Mary Barra: Shifting Gears

Please welcome Andrew Ross Sorkin and his guest, Chair and CEO of General Motors, Mary Barra. We're here this morning from General Motors. I just want to say, Mary, thank you for being here. Mary has been here a whole bunch of times. She is, of course, the Chair and CEO of General Motors. She is unequivocally, I want to say, the most powerful female CEO in America. And if I can go so far to say, one of the most influential in history. She has been at the helm of this automaker since she's, she hasn't been at the helm of it, but she's been at this automaker since she has been 18 years old. She became the CEO of GM in 2014, making her one of the longest serving leaders in this industry. She's also on the board of Disney. First appeared on this stage, as it happens, in 2014. You were about a year in. We were downtown, if you remember. Thank you. And I want to say, we rarely invite executives back repeatedly over and over again. But Mary is an exception. And she's an exception because she has always been candid with us and her willingness to engage in because she's in the middle of some of the biggest, thorniest issues every single moment, it feels like. And right now she is dealing, of course, with tariffs, with global trade, the EV debate, the Oval Office and so much more. So welcome back, Mary. Thank you so much. Thank you. Let's start with EVs. I want to go there because the last time we spoke was 2000, I believe it was 2021. You had just made a big announcement about increasing spending on EVs and on autonomous vehicles, by the way. And here we are in this moment now where it appears as if the EV revolution in America is coming to a standstill or maybe moving backwards. Is that what's happening? I think it's way too soon to tell. Anytime you have a situation where you have incentives and they're announced that they're going to end, you know, we saw the EV demand go up to 12% and then drop. And it's this past month, it's in that 5% to 6% range. But I don't think we're going to know what true EV demand is without incentives. I mean, if you go back to before IRA, we were at that 7% to 8%. A lot has happened since then. EVs are more affordable. They have better range. There's more charging infrastructure. But I think we have a way to go on that. So I think we'll get into second quarter of next year and that's when we'll start to know what true EV demand is. But we're well positioned, whether you want an internal combustion engine vehicle, or I call it an ICE vehicle, or you want an EV. We have great portfolios in both. But how do you think about it? Because so much of what we would talk about is this EV revolution. And that, I mean, you would talk about specific, big, specific goals about where, you know, GM was going to be in 2035, for example. I mean, literally, you know, everybody be driving EVs. And it appears now, and by the way, later this afternoon, I don't know if you can speak to it, but the president is supposed to announce a weakening effectively of some of the restrictions on fuel efficiency, which should make it easier for you to make more, you know, gas guzzling cars. Well, first of all, I would say every new vehicle that we come out, every engine we invest in from an internal combustion, we work to have, you know, significant improvement from a fuel economy perspective, from an emissions perspective. So we're going to continue to do that. 2035 is a long way away. It's a decade. And when I look back of how much has changed in the last five years, one thing I've learned after being in this position, I'm not going to make a lot of predictions. I mean, the world is transforming. I do believe, fundamentally, EVs have better performance. But there's work that needs to be done. We still need to get better battery technology. And we're innovating with LMR technology with our partner, LG Energy Solutions. You know, the LMR technology we're working on that will start to roll out in just two years will take up to $10,000 off the cost of an EV. So when I look at what's happening with innovation and battery technology, what's happening across the country and across the globe from a charging perspective, I think it's hard to say exactly where we'll be in 2035. But what I can tell you is we're going to be guided by the consumer. Well, let me ask about that, though, because clearly, I think you would argue a mistake has been made, not by just yourself, by the way, Ford, everybody who's been in the American industry trying to build EVs, who's announced a $1.6 billion charge for you, obviously, Ford, a $1.9 billion charge. You could go back and say, in a perfect world, you would have made what decision? What was the miss here? First of all, I think everyone who made those investments was making the investments based on the regulatory situation. Under the Biden administration, we were supposed to get to 40% to 50% EVs by 2030. We have a long cycle. If we weren't, if everyone and every single company, for the most part, was making those investments, without them, we wouldn't have been able to sell an internal combustion engine vehicle, have a robust portfolio of EVs at that point in time. So I don't think there was a mistake made by industry. I think we were doing what the regulatory environment was requiring us to do. Okay, but one of the things that was happening during this period of time, and it's just happened this spring, Congress passed a law that stripped California of its right to set emission standards. That mandate would have effectively required car companies to sell only EVs by 2035. But you lobbied for that. Well, I would say several OEMs lobbied for a, and as I have since I've been in this role, for one national standard. And when you think about it, a company, when we're starting to follow different standards by state, it makes it very inefficient. So if we want to put the best