Yes, she is the fifth most-powerful woman in the world, according to Forbes. Yes, she is the first big-time female C.E.O. in an industry that’s historically as male as it gets. But perhaps most impressive is the success she’s had dragging her very tradition-bound company into the modern era despite a variety of headwinds.
Mary BARRA: Hello, I’m Mary Barra and I’m chairman and C.E.O. of General Motors.
Stephen DUBNER: Mary, I understand you’ve set aside six hours to speak with us today. Is that right?
BARRA: Not quite six, but—
DUBNER: I just want to know what it feels like to be the C.E.O. of a carmaker that makes 7.7 million cars a year and has a market cap of $61 billion, while a carmaker like Tesla, which makes only 365,000 cars a year has a market cap of $473 billion.
BARRA: Well, I think it points to the opportunity that’s in front of us, and when you look at that valuation, it is saying there’s growth opportunities with electric vehicles. So I think it in one way validates the strategy that we’ve been on and accelerated yesterday.
We spoke with Barra one day after she announced that G.M. has plans to electrify their entire fleet of vehicles. “Climate change is real,” Barra told investors, “and we want to be part of the solution by putting everyone in an electric vehicle.” Just so you know, in the couple weeks since we spoke with Barra, Tesla’s market cap has risen another $65-or-so billion. That two-week gain alone is about the same amount as G.M.’s total market capitalization. And a Chinese electric-car startup called Nio, even though it has sold fewer than 40,000 vehicles this year — again, G.M. sells nearly 8 million in a year — Nio’s market cap, as of this recording, is roughly the same as G.M.’s. Today on Freakonomics Radio, the latest installment in our occasional series “The Secret Life of a C.E.O.” We speak with Mary Barra about China, Covid, Trump — and whether G.M.’s push for electric vehicles is too late, or maybe even just window-dressing:
BARRA: The fact that we announced that we’ll have 30 vehicles by 2025, it’s not window dressing.
Also, how long will it really take to produce a new generation of electric — and autonomous — vehicles?
BARRA: Any time in this industry we tend to make those projections, we’re usually really wrong.
And, why is buying a new car still such an ordeal?
* * *
DUBNER: I do have to warn you, the last time we interviewed an auto company C.E.O. was Jim Hackett from Ford, and he didn’t last that much longer.
BARRA: Oh no, that seems like a serious warning.
Mary Barra’s General Motors is the biggest of Detroit’s “Big Three” automakers, along with Ford and Fiat-Chrysler. G.M. was founded in 1908; its major U.S. brands include Chevrolet, Buick, G.M.C., and Cadillac. It also has two prominent Chinese brands, and it makes cars in 10 countries. From 1931 until 2007, G.M. was the biggest automaker in the world; at one point, it built more than 60 percent of America’s cars.
You’ve probably heard the old saying: “As General Motors goes, so goes America.” If that’s still true, it’s probably not great news for America. G.M. today has just 17 percent of U.S. market share; it’s now the fourth-biggest automaker in the world, after the Volkswagen Group, Toyota, and the Renault-Nissan-Mitsubishi alliance. Ford, meanwhile, is down to No. 6 and Fiat-Chrysler, No. 8.
In the old days, and for a long time, American automaker supremacy was a given. Today it’s more of a memory, with constant promises that a Detroit renaissance is just around the corner. That was the theme of our interview with Ford C.E.O. Jim Hackett a couple years ago — although there were a lot of doubts over whether he was the right kind of person to lead such a renaissance. For starters, Hackett was not “a car guy,” as they say in Detroit. He was best-known for running the furniture company Steelcase and serving as interim athletic director at the University of Michigan.
DUBNER: Okay, so if I’m looking at your résumé, I’m not seeing C.E.O. of an auto firm.
Jim HACKETT: Oh God, you and me both.
Ford — like General Motors — is heavily dependent on selling gas-hungry pickup trucks and S.U.V.’s. Given new emissions standards and the current climate around climate change, this was looking less like a renaissance and more like clinging to the past. So Hackett wanted Ford to evolve into what he called a “mobility company.”
HACKETT: It’s beyond vehicles to transportation, and actually a transportation operating system.
His plan involved monetizing customer data, just like Google and Facebook do, but in different areas.
HACKETT: They don’t own the health-care data market. They are not controlling aviation data today.
And where would Ford get the customer data to monetize?
HACKETT: We already know and have data on our customers. We know what people make. How do we know that? It’s because they borrow money from us. We know where they work. We know if they’re married. We know how long they’ve lived in their house. And that’s the leverage we’ve got here with the data.
