Case Study

Back to the future: GM and the electric vehicle

16 pages
December 2014
Reference: IMD-7-1631

How should organizations balance pressures to decrease short-term costs at the expense of long-term profitability? How “long” is the long-term? What is the cost of innovation? These are the questions that CEO Mary Barra must face when leading General Motors (GM) into the 21st century. GM became the world’s first mass-produced electric vehicle retailer when it released the “EV1” in 1996. However, GM canceled the program in 2002, citing high costs, a limited market for electric vehicles, and the lack of technology available to make high-performance vehicles. The emergence of Tesla Motors in 2006 and its exponential growth in the electric vehicle market has proven otherwise. Ironically, Tesla Motors began with the same technology that GM already had access to with only a fraction of GM’s resources. The rapid rise of Tesla Motors in the electric vehicle market and the subsequent bankruptcy of GM suggest that GM made the wrong decision to abort its electric vehicle program in 2002. However, it is unclear how GM should proceed. In 2015, the company will launch its first all electric vehicle since the EV1, the Chevrolet Spark. To what extent should GM enter the electric vehicle sector? Tesla Motors is already scheduled to release a more affordable car in the next two years and has been proving its autonomous driving technology. Other automobile manufacturers have also released all-electric vehicles, including BMW, Nissan, Ford and Toyota. Hydrogen fuel cell technology is also on the rise and may be a promising alternative to electric vehicles. Lastly, the Asian markets are leading the demand for automobiles. Place yourself in the shoes of Mary Barra. What should GM’s strategy be in order to regain its stature as the world’s leading automobile manufacturer?

Learning Objective

When organizations are first established, their success largely depends on their value proposition and unique offering to the market as they achieve their vision. But then what? Often times, large organizations become entrenched in their existing revenue streams and forget to iterate on their long-term vision. The case of GM illustrates the importance of continuously iterating upon a long-term vision and constantly moving towards it.

Long-term Strategy, Vision
World/global, United States of America
General Motors, Tesla, Automotive
Published Sources
© 2014
Available Languages
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