product on the road as efficiently as possible, we need one national standard. When you look at where the regulatory environment for the states that follow CARB was, model year 26, and as you well know, model year 26 starts in calendar year 25. Those states needed to be at 35% EV adoption, which meant for us, for every three cars I shipped to the state, one of them has to be an EV and I can't ship another one until that one is sold. The state of New York, where we sit today, they were at 7%. So do you think in a model year change, it's going to be five times more demand for EVs? We were going to have to start shutting down plants because we weren't going to be able to build and sell those vehicles. So again, I looked at, where's the consumer? And the consumer, when you think about buying a new vehicle, for most people, it's one of the most expensive purchases they make. They're very rational about it and they need to know this vehicle is going to be there day in and day out. If all of a sudden they've got to drive to college and pick up their child or drive cross country to take care of a parent, they need to know that they don't want to have to worry about how I'm going to get there. So I look at the consumer and say, we have to be led by the consumer, but that doesn't mean we can't continue to work on improving battery technology so we get the cost down, continue to work on putting more EV infrastructure for charging to make people comfortable and give them that choice. So, but let me ask you, let me just understand the lobbying piece because I think everyone always wants to understand it. In the Trump administration one, you lobbied with him effectively to get rid of this California emission standard. We, as along with many other automakers, asked for one federal standard. And I appreciate that. By the way, though, you were the, I believe the biggest spender of lobbying money in Washington after MEDA. That's because I spend time talking to the administration so they know our policies. That's fair. You know, and I'm going to continue to do that. But the reason I mentioned it is, so there was Trump won and you were voting or trying to get rid of that standard. Biden comes in, you invest heavily in EVs and you pull back on pushing on the California standard. And then Trump comes back and then you push on the California standard. So I think our business strategy, we want to build great vehicles for consumers and delight and surprise them with what we can do from a software perspective. That's our goal. But if you look at what the policies are of each administration, we can't be blind to those. We have to make the investments to get to where the regulatory environment they set. We've seen a complete change in that, you know, one way and 180 degrees, one way, 180 degrees back. That's the world CEOs of automakers are living in. And again, my job is to be able to build vehicles to make sure I continue to have a strong manufacturing base in this country, continue to be the leader. General Motors sells more vehicles in this country than anyone else. I want to maintain that. And so I have to respond to the policies of each administration. General Motors has been working with, as you know from your book, General Motors has been, you know, working with administrations for the last hundred years. This is very true. I want to give you the opportunity just to speak to this because he's going to be here later. And I don't know if he's going to comment on this or not, but he could. Gavin Newsom said the following. He said GM sold us out. Mary Barra sold us out. You want to respond to him before he gets here? Andrew, I'm not going to talk about the rhetoric. Let's focus on results. We have the largest EV portfolio of anyone selling vehicles in this country. We sell a huge amount of vehicles in the state of California. I am always going to advocate for one national standard and for making sure regulatory requirements don't get in front of the consumer. Do you think, though, that there's a mistake in terms of how the U.S. is approaching EVs? And the reason I say China is now expected to hit 60 percent of sales this year, EVs. Germany, France, close to 20 percent. They're growing in India, Africa, Latin America. And so the question, I think, is there a colossal mistake happening here in five, 10 years from now? Are we destined to become a regional player in vehicles? I don't think so. I mean, in China itself, yes, there was a huge entry of domestic EV competitors. But right now, we're the only Western automaker in China after we did our restructuring that is now growing share, competing at the luxury level with Cadillac and at the premium level with Buick. And we're going to continue to do that. We have a strong business in South America. We're back in Europe from an EV perspective. So I think we can be strong across the globe. So I don't see that going to a regional player. My general philosophy, though, is I want to give customers choice. And so instead of telling them you must buy an EV, because if you look at some of the countries, there was both carrot and stick put in place for a regulatory perspective and an incentive perspective to drive that. What I've been working on, and that's why even in this period where we have single digit adoption of EVs in this country, we're going to continue to invest, not in more models, because we've got the biggest portfolio right now. We're going to invest in how do we keep making the vehicles better, taking cost out, charging infrastructure so people have a choice. That's what we're working to be. So people choose an EV because it's a better performance vehicle and it fits their life, not that the regulations force us to encourage them. The reason I ask, though, is because I can't tell whether you like tariffs or you don't like tariffs. I think you don't like tariffs in certain ways, but then you