GM: Halting production at 5 plants in N. America, cutting 14,000 workers

Focusing on EVs and autonomous driving technologies by strengthening of the liquidity position

2019/01/09

Summary

2019 Chevrolet Bolt EV
2019 Chevrolet Bolt EV
(All photos used in this report are from GM materials)

This report covers trends at GM, focusing on two announcements made by GM in November 2018, concerning its "North America restructuring plan" and the "next step toward commercial deployment of self-driving cars".

According to the major restructuring plan recently announced by GM, the company will halt production at five plants in North America by the end of 2019 and reduce its workforce by 14,000 employees. By 2020, these activities to cut costs will allow GM to generate an annual adjusted automotive free cash flow of USD 6 billion by year-end 2020 to focus more on the development of electrification and autonomous driving technology.

GM plans to introduce the Cruise AV, a Level 4 autonomous vehicle developed based on the Chevrolet Bolt EV, to the ride-sharing market in 2019 in several major U.S. cities. GM announced that Dr. Dan Ammann, president of GM, will be appointed as CEO of Cruise effective January 1, 2019 as commercialization of the Cruise AV approaches. Cruise investment funding includes USD 2.25 billion from SoftBank Vision Fund and USD 2.75 billion from Honda.

Regarding electrified vehicles, GM plans to launch 20 new all-electric and hydrogen fuel cell vehicles globally by 2023. Although GM is currently losing money on EVs, it expects its electrified vehicle operations to be profitable with the launch of its next-generation modular EV platform in 2021, and sell 1 million EVs annually by 2026.

GM’s plans for its existing models include upgrades to its high profit margin full-size and heavy-duty pickup trucks and full-size SUVs of Chevrolet and GMC brand during the 2018 to 2020 timeframe. For the Cadillac brand, GM will introduce a number of new models, primarily crossover vehicles.

According to its financial results for the January to September 2018 period, GM maintained a high level of profitability with an EBIT-adjusted margin of 8.2% (9.2% in North America). However, EBIT-adjusted decreased by 8.2% y/y (14.3% in North America). In July 2018, GM had revised its 2018 year-end financial forecasts slightly downwards.


Related reports:
OEM Operations in the US in 2018 (December 2018)
GM, Google-Waymo to launch driverless cars for ride sharing in 2019 (February 2018)