GM's Barra reboots her 10-year effort to lift stagnant shares

DETROIT — General Motors CEO Mary Barra has made many bold moves during a decade on the job to lift the automaker’s share price: jettisoning money-losing operations in Europe, promising to outsell Tesla in the electric-vehicle market and betting billions on developing a profitable robotaxi business.

Investors are unmoved. GM shares are trading close to the $33 a share at which they went public in 2010 following the company’s government-financed bankruptcy. Since hitting $63 a share in November 2021, GM shares have fallen 47%.

Warren Buffett’s Berkshire Hathaway sold all its GM shares without explanation during the third quarter as the price slid to a two-year low during tough contract bargaining in the U.S. with the United Auto Workers.

Now, as she heads toward her 10th anniversary on Jan. 15, Barra is overhauling GM again. On Wednesday, GM said Barra has named new heads for key areas of vehicle development and EV manufacturing. The moves come after production technology problems caused GM to fall well short of EV output goals.

“We didn’t execute well this year as it relates to demonstrating our EV capability and the capability of Ultium,” Barra told investors and analysts in a Nov. 29 call, referring to the automaker’s EV battery technology. “So I’m disappointed in that.”

GM has begun overhauling its EV strategy, delaying planned factories and product launches, and is reconsidering whether to offer hybrids in the North American market after abandoning the technology in favor of an all-EV strategy.

Barra and GM’s board last month launched a $10 billion share repurchase program to buy back the equivalent of a quarter of the automaker’s market capitalization – a bid for support from shareholders who want more of the cash generated by the company’s highly profitable North American combustion truck business.

Most shareholders, although disappointed with the company’s stock performance, are happy with Barra’s leadership for now.

Kyle Martin, an analyst with Westwood Group, said Barra is doing better than her rivals and is not in any trouble as the sector is challenging for everyone.

“At the end of the day, the market is the best arbiter,” he said. “That the share price has gone nowhere is an indictment of what she’s doing and to be fair what her competitors are doing as well. You only need a few things to go right to really see a rebound in the stock.”

Officials familiar with Barra’s thinking said the CEO wants to see GM safely through the EV transition. Barra signaled that on Wednesday.

“In the next couple of years, it’s our years to really execute this new strategy so I’m energized,” she said at the Washington Economic Club. “As long as I have the opportunity to do that … it’s great,” she added about being CEO.

During a Dec. 4 onstage interview, she deflected a question about how long she plans to stay in her position.

“It feels like it hasn’t been 10 years,” Barra said. “We’re in the midst of this really once-in-a-generation transformation. And there’s so much that can be done and so I’m more forward-looking.”

History-making CEO

Barra’s place in GM’s history is secure. The first woman to lead a global automaker, Barra has now held the top job at the automaker longer than anyone other than Alfred P. Sloan, the architect of GM’s rise to become the world’s largest industrial corporation during the mid-20th century.

Sloan and his immediate successors faced no serious challenges from Japanese or European automakers and no demands from regulators to abandon fundamental technology.

Competition and regulation have forced Barra to put sustaining profits over defending a sprawling global empire.

Barra sold or closed GM’s money-losing operations in Europe, Australia and Southeast Asian markets. GM’s market share and profit in China have fallen as the world’s largest auto market has shifted to EVs made by Tesla and by BYD and other Chinese automakers.

GM is still No. 1 in U.S. sales volume, but Tesla is by far the more valuable company with a market capitalization of $775 billion to GM’s $46 billion.

Like Roger Smith, who led GM during the 1980s, Barra has tried to revive investor interest by repositioning GM as a technology enterprise.

She told investors in October 2021 that GM could double its annual revenue by 2030 to $280 billion by adding EVs, expanding sales of digital subscriptions, ramping up the Cruise robotaxi operation, supplying vehicles to the U.S. military and developing a new electric van delivery service.

But during the second half of 2023, key elements of Barra’s growth strategy stalled.

The biggest trouble is at Cruise, which has lost $8 billion since GM acquired it in 2016. Barra has told investors Cruise could generate $50 billion a year in revenue by 2030.

Cruise’s future is now uncertain after regulators charged officials with misrepresenting details of an accident in which a Cruise driverless car dragged a pedestrian 20 feet (6.1 m )before stopping.

The Cruise incident has put Barra back in the role of crisis manager.

Shortly after she took over as CEO in 2014, she faced a scandal over GM’s mishandling of deadly ignition switches. Barra resolved that in part by commissioning an outside law firm to investigate GM’s mishandling of safety recalls. She embraced the firm’s scathing critique of GM’s culture.

Barra has again engaged an outside law firm and technical experts to investigate Cruise’s response to the accident. Cruise’s CEO, Kyle Vogt, has left the company. The unit’s new leaders, including GM’s chief counsel Craig Glidden, have pledged to cooperate with regulators.

Meanwhile, GM is trying out new ways to appeal to skeptical investors. The company has hired a Meta executive as new vice president for artificial intelligence and launched a new website to showcase GM’s use of AI – the new hot area for technology investors.