I am no auto-industry expert, but that interview with Jim Hackett left me with a strong impression. It was this: lovely man, wonderful leader in the right circumstances, but quite likely not the best candidate to convert a 20th-century industrial giant into a 21st-century tech darling. In fact, the minute we left the studio that day, I asked our producers to accelerate our editing schedule. Otherwise, I was worried Hackett might be fired before we could get the episode out. It didn’t happen quite that fast, but Ford’s stock price kept dropping, and this August, Hackett was removed as C.E.O. The parallels between Jim Hackett at Ford and Mary Barra at G.M. are not very parallel. Mary Barra, even though she’s not a guy at all, is very much a “car guy.”
BARRA: I’ve been at General Motors for 40 years, because I started as a co-op student.
That is, a student in the cooperative-education program at what was then known as General Motors Institute. Today it’s called Kettering University. Barra got an electrical-engineering degree while working on a Pontiac assembly line as a quality inspector. “I was checking fits between hoods and fenders,” she recalled last year. “I had a little scale and clipboard. At one point, I was probably examining 60 jobs an hour during an eight-hour shift.” This was the same Pontiac factory where her father used to work as a die-maker.
Mary Barra began rising through the ranks at G.M., earning an M.B.A. at Stanford along the way. In the late 1990s, when G.M. was booming, Barra was there. When G.M. filed for bankruptcy in 2009, during the global financial crisis, she was still there. And in 2014, having held top jobs in manufacturing, engineering, human resources and global product development, Mary Barra was announced as C.E.O.
She was generally regarded as a good choice. Barra would make some enemies — primarily the executives and factory workers she would downsize — but people appreciated her G.M. experience, her-can-do attitude and her candor: at one point, she said what G.M. needed to succeed was, “to stop making crappy cars.” G.M.’s stock price hasn’t exactly soared since Barra took over but it’s more than held its own, especially when compared to the other Detroit automakers. And investors were very pleased when she declared that G.M., rather than grasping at some sort of “mobility” play, was going all-in on electric vehicles.
BARRA: Unequivocally, the whole management team aligned on, “We are going to accelerate E.V.s.”
DUBNER: If you look through the history of business in the 20th and 21st century, you see that very few firms last a really long time. G.M. has obviously lasted a very long time already. But you think of companies like Kodak and Blockbuster that were preeminent just a couple decades ago, and they’re now dust. When technology changes, most big successful firms fail to round the corner. What makes you think that G.M. or really any of the legacy automakers will be able to keep up?
BARRA: I’m not sure that all will necessarily successfully make the transformation. But back in 2014, as I took this role, we knew there were four major areas where technology was changing the way people moved. Whether it be the way the vehicle is propelled, autonomous, sharing and connectivity. Because I think to your point, no one has a right to exist, especially as technology is changing almost everything, if you don’t move and have the best customer offering or customer value and experience, you won’t exist.
DUBNER: So, you have been aggressive in remaking G.M. over the past several years as the C.E.O., with this big push toward electric vehicles, cleaning house at the executive level, and shrinking the workforce and operations generally, trying to get, as The Wall Street Journal put it, better by being smaller. But also one thing that really intrigued me is, it’s been noted that you’re trying to do away with what have been called “bad entrenched habits.” Can you talk about some of those habits and how you’re trying to change them?
BARRA: Well, I think it’s empowering people. I mean, getting subject-matter experts that know the right thing to do. One of the things that we did when I was in H.R. is we changed our dress code from 18, 20 pages to two words: “dress appropriately.” And I think empowering people and knowing you trust them — but you also are going to hold them accountable to do the right thing — I think just creates a different mindset.
DUBNER: I understand there were some managers who either pushed back or were just confused without that 18- or 20-page dress code. What did that tell you, that there was some reluctance to accept a two-word code instead of a multipage code?
BARRA: Well, it challenged leaders to be the leaders we needed them to be. Because it’s really easy to point to an 18-page document that says, “I’m sorry, I don’t care. You know, you can wear jeans, but the rule says you can’t.” It’s a whole other thing to have the judgment to say, “Well, yeah, that’s fine, you can wear jeans,” or whatever. And so, to me, it was eye-opening that we had to empower, encourage and actually train some of our first-line supervisors and managers of what it means to be a leader.
DUBNER: I guess if I were to interpret it in a slightly less-generous way than you did, I might say if you can’t handle this without the strict rules, without the rules to back you up, then maybe you’re just not, I don’t know, creative enough or smart enough or devoted enough to handle the important things of being an executive. Is that too ungenerous?