like them in other ways. We're going to talk about tariffs now. But that has to do with the tariff piece of this all has to do. I mean, they're all intertwined in terms of whether the United States, in terms of our auto industry, ultimately is the most competitive in the world or becomes a regional business effectively. Well, I think Secretary Besant talked about it today. There was not a level playing field. I think there's been a lot done with tariffs to have a more level playing field. I wouldn't say it's level now, but for years we faced either tariffs or non-tariff trade barriers. For instance, in Europe, it was 10% if we exported there. If they exported here, it was two, two and a half. Exporting to China was 25 to 50% tariffs. So and again, the same two, two and a half in this country, setting aside full size trucks. So what and we've competed and had leadership in many countries around the world. I think getting to a more level playing field is definitely better for all of the American OEMs as we move forward. Let me read you. This is Elon Musk. He says, if there are no trade barriers established, they will pretty much they being China will pretty much demolish most other car companies in the world. They're extremely good. Well, I have been going to China for more than 20 years. I was just there last year and drove a whole host of vehicles. So I do agree with Elon that I think their capabilities, the Chinese OEMs have gotten much better, especially as we move to EVs. But I also think we all know that China is heavily subsidizing their industry. So I think that's what Elon was referring to with those heavy subsidies. And I think it was like there's a government response there. There has to be a government response or that could happen. But what do you think is going to happen in all of these other markets in five or 10 years from now if BYD is selling, you know, advanced cars at cheaper prices than we can manufacture this thing? Well, again, I think you win on not just price. I mean, we're proving that right now in this country. We've had lower incentives, either the lowest or among the lowest of incentives this whole year and have been able to sell our vehicles based on the styling, the safety, the performance across the board. So there's it's more than just price of what people look for. And they also look for brands that they can trust. We're in the, you know, first first lap of the 24 hours of Le Mans when we look at what's happening in these other countries. I think what I focus on, though, with our team is saying we have to compete. We have to be able to compete with those that have lower input costs and lower labor costs. And again, you know, that's what we that's the realities that we have. Now, if somebody's being subsidized 30 percent, that becomes a pretty difficult situation. But I think overall, we're continuing to work to how do we make our vehicles more efficient? How do we give the consumer more? How do we increase our speed? Do you wish on the front that that the subsidy was still there? You think it was a mistake to take the subsidy away? You know, it's not my job to to opine on what regulatory environment. Well, yes, because you lobby for other things. So it is you have a position. And the most important and my position is what what I would like is consistency. I want clarity, whether it's tariffs or regulatory. I want because we invest over a period of years. I'm looking for clarity and then consistency. I got one political question for you just as a throwback to 2021. We were together at Dealbook and I had asked you about Elon Musk at the time. There's been a big summit, if you remember, at the White House and he was not invited. And I asked you what you thought of that. I don't know if you remember. It kind of went viral. And you said you hadn't thought a lot about it at the time. In retrospect now, the vice president of the United States here, she said it was a mistake in her book recently. Do you think that that was a big mistake by the White House in terms of how you were even dealing with with that White House then? Well, when I answered the question last time, again, it wasn't something I gave a lot of thought to. I wasn't in charge of the guest list. So again, I try to focus on things I can control. No, I know. But you know how Elon felt and all of the things that happened in this country after that. I will tell you what I did say to the president because he credited me with and I said, actually, Mr. President, I actually privately had that conversation with him. You did? I did. And you told him? What did you tell him? I told him that I, you know, because he was crediting me. And I said, actually, I think a lot of that credit goes to Elon and Tesla. Wow. Separately, you know me, Andrew, I don't I don't want to take credit for things that I know. I want to ask you about autonomy because cruise was an early investment. I know a lot of the technology from cruise is going to end up in a lot of your vehicles, but it's it's not something that you're pursuing in the same way that you were before. And I want to understand what you think the lessons of cruise were for you, because I think you had very big ambitions in that space. Well, I think, again, any transformative technology, and as we talk about artificial intelligence, autonomous driving is one of the ultimate applications that I still strongly believe in. Our investment in cruise that we made in 2016, remember at that time, we thought by 2019 we'd have autonomy. And frankly, we still don't have it yet where you can drive anywhere under any condition. So, again, we said it was one of the most challenging technologies to develop of this generation. But I think there's been tremendous progress made. I also think technology has changed greatly during that period of time. So there's tremendous learnings and assets and people that we