GM CEO's Latest Comment Is Causing All Sorts Of Debate

Aug. 02, 2020 4:06 PM ET by Jay Traugott Industry News / 27 Comments

Everything could change.

Big things are about to happen at General Motors. The largest of Detroit's three automakers, which just reported an $800 million loss in the third business quarter of 2020, is undergoing major changes under the leadership of CEO Mary Barra. Last spring, it announced plans to invest over $20 billion on its next generation of all-electric and autonomous vehicles through 2025. At least 20 new electrified models are planned by 2023, including the new Cadillac Lyriq. Presently, the only all-electric vehicle on offer is the Chevy Bolt. With such a huge focus on electrification and mobility, Barra won't completely rule out changing the company's name at some point as the word 'Motors' may no longer accurately describe things. But there could be yet another option on the table and it's possible Barra is already testing the idea.

The Detroit Free Press recently reported about an earnings call industry analysts had with Barra and her team following the Q3 report.

One analyst flat-out asked Barra the following: "When you look at the high market valuations and cheap access to capital of some of these electric vehicle companies we spoke about earlier, some established ones, but also many unproven startups, can that make you consider spinning off GM's electric vehicle operations and capability into a separate stand-alone entity?"

Translation: could GM spin off its electric vehicles division and thus become two automakers? Barra didn't give an outright 'no.'

"I don't have anything further to say other than we are open to looking at and will evaluate anything that we think is going to drive long-term shareholder value," Barra said. "So, I would say nothing is off the table."

At first, her response might appear like she's trying to somewhat dodge the issue, but it can also be interpreted as her attempting to see how the market could potentially react to such a possibility.

"GM CEO's response to our question on the topic during the earnings call might suggest GM may already be evaluating this option, although estimating a probability or timeline of it happening is difficult," the same analyst later summarized.

Other analysts and industry watchers are less keen on the idea for many reasons, among them being EV operations requiring lots of research and development without immediate profits mainly from trucks and SUVs, and possible damage to GM's legacy in general. But it's certainly an intriguing idea and shouldn't be ruled out. Barra has already made plenty of bold decisions (she sold off Opel/Vauxhall and shutdown Holden, for example), so no one should be surprised if she has some secret plans in progress.