The current automotive production environment has provided OEMs across the globe a compelling reason to reassess their strategic goals and plans, specifically for investment in Electric Vehicle (EV) technology. General Motors (GM), which had announced head-count reduction initiatives in advance of the Covid-19 pandemic, is in the news again outlining plans addressing sustainability and profitability. From a market perspective, GM has decided to focus on profitable regions.
GM’s Need for Strategic Change
In 2015, GM exited Russia; in 2017 operations were closed in India; and in the same year in Europe the company went through the sale of Opel/Vauxhall to PSA. Finally, in February 2020, GM’s Holden brand was terminated in Australia. Between 2018 and 2020, GM also reduced the number of nameplates in North America with the termination of most sedans. This left only the Chevrolet Malibu, the Cadillac CT4 and CT5 to compete in the market. New modular platform strategies aimed to reduce complexities, cost, and development costs are fully implemented at most carmakers. And although GM is largely following this trend with its VSS platforms, it appears they may be behind the competition, forcing the OEM into drastic measures to keep up with the competition.
Along with market rationalization, GM has been investing in several technologies to better prepare for upcoming market shifts:
Strategic Partnerships Signed for Future Success
As the automotive environment is under increasing competitive pressure, the strategy focusing on profitability aligning with the right segments and markets has been a necessary step in GM’s turnaround. This has led to two different challenges for GM:
To address those issues, GM has recently signed agreements with Honda and Nikola (EV Trucks) to secure current market position and focus on future growth as the economy is expected recover from Covid-19. The Honda partnership agreement opens the way to sharing ICE with traditional platforms. In the meantime, Honda will be using the Ultium battery program and platform for its own models. This partnership will help to rationalize platforms and component sharing with Honda for North American vehicles. The participation in Nikola highlights GM’s strategy in EV trucks, while the Nikola Badger will benefit from GM’s parts bin and production capacities.
GM needs to fuel up its position as the entry ticket in technologies is increasing and the competition is being consolidated. FCA is merging with PSA in the Stellantis brand; Ford is reinforcing its partnership with Volkswagen; Nissan and Renault are putting their alliance back on track; and Toyota continues to work with Suzuki, Subaru and Mazda on future technology and manufacturing developments. The move with Honda and Nikola provides GM with the capacity to keep up and remain strong in the OEM landscape.
DuckerFrontier’s Automotive team continues to follow and analyze the key trends and impacting the automotive and transportation industry, both during and post Covid-19 disruptions. Visit our Covid-19 Resource Hub for the latest insights and implications for global business, or contact us to connect with a team member.