still have from our cruise. So I look at that investment as foundational to where we are now, and I think we've learned a lot. And I'm very excited. We just announced, I think, about a month, six weeks ago that we plan to have highway L4 capability starting with the Escalade in 2028. And with the resources from General Motors combined with cruise, combined with the capabilities, for instance, the simulation capability that they had developed and we're continuing to use is phenomenal. So as we look at that and go into the future, now with Sterling Anderson who joined from Aurora, I think we're well positioned. But we did, to your point, make the decision to focus on personal autonomous vehicles because that's our business today. As this evolved and we looked at, do we really want to be in that business where we're competing with buses and cabs and et cetera? We said, no, our core business is personal vehicles. And you think that's where it goes? You think there'll be a personal vehicle business and there will be an autonomy fleet business and it's going to be separate? I do think they can be separate. And so we're focused on the personal autonomy because we also, as we've had, in this area, everyone's talking to everyone. Or at least I would say General Motors is talking to a lot of these different companies. And what we really are technically really realize there's very, there's significant differences between personal autonomy and some of the transitions and what you need to do than there is from a robo-taxi fleet. And that's why we decided we're going to focus on personal. Okay. Two more quick questions. One's about labor. Your, I don't know if he's your rival, CEO Ford said, it is very hard to find skilled labor in America today. It is increasingly hard. Where do you think we really are on that? And what would you, what do you think we have to do? Is it, and by the way, is the skilled labor required? Do we have enough of it? And if we don't, are robots ultimately going to do it? Well, I think one of the things I wish in this country, and my dad was a dye maker, so he was a, what would be considered a blue collar worker, who is one of the people I look up to very much so in this world. I wish we didn't have a negative view of people, whether they're plumbers, electricians, dye makers, because I think that the craft, because it is a craft, the capability is incredible. So I agree with Jim on those issues that I think that we, you know, we do need to celebrate people who choose those fields. They're very important. And I think as you look in an AI world, there can be really good jobs. From General Motors' perspective, we invest, in the last five years, we've invested over $250 million in apprentice programs alone. So training electricians and millwrights and pipefitters that work in our facilities. We also work with the military. So as people come out of serving the country, putting them into programs so then they can be dealer technicians, because there is a shortage of dealer technicians right now. So we're really working, and we've been in, have investing in this year, we've invested, you know, frankly, for decades. I remember when I first started at General Motors, I was an electrical engineer, I was working in one of our plants, and we were just making the transition from literally plant conveyors and all the machinery and equipment running with relays and wires to computers. And what we did then is we partnered with local community colleges and trained our workforce. Right now we're in the middle of training our workforce as we introduce electric vehicles into a plant. We're using that same model to train our workforce. So to me, it's the investment General Motors makes in continuing to train our employees, our existing employee base, and then looking for creative ways to invest. But I think as a country, we need to have much more respect for the people who choose those career paths, because they're important to this country, and they're hardworking, and the skills that they have, I don't know about you, as you do home improvement projects, or as I look at the skill in our plants, I think they're undervalued. Okay, final question. You've been at this now, at this company, 45 years, almost five decades. Is that right? That is true, but I started as a college co-op student. So what do you want to accomplish at this point? How long do you want to do this for? Well, that's the board's decision, not mine. But what I can tell you is, first of all, I love this industry. I mean, the letters I get from customers sending me when their odometer turns over to 200, 300, 400, getting a letter from somebody who is still in the hospital saying, I will drive a Chevrolet forever because this vehicle saved my life. The first responders thought when they saw the state of the vehicle, I wouldn't be alive, and I walked away with mere scratches. And I get letters from consumers who are unhappy about something, and I respond to every single letter that I get. So to me, this is such a special business. I mean, what other industry do people write songs about you? Do they name their cars? I mean, there's a touching letter I got from a mother who, Tim the Tahoe, drove their family through in the Northeast to all of their son's lacrosse games, to her cancer treatment, and they view it as part of the family. So this is not an easy industry, but it is a rewarding one. And when we look at what's happening, we're an industry in transformation, not only from how the vehicles propelled, but how the vehicle, all the technology. So you look at building great vehicles, the technology transformation we're making, and the investment and the strengthening we're doing of manufacturing, you know, I'm energized every day. So we'll see. Mary Barra, thank you very, very much. We're going to take a coffee break. We'll see you in just a little bit. Thank you.