UAW Rescues GM's EV Plans

On Monday, General Motors announced its production plans for its Hamtramck assembly plant to include the company’s first all-electric pickup, to be followed by production of the recently announced Cruise Origin in 2022. The production plans were part of a planned $2.2B investment in the factory which had been slated for closure prior to last year’s negotiations with the United Auto Workers union, according to Automotive News.

The announcement highlights the curious and dramatic impact the UAW strike had on GM and on the union itself. Prior to the strike, GM had announced plans to shutter its plants in Hamtramck and Lordstown – both of which announcements brought gails of grief from workers and even the President of the United States. The UAW chapter in Detroit, meanwhile, was in the throes of an ongoing corruption investigation and prosecution casting its credibility into doubt and certainly angering its members.

General Motors emerged from the UAW strike, which ran for 40 days from September 15th to October 25th, with seemingly refocused plans for EV pickup trucks and automated vehicles revolving around the revived Hamtramck plant. The UAW emerged from the strike with its credibility restored along with job security for its members and a plant rescue to brag about.

From its very beginning it appeared that the UAW strike was a calculated risk GM was prepared to take. In retrospect it is worth toting up the cost.

• The strike emptied dealer lots on the eve of the critical fourth quarter sales period. The strike was ultimately blamed for a 6.3% decline in year-over-year deliveries in the fourth quarter – a figure that, once reported, knocked GM’s stock down 3%.
• The strike was also blamed for GM’s decision not to participate in the CES2020 event in Las Vegas – an annual technology event that attracts more than 180,000 attendees and has become increasingly auto-centric – and also led to CEO Mary Barra’s decision not to deliver a CES2020 keynote. (GM’s absence from the show floor was notable given the array of OEM booths including Daimler AG, FCA, Ford Motor Company, Hyundai, American Honda,, Audi AG and more.)
• The strike was also blamed for GM’s delayed announcement of its plans for all-electric pickups.

Post-strike, GM rushed to make strategic EV announcements:

• EV pickup production at Hamtramck slated for 2021.
• The creation of a new Lordstown plant in a joint battery-making venture with LG Chem.
• Production of the Cruise Origin EV shuttle slated for 2022.

The final announcement - of the Cruise Origin – occurring in the third week in January, just two weeks after CES2020 – raises questions as to why GM chose not to bring the vehicle to the show. A splashy launch at CES2020 would have had far greater and farther reaching impact than the mid-January announcement GM opted for. In fact, news of the Cruise Origin was practically lost in post-CES2020 coverage encompassing the meteoric rise of Tesla Motors’ stock price and Uber’s plans to bring autonomous vehicles to Washington, DC.

In the end, though, it appears that the UAW somehow forced GM’s EV hand. With dealer lots empty and products delayed and the stock heading south, the only option to restore confidence was to lean into bold statements regarding the company’s EV plans – even if the projected positive impacts on GM’s overall business were years in the future.

There is another actor in the mix. Michigan Economic Growth Authority tax credits were at stake and served as yet another compelling factor in GM’s decision making regarding Hamtramck.

Still, the UAW’s strike acted as a fortuitous trigger tipping forward multiple EV dominoes at GM. But don’t expect GM to send the UAW any thank you notes – or vice versa.

GM is still mired in a downward sales swoon, exacerbated by weakness in the critical Chinese market. The UAW, too, is facing its own troubles from the ongoing investigations into past corruption. 

In the end, both the UAW and GM are facing multiple challenges from the onset of electrification – now embraced by both. The UAW faces the prospect of fewer jobs created by the manufacturing processes associated with EVs (vs. internal combustion engine-based vehicles) and GM faces uncertain consumer demand for all electric vehicles. Now both the UAW and GM are in this battle together – perhaps now they can find some solidarity from their shared stress.