BARRA: I think it’s a little ungenerous — but here’s why. Because the people were capable. But if you as a company have a culture that has all these rules, people are going to follow them. And so part of it was almost giving permission. And so I don’t blame it on the individual. I think it was freeing them.
G.M.’s recent news about electrifying their entire fleet over time wasn’t much of a surprise. In January of this year, Barra announced a lineup of forthcoming E.V.’s that would join the Chevy Bolt, which went into production in 2016. The first new E.V.’s, set to arrive in 2022, are an electric Hummer and an electric Cadillac S.U.V. called the Lyriq. But shortly after this announcement of forthcoming E.V.’s came the Covid-19 crisis. It disrupted G.M.’s manufacturing, sales and, theoretically at least, their electric future.
BARRA: As we got into the crisis that for us started in January, when we saw the implications in China to Korea and across the globe — and so once we did some of the things we had to do to make sure the company was going to be strong through this, then we started saying, “Okay, how do we accelerate the critical parts of the business during this crisis?”
DUBNER: Did the crisis accelerate G.M.’s E.V. plan specifically?
BARRA: It absolutely did. Because we saw the teams coming together and doing great work, even in a remote instance. And we saw that if we just empower the team, give them really clear directions and get out of their way, they can take time out of the process.
As much as it may seem that General Motors is playing catchup with Tesla, the fact is that G.M. began prototyping electric vehicles in the 1980s, well before Tesla existed. Spurred on by new emission laws in California, G.M. came out with the first mass-produced electric vehicle, called the E.V.1. It had a battery range of about 60 miles. By the 1990s, G.M. was running ads like this:
AD: How does it go without gas and air? How does it go without sparks and explosions?
AD: And then you will ask, “How did we go so long without it?”
It seemed a sure bet that the future had arrived.
AD: The electric car: it isn’t coming. It’s here.
But in 2003, G.M. shut down production of the E.V.1. Their explanation: production costs were too high and demand was too low. G.M. began backing away from electric vehicles just as Tesla was getting started. Their technology and styling have since attracted many fans, despite their relatively high prices. Over the past several years, Barra dearly wanted to get General Motors back in the E.V. arena.
BARRA: And that’s what led to many of the announcements yesterday, because those weren’t knee-jerk announcements.
DUBNER: And this decision to accelerate — was it mostly supply-driven? Demand-driven? Macro?
BARRA: Well, I had been pushing for a while of, “Can’t we go faster? Can’t we go faster?” But we started to see some really interesting customer trends. I mean, if you look at the Cadillac Lyriq, when we did the confirmation clinics with customers, we even included non-E.V. intenders. And when they saw the vehicle, they were like, “I would buy that vehicle. I want that vehicle.” So one part of it that really reinforced our need to accelerate was consumer perceptions changing about E.V.s and their willingness to own.
DUBNER: When you say “consumer perceptions,” is a part of that the simple fact that Tesla has been so prominent and successful, albeit on a much smaller scale than G.M., but still it seems to have captured the public’s imagination, yes?
BARRA: Well, I think that’s a piece of it. But we’ve been talking to customers for several years now about electric vehicles. And what they’ve always told us is it’s got to have the right range; they start to lose range anxiety at about 300 miles of range. They needed a robust charging infrastructure, and so we’ve been working on that, hence the partnership with E.V. Go and other partnerships.
Customers all along have been saying “Make my ease of ownership better and I’ll consider an E.V.” And that’s why you have to look at it as an ecosystem, not just by the vehicle. But then they also said, “The vehicle has got to meet my needs. It’s got to be the vehicle I would normally buy to drive mass adoption.” Because if you look at it right now, a lot of the E.V.’s — you know, we have the Bolt E.V., which is the most affordable E.V. with over 250 miles range — but people were saying, “I’m not going to compromise the functionality of the vehicle. I’m not going to just buy any electric vehicle. If I drive a truck, I want a truck. If I drive an S.U.V., I want an S.U.V.”
DUBNER: As I understand it, electric vehicles currently account for only about 2.5 percent of all car sales. What do you think that number looks like in five years, at least for G.M.?
BARRA: Well, we’ve said by 2025 we’ll have over a million E.V.s on the road in North America and China. When you look at a lot of external projections, and you go out to 2030, there’s quite a huge range. But one of the forecasters just went from saying 30 percent by ‘30, to 35 percent. So I don’t think it’s going to necessarily be linear. What’s going to be key to unlocking it is having affordable vehicles across multiple segments, not just in high-end.
