So, uh, I think that is really, uh, I, I completely agree with you.
I think the challenge and that's obviously why Tesla has had so much success along
with some of the other startups is good product.
You have a product that looks good, that works well, easy to use.
Uh, and some of it obviously is generational connection, but yeah, I, I
think that is the biggest challenge that some of these legacy automakers have.
I.
I agree with you, the lightning's a good product, but it's way too for what it is.
It's priced way too high.
That's, yeah, the price is still way too big for most people on a lot of these EVs.
And, uh, I guess one last thing, I'm sorry.
Uh, then we'll let you go with the announcement yesterday of, uh, for now
being able to use the Tesla charging network.
Do you think, uh, I think that does kind of help actually with some of the
education and just kind of off-line at the now dealerships instead of having to go
really deep into it was like, Hey, you can use the Tesla ones.
They work.
Do you think that is a wise long-term strategy for these companies that
essentially every.
time that someone goes on a road trip or needs to charge somewhere.
They're using a literally a competitor's product and then sees the.
Okay, I've asked them this question myself and they all tell me, you know, it's not
it's not a problem But you know when you're when you're arch rival and selling
EVs, it's their brand name on the charger that works Look that is a marketing
advantage for Tesla You know one underrated thing about Tesla's they're a
great marketing company and Elon Musk is a great marketer himself And look in some
ways he you know, he can be his own worst enemy But the guys just you know, he and
his company always have attention, right?
I think they are kind of the example of even bad news is good news.
Yeah.
So look, if people like the other EVs, they'll buy them and just use Tesla's
charger knowing that that's the place to go charge.
And look, Tesla will make some money off of this because they'll build more
chargers and they'll make some money off of this.
It's not like the charging business isn't a huge moneymaker for them.
But
it will make them some money.
Yeah, I think as I look at the market, I mean, other than Cybertruck, you know,
Tesla's vehicles, you know, you're looking at two big, two sedans, two crossovers
with pretty much the same styling.
So, you know, as we get more vehicles from other companies with from brands that
people are already loyal to, you know, I think they can overcome the fact that
people are going to go to Tesla for charging.
And the other thing is like people go to so many different chargers wherever they
needed, wherever it's convenient that I think they'll be okay with it, but
I think there's truth to that and definitely in the long term, but as
someone who's done a lot of UV road trips, I've been consistently disappointed by
the, oh yeah.
And every time it's like, every time I try to give them the benefit of the doubt and
I'm like, well, actually this is a higher power charge when technically it'll be
like, it'll save me 10 minutes.
It always costed me 20 minutes.
Um, and I usually just ended up driving to the Tesla one down the road anyway.
But, um, I, I guess one comment on that is I, I do think it was really,
It's interesting that Jim Farley and the four team did kind of position.
I thought they were vocal about this.
I haven't really heard a similar thing from Jim, but they looked at it as.
Actually, it's a great opportunity to get in with Tesla and like see Tesla drivers,
then see our products on a regular basis and almost kind of looked at as an
acquisition or whether that is them trying to do market and position.
Why they have to do this.
I don't know, but at least the strategy of it did sound kind of good.
Um, and then the other thing that I hope.
I'm imagining GM will do is the fact that they included the plug and charge
protocol.
So when you plug in a four DV, it charges pretty much exactly this.
You don't have to use the app.
You don't have to kind of do all the other stuff that these other chart.
I mean, once again, which makes the charging network for Tesla that much
better.
But, um, with that, David, I've taken plenty of your time today.
I really do want to say thank you for all this has been really fascinating.
And I'm sure listeners would have really enjoyed your perspective and just kind of
learning more about.
the GM backstory and challenges they faced with electric vehicles and where they're
going.
So I'll let you get going and thank you so much for joining us today.
As we wrap up today's episode with David Welch, we hope you've found this episode
of Grid Connections both insightful and inspiring.
David's expertise and his book Charging Ahead offer a fascinating glimpse into the
challenges and opportunities facing General Motors as it tries to reinvent
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