Barra Boldly Stakes GM To a Future Without Fossil Fuels

General Motors Chairman and CEO Mary Barra absolutely put the pedal to the metal today by setting a date of 2035 for phasing out the company’s gasoline- and diesel-powered vehicles around the world, marking the industry’s most prominent vow yet to eliminate internal-combustion engines from a lineup by a definite date.

Barra also pledged to make General Motors “carbon neutral” by 2040 in its global operations as well as its products, doubling down on its use of renewable energy to power its factories while also investing $27 billion in electric and autonomous vehicles in the next five years.

“General Motors is joining governments and companies around the globe working to establish a safer, greener and better world,” Barra said in a GM statement. “We encourage others to follow suit and make a significant impact on our industry and on the economy as a whole.”

Time will tell if other automotive CEOs will join her in making such breathtaking pledges. No one else has outlined such a big bet with such a specific timeline even as governments around the world have been setting down all of their own deadlines. But for now, it’s enough that Barra has dramatically intensified her own company’s commitment to bringing an end to the fossil-fuel era. In doing so, she continues to leapfrog herself more than anyone else.

Barra apparently seeks to overturn sooner rather than later a GM business model which now depends on petroleum-fueled vehicles for 98 percent of its sales and all of its profits, including most of the company’s hefty profits from pickup trucks and large SUVs sold in the United States that are its fleet’s least fuel-efficient.

At the same time, Barra’s declaration included a turnabout in GM’s relationship with the environmentalist community that has been a bane of existence for automotive CEOs for decades. She even brought the Environmental Defense Fund into the tent to help “develop a shared vision of an all-electric future and an aspiration to eliminate tailpipe emissions” by 2035, the GM release said. EDF President Fred Krupp asserted in the release that such a move now “is an essential element of any automaker’s business plan.”

“EDF and GM have had some important differences in the past, but this is a new day in America – one where serious collaboration to achieve transportation electrification, science-based climate progress and equitably shared economic opportunity can move our nation forward,” Krupp said.

Still, the timing of Barra’s announcement this week comes tightly on the heels of a flurry of moves by the new Democratic administration in Washington, D.C., to prod automakers to give up on fossil fuels – and perhaps to dramatically disincentivize the companies’ continued dependence on the internal-combustion engine. These signals range from calls for President Biden to declare a “climate emergency” that would allow him unilaterally to restructure American industry without fossil fuels to hints by new U.S. Senate Majority Leader Chuck Schumer that Congress could leverage the budget-reconciliation process to ban gasoline-powered vehicles at any moment.

In any event, there’s been little doubt of Barra’s general direction for at least the last few years of her seven years at the helm of GM. She accelerated development and introduction of GM’s first all-electric vehicle, Chevrolet Bolt; rode herd on GM’s development of its own Ultium battery system so that the company wouldn’t be dependent on outsiders for a technology so important for the future; ordered the conversion of Cadillac into the company’s EV luxury brand; signed off on a new EV-delivery-vehicle venture called BrightDrop; and, most recently, even endorsed a change in GM’s traditional brand logotype to reflect her hopes for a “connected” future.

Yet getting from here to the new “there” she has described would be a monumental accomplishment for any company. Besides the matter of transforming GM’s business model, there will be a thicket of challenges including consumer readiness to give up on ICEs and fully embrace EVs, the company’s ability to compete with Silicon Valley for the digital talent that more thorough electric and autonomous connectedness requires, and the huge impact Barra’s plans will have on hourly workers who belong to the United Auto Workers union.

An industry rule of thumb is that EV production requires about one-third less labor than making conventional vehicles because of the absence of an engine and traditional transmission as well as exhaust and other systems, making EV output less materials-intensive and less complicated. In its release today, GM referred to “maintaining high-quality jobs which … will be needed to meet these ambitious goals.”

Barra already ranks as one of the most consequential chiefs of GM in its history and as one of the most important automotive CEOs of her era. The average tenure of GM’s 13 chiefs has been only about five years since the time of Alfred P. Sloan that ended in 1956. Significant stints included that of Roger B. Smith, in the 1980s, who launched Saturn, and Rick Wagoner, in the 2000s, who ended up presiding over GM’s plunge into bankruptcy during the Great Recession of 2008 and 2009.

Arguably, what Barra already has accomplished in overhauling GM – which also has included major moves such as axing most sedans and exiting Europe – has made her the company’s most impactful CEO since Sloan, who during his 33 years at the top of the company introduced the epochal GM business model of creating a ladder of brands that offered “a car for every purse and purpose.”

Indeed, Barra also might rank even today as one of the industry’s most significant CEOs of the last half-century, who also have included Lee Iacocca, the charismatic Chrysler chief who kept the company alive during the bruising 1980s, and Alan Mulally, the Ford CEO, operations whiz and effective leader who revitalized Ford without benefit of bankruptcy during the early years of the recently ended 10-year boom in the U.S. auto industry.