DUBNER: As much as you’re pushing E.V.s, you’re also scaling up production of pickup trucks and other big vehicles, mainly because that’s where the demand is. The best selling G.M. vehicle is the Chevy Silverado. If one is an environmentalist, E.V.’s may just look like window dressing. Persuade me they’re not.
BARRA: Well, the fact that we announced yesterday that we’ll have 30 vehicles by 2025, two-thirds of them in the United States, and a goal to have over a million, it’s not window dressing. The way I look at it is, our strong truck business is funding our ability to go fast in E.V.’s. I would also say every single truck, every time we put a new generation out, it’s more fuel-efficient. So, again, we have to recognize the consumer in this equation. But the faster General Motors solves some of consumers’ concerns or challenges as it relates to E.V.’s, the faster that transition will happen.
G.M.’s push to develop this new line of electric vehicles will be expensive. They’ve just increased their budget to manage the accelerated timeline from $20 billion to $27 billion by 2025. They had planned to invest another $2 billion in the electric-truck company Nikola, but they just backed out of that deal after the company became the target of a fraud investigation and its founder resigned. (“Nikola,” by the way is the first name of the Serbian electricity wizard Nikola Tesla. So if you’re planning to start a new electric-vehicle company, you might have to name it after one of Tesla’s parents, or maybe one of his three sisters: Milka, Angelina or Marica — although there is already a beauty-supply company in South Africa called Marica, and a Swiss chocolate company named Milka.)
In any case: General Motors, in order to afford its electric reinvention, has had to become much leaner. Mary Barra has cut G.M.’s global workforce from 219,000 to 164,000. This led to a showdown last fall with the United Auto Workers, and the biggest auto-industry strike in a decade. And while G.M. still manufactures vehicles in ten countries, that number was 26 not so long ago. But at least from a financial perspective, Barra’s “smaller-better” plan seems to be working. G.M. just reported good third-quarter numbers and it seems to have weathered the pandemic, at least so far, in terms of both production and sales.
BARRA: We worked very hard to put protocols in place to enable people to return to the workplace safely. I’ve been in over a dozen plants since we resumed working in North America. And they, to a person, say they feel safer at work than they do at the grocery store.
DUBNER: What can you tell us — and I realize it’s a moving target and Covid has been wildly disruptive and unpredictable — but what can you tell us about overall demand for autos at the moment? Because of Covid, some people are driving a lot less and others are driving a lot more. So what are you seeing?
BARRA: We’re seeing actually very strong demand. We’ve seen China recovering. We’re seeing very strong demand in the United States. We’re not all the way back to where we were, but we’re definitely seeing a recovery. And I think some of it is, people, regardless of how often they need transportation, they want their own vehicle.
DUBNER: As I understand it — and please correct me if I’m wrong — but auto dealers, in your case G.M. franchisees, make a tiny profit from new car sales, with the bulk of their profits coming from financing and repairs. Why is that model a desirable one? Or is it just an accident of history?
BARRA: I think it’s evolved over time, but we believe our dealers are a true asset. The knowledge, the relationships they have in communities. And again, you’ve got to put the customer at the center of this. So we’re working hard to create a customer experience that’s centered around making it easy and exceptional for the customer.
DUBNER: I think most people would say it’s certainly not easy or exceptional at the moment. Buying a new car remains, I think, a frustrating experience for a lot of people. And I’ve heard even you say that some haggling on price is to be expected. Why does the auto industry do that? What’s wrong with just setting a price for their goods like just about every other industry does, rather than forcing the customer to negotiate with a salesperson?
BARRA: Well, if you go back in history — I don’t know if I’ve ever said some haggling is going to be a part of it, but I think I might have acknowledged it is, not that it necessarily needs to be. I mean, we’ve got to follow dealer-franchise laws.
Franchise laws require auto dealers in many states to operate as a third party, separate from the manufacturers. Tesla, by the way, has found ways around many of these state laws, prompting a host of lawsuits. Manufacturers like G.M. earn their money when they sell their cars to the dealers; and the dealers’ prices aren’t always fixed. Here’s how Barra responded when the private-equity investor David Rubenstein asked her in a recent interview about car pricing:
David RUBENSTEIN: So, if I’m going to go buy a car today, should I negotiate a little bit or should I just basically say, whatever the price they say it is, I should just take that price? Or a little negotiation, is that okay?
