General Motors today announced a major restructuring of the company away from sedans and smaller cars in favor of SUVs and trucks as well as electrified and autonomous vehicles.
The move entails some 14,000 layoffs and buyouts in the US and Canada related to the planned closure of three assembly plants and two transmission plants. Of those, about 8,000 are North American salaried or global executive employees, according to the Detroit News.
That 8,000 would reportedly be 15 percent of the company’s white-collar North American workforce. Of those, 2,250 have agreed to buyout offers and nearly 6,000 are likely to be laid off.
Hourly job losses could be 3,300 in Canada and 2,600 in the US. Overall, the total workforce reduction represents about 8 percent of GM worldwide employees, according to the Chicago Tribune.
“The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future,” said GM Chairman and CEO Mary Barra. “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”
The changes are expected to reduce costs by $4.5 billion next year and also eliminate $1.5 billion in previously planned capital expenditures, according to GM. In recent years GM also shut down its European operations which saved an estimated $6.5 billion.
Among the cars being discontinued is the Chevrolet Volt plugin hybrid which has been made since November 2010 at a factory that straddles the border between the cities of Hamtramck and Detroit, Michigan. The factory also currently makes the Impala and the Cadillac CT6 (a plug-in hybrid version of the CT6 is made in China and imported to the US).
Among the many regional suppliers that will be impacted is LG Chem’s battery factory in Holland, Michigan. GM also has a nearby battery pack assembly factory in Brownsville.
Update: the article originally said four cell production lines at the Holland factory were devoted to making Volt cells.
The LG Holland factory reportedly has three battery cell production lines making Volt cells and a new fifth line recently began making cells for the Chevrolet Bolt EV late this summer. Bolt EV cells and packs are also imported from factories in South Korea. The fourth line makes cells for the Chrysler Pacifica plug-in hybrid minivan.
Chevrolet Volt production will end on March 1 next year which presumably would free up some or all of those first three lines to produce Bolt-style cells after some line reconfiguration.
GM’s exit from the smaller car market follows similar moves in April announced by Ford as well as previous repositioning by Fiat-Chrysler. Readers with long memories may recall similar moves back in the early 1990’s that left GM stranded with SUVs and trucks when gas prices suddenly surged during the first years of the Iraq War.
This time around, predictions are calling for plentiful near-term oil production and potential further oil price cuts. Sales of sedans in the US have fallen from over half of all sales down to about 30 percent, according to Bloomberg. GM is positioning these new moves as a way of getting ahead of a slowdown in vehicle sales and positioning itself for future economic weakness.
The fate of the Chevrolet Malibu sedan and its relatively modestly-selling hybrid variant has not yet been announced. The Malibu hybrid shares the same design and most components with the Volt transmission.
Although Volt production and sales are ending there may yet be a need for some of the technology derived from it. In particular, the CT6 plugin hybrid rear wheel drive transmission may be suitable for use in future hybridized SUVs and trucks although this is speculative.
GM had an earlier product line of rear wheel drive hybrid SUVs and trucks between 2008 and 2013 using an earlier “Two Mode” hybrid design. The Volt and Malibu hybrid front wheel drive transmissions used a simplified variant of that design and the relatively new CT6 RWD hybrid transmission is an architectural engineering design extension of the Volt and Malibu design.
The company had previously announced plans to add 20 fully electric vehicle models by 2023 worldwide many of which may be due to China’s aggressive vehicle electrification regulations.
GM has previously said it would soon introduce two new vehicles based on the Bolt’s powertrain platform within the next six months but there is no recent word on the fate of those plans. A newer-generation electric vehicle platform is planned for new vehicle introductions beginning around 2021.
Honda recently announced a $750 million equity investment in GM’s Cruise Automation subsidiary. Honda and GM said they are working together on a future high-volume self-driving vehicle with Honda pledging up to $2 billion on that and related efforts over the next 12 years.
For its North American operations, Honda has also agreed to join an effort with GM and LG to introduce a new battery cell and pack design in conjunction with those efforts during the 2021 timeframe.
According to Reuters, the three companies aim to drop the cost of batteries by half. Today, GM is widely believed to pay LG between $130 to $145 per kWh for individual cells and total pack costs are estimated to be near $200 per kWh. The moves are needed to keep up with battery cost reduction by Tesla Motors due, in part, to scaled-up production efforts at its Gigafactory near Reno, Nevada.
The three assembly plants closing in North America are:
- Oshawa Assembly in Oshawa, Ontario, Canada.
- Detroit-Hamtramck Assembly in Detroit.
- Lordstown Assembly in Warren, Ohio.
The two propulsion plants closing are:
- Baltimore Operations in White Marsh, Maryland.
- Warren Transmission Operations in Warren, Michigan.
That’s too bad they are cancelling the Volt. I love driving my Volt and I especially love skipping the gas station. I fill up 3 – 4 times a year, which is not bad for 12,000 miles/year average. I wish Chevrolet would have actually advertised it, they may have sold a bunch more.
I recently had the oil changed and the service guy said “I hate that car, I don’t make any money off of it’. I believe this is the real reason they never advertised the Volt.
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