General Motors is cutting over 1,000 salaried software and service employees, despite the automaker’s increasing focus on opportunities to expand revenues through the use of connected and autonomous vehicle technologies. The company said the move will help it “prioritize investments.”
GM CEO Mary Barra has said the automaker expects to earn billions from software and related services.
Today’s vehicles have become as much computers on wheels as they are mechanical modes of transportation. That’s why General Motors has taken some industry observers by surprise with news that it is cutting an estimated 1,000 or more jobs in its software and services division.
The move comes at a time when many manufacturers are aggressively hiring tech employees. That includes cross-town rival Ford Motor Company which recently dedicated an entire technical center in Detroit’s Corktown neighborhood anchored by the restored Michigan Central Depot.
For its part, GM has made a priority of targeting various high tech ventures, CEO Mary Barra repeatedly suggesting there are billions of dollars in potential revenue opportunities for connected and autonomous vehicles.
Prioritizing investments
GM has to spread investment dollars around as it expands its EV program.
“As we build GM’s future, we must simplify for speed and excellence, make bold choices, and prioritize the investments that will have the greatest impact,” a statement from GM explained. “As a result, we’re reducing certain teams within the Software and Services organization. We are grateful to those who helped establish a strong foundation that positions GM to lead moving forward.”
The automaker did not offer specific details on how many jobs it planned to eliminate but a report by CNBC placed the number at “more than 1,000” salaried staff worldwide, with 600 of the cuts coming at the General Motors Technical Center in Warren, a northern Detroit suburb.
Based on that figure it would account for roughly 2% of U.S. salaried employees – which totaled 53,000 at the end of 2023. Globally, GM had 76,000 salaried staff at that time.
Who’s impacted
Most of the cuts will be made at the GM Technical Center in Warren, Michigan.
General Motors was one of the first automakers to make a serious push into onboard electronics – moving beyond basic digital controls for mechanical systems such as engines and transmissions. It launched its OnStar division in 1996 to provide basic safety and security services. Its equipment today is found on all of the vehicles sold in key markets such as North America and Europe.
OnStar has expanded its array of services and features but so have other GM software and services operations. On the hardware side, new vehicles now feature at least one digital display and some, like the new Cadillac Escalade IQ battery-electric vehicle, boast displays covering the entire instrument panel. Under Barra, the automaker has sought out new revenue opportunities such as infotainment-based subscription services.
It also has pushed into vehicle autonomy and is now rapidly expanding the availability of its Super Cruise driving system. As of this coming model year, the hands-free technology will be offered – and in some cases come standard – on all GMC and Cadillac models sold in the U.S.
According to prior comments made by CEO Barra, GM was expecting the typical owner to spend $150/month for a combination of software/connected tech-based features and the hardware to use them.
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Why the cuts
The pillar-to-pillar screen in the new Escalade IQ.
In the wake of the news cuts at GM, the question is why? There has been some concern that automakers might have overestimated potential connected car revenues, according to analysts such as Sam Abuelsamid.
There’s also the fact that various automakers have begun outsourcing some of their connected car operations. GM is one of those migrating to the Google built-in operating system, with its digital voice assistant.
The automaker also has to carefully parse its capital expenditures as it continues to grow its fleet of all-electric vehicles.
The cuts, meanwhile, come at a time when there is growing concern about both the health of the economy and the direction the auto industry is taking. There have been layoffs elsewhere in the business, notably at Stellantis, in recent months.
As I see it there are two possible reasons:
– GM is moving SW to a low-cost country, spelled I-N-D-I-A.
– GM evaluated the tons of recent SW hires and is deleting the ones who didn’t work out.