BARRA: I think a little negotiation is probably recommended.
As Barra told us, that’s because of these dealer-franchise laws:
BARRA: That’s a piece of it. But I think we can make it much simpler for the consumer. I would say through Covid, that’s another thing that got accelerated, working with our dealers to do almost the entire transaction online.
Most customers seem to like it too, she says.
BARRA: And again, our job is to meet them where they want. And if they want a complete online experience and contactless delivery, we’re doing that today.
* * *
Mary Barra has spent 40 of her 58 years at General Motors. She was born in Michigan to parents of Finnish descent; both of them grew up during the Great Depression and neither went to college. But their kids did all right: their son is a gynecologist and their daughter runs America’s biggest automaker.
DUBNER: So, in 2009, during the financial crisis, G.M. declared bankruptcy with $172 billion in liabilities. But it wasn’t just the crisis — you’d been losing billions for the preceding years. So the federal government came in and became a 60 percent owner in what was called “the new G.M.” What was your role at the time, and did you consider leaving the company at the time?
BARRA: I was running manufacturing engineering as we were entering that phase. And then coming out of it is when I took on the H.R. responsibility. And when the company you’ve worked for for a couple decades is going through those difficult experiences, of course you do some soul-searching. But at the core, I knew we had great people and I wanted to be part of the team — having no idea I’d be C.E.O. — but I wanted to be part of the team that caused General Motors to reinvent itself and be significant and lead again.
DUBNER: So, the decision to bail out G.M. from the federal perspective was not unanimous. There was at least one prominent White House economist who thought it was a bad move that would set a bad precedent. I don’t expect you to take his side, but if a company is that deep in debt, why shouldn’t it have been allowed to just die off?
BARRA: The way we looked at it is, we are grateful for the fact that that we received the aid that we needed, and we recognize that that wasn’t something we necessarily were entitled to, nor ever will be again. But since 2009, General Motors has invested $29 billion back in the United States. Think about the job creation. And we paid back our loans. I think when you look at it on balance, the benefit to the economy and jobs, I think it turned out to be a good decision.
When Barra became C.E.O., in 2014, she was eager to reinvent G.M.’s technology and refresh its car-and-truck lineup. But first, there was a crisis.
CBS: Last week, General Motors said it was recalling more than 700,000 vehicles because of a problem with the ignition switch.
The faulty switch could power down a car’s electrical system, including the airbags. A number of G.M. models included this switch, most prominently the Chevy Cobalt. Ultimately, it was found that 124 people had died as a result of G.M.’s faulty switches.
CBS: The problem was first discovered in 2004. The recalls came in 2014.
In one of her first major acts as C.E.O., Barra was hauled in to testify before the Senate Commerce Committee. They went hard at her.
Claire McCASKILL: It might have been the old G.M. that started sweeping this defect under the rug 10 years ago, but even under the new G.M. banner, the company waited nine months to take action.
The U.S. Department of Justice considered criminal charges against G.M. but settled for a fine of nearly $1 billion as well as a nearly $600 million settlement fund for the victims of the crashes. G.M.’s internal report on the fiasco concluded that G.M.’s, “inability to address the ignition switch problem for over 11 years is a history of failures. Although everyone had responsibility to fix the problem, no one took responsibility.”
Mary Barra attributed this failure to what was called “the G.M. nod.” That’s what happened in meetings, where some issue would be brought up and everyone would nod in agreement that something needed to be done, and then nothing would get done. Barra fired 15 employees who were involved in the ignition-switch failure and coverup, and she created a new position at G.M.: vice president of global vehicle safety.
DUBNER: I’d like you to talk about what that ignition-switch experience was like as a brand-new C.E.O. and how that set you up to be a C.E.O. in slightly less tempestuous times?
BARRA: As we got into the crisis, we quickly realized we had to demonstrate our values. And so we agreed that we were going to be guided by doing what’s right for the customer, being transparent, and doing everything in our power to make sure nothing like this ever happens again. And we met every day. Because in a crisis, you don’t know everything on day one. You don’t even know sometimes how big the problem is. We went and looked at every vehicle we had to make sure we didn’t have an issue, and that caused us to recall a number of vehicles even though there had never been an issue and the vehicle might have been in market eight, 10 years.
DUBNER: I mean no offense by this, but those values that you just listed — doing what’s right for the customer, being transparent, do what you can to never repeat that same problem — those seem like they should be the values or mission of every company and indeed every human. How had G.M. gotten to the point where that wasn’t the case?
BARRA: I think there was a time earlier where maybe some of our success — we didn’t listen to the customer as well as we should. But then I also think, the transparency piece, sometimes people don’t realize the way the world works today. You have to share what you know and sometimes people get frustrated because they’ll be like, “But I want to know this.” And then I’m like, “I don’t know that yet.” And then doing the right thing. I have to say, I think General Motors always tried to do the right thing.
DUBNER: So, as we all know, women are underrepresented in STEM fields and they’re also underrepresented in C-suites. You, meanwhile, are a C.E.O. who earned more than $20 million last year. Congratulations. I hope you’re saving some of it. And you’ve got a math-heavy engineering background. So what do you have to tell the rest of us? What’s your secret?
BARRA: Well, I was always interested in math and science when I was in high school. And I had parents who told me I can do and be anything as long as I worked hard, which then led me to pursuing an engineering degree, which I think has served me well in all of the positions I’ve had at General Motors, because really engineering is about logical problem-solving. I think education is so fundamental to solving many of the issues that we have as it relates to inequity, and encouraging young girls and young boys to pursue technology, because technology impacts every single industry in the world today, whether you know it or not.
DUBNER: How do you feel about all the attention paid to you, not just for being a successful C.E.O., but for being a successful female C.E.O.? Is it a bother?
BARRA: You know, it’s funny. When I first got this job, people would say to me, “So, you’re the first woman C.E.O. of a large automotive company.” And it was a statement. And I was like, “Yes, that’s true.” I think like everyone, you want to be judged by your contributions and your results and your behaviors and how you treat people independent of gender. But what I have learned in this role, when people come up to you and say “My daughter’s now going to pursue an engineering degree because she sees your success,” I think that’s so powerful. But I think the day that we’ll be in a much better place is where gender is not highlighted.
DUBNER: I’d like you to make your best argument for why an increase in female leadership is not just the right thing morally, but also from a business perspective. So, what does a female C.E.O., or any leader, do, potentially at least, differently? And what kind of results stem from those differences?
BARRA: Well, I think it’s hard to just say women, maybe, are more collaborative, because I think it’s very independent on the individual leader. But to me, it’s the broader diversity. You will make better decisions when you have diverse thoughts and inputs and debates. And I’ve seen that already with having different gender, race, background, nationality, experiences. I think it helps you create better strategies that are, frankly, better balanced for what could go wrong or what opportunities you could seize.
DUBNER: Let’s talk about China for a moment. First of all, would you just characterize the relationship and history of G.M. and China in terms of manufacturing and selling autos?
BARRA: So, General Motors was the second global O.E.M. to enter China in the mid-90s.
An O.E.M. is an original equipment manufacturer.
BARRA: And so we’re very proud of our long track record there. We’re No. 2 in market. You know, they’re going through a bit of a recession, even pre-Covid. But we still think over the medium term, if the market is around 24, 25 million units, and you think about that compared to a very strong market in the U.S., would be 17, 18. We still think China has the ability to grow to over 30. So very significant market in size.
DUBNER: I see that G.M. sold more cars last year in China — 3 million — than in the U.S., 2.8 million. But then I look at the revenues and I see that G.M. North America brought in $106 billion, and G.M. International, including China, brought in just $16 billion. So explain what accounts for that huge discrepancy? How are you selling so many cars in China and generating relatively such small revenue?
BARRA: Well, there’s a couple of things. First, as you combine it with G.M. International, there’s still some markets that we’re working to improve.
DUBNER: Meaning some are in the red?
BARRA: Like South America. South America, for instance due to macro issues, exchange rate, etc. So that’s one driver of it. A second driver is, a portion of our business is with our other joint venture that has a lower-price vehicle that they sell. So that’s just a different price point. And then what drives the U.S., one of our true franchises of this company, is our full-size truck franchise. So different product line is probably a big piece of it as well.
DUBNER: I gather that the median General Motors car that’s bought in China is much, much, much, much, much cheaper than the median General Motors car that’s bought in the U.S., correct?
BARRA: I would say that the range varies. Because we also sell Cadillacs and Buicks and Chevrolets along with Baojun and Wuling products. And so the range of prices is far greater in China than it is in the United States.
DUBNER: So what is the least expensive new General Motors car I can buy in the U.S.? And what’s the least expensive new G.M. car I can buy in China?
BARRA: Well, that would probably be one of the new Baojun products in China. And very affordable is the Hongguang E.V. that we just launched in China. And in the U.S., one of the most affordable vehicles is the new — well, there’s the Chevrolet Trax, but also Trailblazer.
DUBNER: Is the entry-level of the cheapest car in China maybe in the $4 to $5,000 range, and in the U.S. more like 10 to 12, or 12 or 15?
BARRA: I think it’s a little higher in the U.S. You know, so much depends on how the vehicle’s contented. I don’t have, off the top of my head, the lowest, lowest price.
DUBNER: So, what accounts for — I mean, you can think of a lot of reasons why. There’s labor costs, there’s supply-chain costs, there’s currency, etc. But can you just describe why can’t I buy some kind of entry-level G.M. car in the U.S. for $5,000, $8,000, $12,000?
BARRA: Well, there’s also regulatory differences between the two countries of what’s required in the vehicles. There are different standards. And we obviously comply with every safety standard in any country we sell vehicles. In many cases, we far exceed those. For instance, there’s things that we put in a U.S. vehicle that aren’t even required in Europe.
DUBNER: What’s a for-instance of a U.S. regulation that doesn’t exist even in Europe?
BARRA: Well, the standards that we have to meet for an unbelted passenger. So, there’s requirements in the U.S. that, I believe — and I’m not an expert on this, but I know there’s some countries in Europe where there’s the assumption that you’re going to wear your safety belt.
DUBNER: So, overall, cars have become so, so, so much safer over the history of auto travel. But there are still more than 35,000 traffic deaths per year in the U.S. And globally the number is to me, almost unbelievable, 1.3 million traffic deaths a year globally. What is the next big advance there? Maybe it’s autonomous. Maybe there are 10 answers, but I’m curious to hear what you’ve got to say on that.
BARRA: Well, I do think there’s 10 answers, because every year we’re improving the safety of our vehicles with technology, on a whole host of issues. But I do think autonomous is an ultimate part of the solution, because when you look at the number of deaths that we’ve studied in the United States, 90 percent of them are caused by human error. And an autonomous vehicle is going to follow all the traffic laws and regulations. It’s not going to drive drowsy or drunk or impaired. And it has A.I. technology that allows you to understand when the light’s going to turn green or red.
DUBNER: So, I happen to be a fan of autonomous vehicles and I’m kind of frustrated that they’re not further along than they are. What do you think have been the biggest drivers in — well, why do you think they’re not further along and what’s it going to take for them to be fully deployed?
BARRA: Well, I think technology will continue to advance. It’s one thing to go on a road and have an autonomous vehicle in a demo. And it’s another thing to, for instance, be on the streets of San Francisco and go to — there’s a famous intersection that’s got like five different streets coming together. And so, you know in the coding world, it’s the corner cases. And you’ve got to solve for all of those. We will solve it. We will have vehicles that could be autonomous and handle any situation as we continue to move forward.
DUBNER: What about public acceptance? Even if, let’s say, 10 years from now, autonomous vehicles are shown to save 30,000 lives in the aggregate from fewer traffic fatalities. If there’s one very visible tragedy — an autonomous vehicle plows into a playground — I’m curious how you see juggling, balancing, the public response.
BARRA: Well, of course, any loss of life, whether it’s technology- or human-driven, is going to be tragic and is tragic. That’s why we’re so focused on the safety standards that we’re holding ourselves accountable to demonstrate before we would take the driver out of the vehicle. And then I think with adoption, one example is, in vehicles we have on the road today, we have a technology called Super Cruise. And Super Cruise, you can take your hands off the wheel, feet off the pedals, even now change lanes. The vehicle will do that for you.
And I have to admit, myself, when I’ve been in the vehicle the first time, you’re like, “Oh, this is a little strange.” But five minutes in, you’re like, “This is good.” And 85 percent of our customers who have experienced that technology say for their next vehicle, they’d either require it or they’d strongly desire it to be in the vehicle. So I think it’s one of these things you have to experience, and then you have to trust the company putting it forward.
DUBNER: What share of vehicles on the road in the U.S. in, let’s say, 2025, will be primarily autonomous vehicles. Can you take a guess?
BARRA: Oh, I think at that point it would still be fairly small. You know, any time in this industry, we tend to make those projections, whether it’s E.V. or A.V., we’re usually really wrong. But I’ll just say, when you look at the way we believe A.V.’s will first roll out, it will be in dense urban environments, thousands of vehicles in each of those cities. But really changing the way mobility is. Because it changes a lot of things. Think about how much space in New York City is designated for parking. So I don’t know if the number is going to be as significant as the impact it’s going to have on communities with the efficiency and the changes it drives.
In 2016, G.M. bought a San Francisco startup called Cruise Automation. Cruise is still based there but they now have access to all of G.M.’s capital and scale. They recently partnered with Walmart to test autonomous delivery vehicles in Arizona, and the city of San Francisco has approved testing on city streets before the end of the year.
DUBNER: From General Motors’ perspective, how would you assess President Trump’s approach to China when it comes to trade and manufacturing?
BARRA: There are issues that need to be addressed as the company has grown. I sit on the U.S.-China Business Council, along with some advisory boards in China. And my whole point is, give us a level playing field. And let us compete. So I think there are some issues that are being addressed — will need to be addressed — as we go forward.
DUBNER: If I recall correctly, you were originally a member of President Trump’s business forum, but you quit following his response to the Charlottesville protests. What was your relationship with him like after that?
BARRA: Well, I think what we looked at is, when I was asked to serve — I think it’s always important to have a voice and have — in decisions that are being made. I think when that group decided — it wasn’t productive because it had just taken on a tone that frankly wasn’t allowing it to be an effective place to provide input.
DUBNER: Purely from a business perspective, especially considering how much business General Motors does in China, would you have preferred to see Trump serve a second term?
BARRA: Oh, you know what, we’re open to work with anybody. We’re — you know, so I think — what I think of that is immaterial. It’s the American people who have spoken.
And Mary Barra has spoken. A quick postscript: A few days after this interview, Barra announced that General Motors would no longer work with the Trump administration’s legal team to fight emissions regulations in California, as they’d been doing. California has ruled that vehicles get more than 54 miles per gallon of gas by 2025; the Trump administration wanted this lowered to 37 miles per gallon. The fact is, the California standards may become moot if the Biden Administration increases federal emissions standards, which it’s expected to at least attempt.
One more thing to add. I’m sure you know the concept of the glass ceiling, which describes how women have a hard time rising to the top of organizations. There’s a related, even more insidious concept called the glass cliff. That’s the idea that women who do make it to the top of an organization are often elevated in part because that organization is already in trouble. Which makes the new female leader more likely to fail — to fall off (or be shoved off) the glass cliff. We made an episode about this a few years ago, No. 319; it’s called “After the Glass Ceiling, the Glass Cliff.”
Anyway, when you talk to academic researchers about the glass cliff, as we did for that episode, the evidence is fairly persuasive. And when you look at the circumstances under which Mary Barra became C.E.O. of General Motors — a recent bankruptcy, a huge safety scandal and related cover-up — it’d be easy to put Barra in the glass-cliff category too. Barra herself has always shrugged off this theory. Whatever the case, when the next academic researchers come looking to survey the wreckage of the latest glass-cliff candidates, they’ll have a useful counterexample to consider in Mary Barra.
* * *
Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Zack Lapinski. Our staff also includes Alison Craiglow, Greg Rippin, Mary Diduch, Mark McClusky, Daphne Chen and Matt Hickey. Our intern is Emma Tyrrell. Special thanks to Jason Stein, from Automotive News. Our theme song is “Mr. Fortune,” by the Hitchhikers; the rest of the music was composed by Luis Guerra. You can subscribe to Freakonomics Radio on Apple Podcasts, Stitcher, or wherever you get your podcasts.
- Mary Barra, chairman and C.E.O. of General Motors.
- Automotive News
- “Electric mobility after the crisis: Why an auto slowdown won’t hurt EV demand,” by Thomas Gersdorf, Russell Hensley, Patrick Hertzke, and Patrick Schaufuss (McKinsey & Company, 2020).
- “Global EV Outlook 2020,” by the International Energy Agency (International Energy Agency, 2020).
- “Power Play,” by Alex Davies (WIRED, 2016).
- “Economic Effects of State Bans on Direct Manufacturer Sales to Car Buyers,” by Gerald R. Bodisch (Economic Analysis Group, 2009).
- “The Downsizing Decision,” by Joseph Kraft (The New Yorker, 1980).
- “Ethical Culture and Legal Liability: The GM Switch Crisis and Lessons in Governance,” by Marianne Jennings and Lawrence J. Trautman (Boston University).
- Road to Power: How GM’s Mary Barra Shattered the Glass Ceiling, by Laura Colby.
- “Can an Industrial Giant Become a Tech Darling? (Ep. 357),” by Freakonomics Radio (2018).
- “After the Glass Ceiling, a Glass Cliff (Ep. 319),” by Freakonomics Radio (2018).