GM’s new business model turns automakers into software companies

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The transition from General Motors to all-electric vehicles will turn the centuries-old automaker into a software company that happens to make hardware: automobiles.

In the new business model, the cars will be a platform for delivering software developed by GM to offer consumers services beyond their vehicle. Services that can be used in the home and in other areas of their lives, say GM executives.

It is “a potential game changer for the delivery of subscription services that generate recurring revenue,” said Alan Wexler, GM’s senior vice president of innovation and growth.

Wexler said GM will share more details in the coming weeks about how its software strategy is turning cars into devices.

“(It’s) similar to how you think about your iPhone or Android phone,” Wexler said Wednesday at the Benzinga Electric Vehicle Investor Conference, which was held virtually. “We’re working to create experiences and services by using data in and beyond the vehicles.”

The new business model will also help GM recruit and hire the best tech talent, GM President Mark Reuss said Tuesday at the Mackinac Policy Conference 2021 on Mackinac Island.

“We hired more people in the first half of 2021 than in 2020 together,” said Reuss. “Young people and seasoned people who want to be part of the revolution of what this transformation looks like come to our company to do this.”

Deliver desirability

Reuss said that Silicon Valley and other types of technology have shunned the auto business in the past, but now people understand that the car is a platform that delivers the software. “It’s very exciting for a lot of people who probably wouldn’t have thought of automobiles in the past.”

In November, GM announced that it would be hiring 3,000 engineers, designers and technology specialists by the end of the first quarter, and most of those people will be able to work remotely to open up the talent pool across the country.

GM did not immediately have the latest recruitment figures available.

Reuss said technology in vehicles today, such as GM’s advanced electric power steering, brakes and hands-free driving technology, Super Cruise, is the foundation for developing the software “for the company’s future growth,” he said.

In addition, “We have to build cars like the (Cadillac) Lyriq, which is not in the charts in terms of attractiveness,” said Reuss. “We have to deliver things that people don’t even know they want, in terms of connectivity, software and what it does to make their lives easier and how they feel when you drive this car.”

The 2023 Lyriq is an all-electric SUV set to hit the market next year. Also sold later that year is the 2023 GMC Hummer EV pickup, which was built in Detroit and Hamtramck at Factory ZERO. GM has announced that it will bring 30 new electric cars to market by 2025.

“We can only take advantage of this growth opportunity when we have cars that people want to buy. That basically has to be there,” said Reuss. “Then we can deliver things that are somehow out of this world that people don’t even know they want.”

Planes, trains and cars

GM’s future rests on the technology it develops for its EV future, such as the Ultium battery system. Wexler said Ultium not only underpins a wide variety of electric vehicles from GM’s four brands, it also enables partnerships like one with Honda.

About this time last year Honda and GM formed a North American automotive alliance. In it, the two share a range of vehicles to be sold under each company’s respective brands, as well as a collaboration in purchasing, research and development, and other related services. The two can take advantage of their size by buying supplies cheaper and saving tons of money. The Honda Prologue SUV EV is the first vehicle that GM developed with Honda. It will go on sale in 2024.

GM also developed hydrogen fuel cell technology that enabled the company to partner with long-distance transportation company Navistar Inc. and hydrogen supplier OneH2 in January to develop a complete zero-emission long-distance transportation system in the United States.

In June, GM announced that it would develop and supply its Ultium battery technology and Hydrotec hydrogen fuel cell system for powering locomotives in partnership with Wabtec Corporation, a company that provides equipment and other services to the freight and rail industry. Also in June, GM and Liebherr-Aerospace, a provider of on-board systems for aircraft, announced a partnership to develop ways of using hydrogen fuel cell power generation in an aircraft.

“We are rethinking the company and our future as a platform company. It goes beyond vehicles, ”said Wexler. “There is the ability to propel planes, trains, automobiles and even beyond transportation.”

A big company that acts small

Outside the vehicle, Wexler said GM is looking for revenue opportunities with subscription services such as OnStar.

GM has announced that it will offer OnStar insurance. The name comes from the brand that GM uses for the safety communication system integrated in its vehicles. However, GM is expected to sell its own insurance policies for all vehicles, including non-GM brands, as well as homeowner and renter insurance. The electric car maker Tesla has been selling auto insurance to its vehicle owners since 2019.

On Wednesday, GM announced OnStar Guardian, a new security app that provides voice-controlled connectivity to emergency-certified OnStar advisors at home via compatible Alexa devices.

Finally, he quoted BrightDrop, GM’s new electric van and software startup. The company will be delivering a small number of all-electric EV600 vans to its first customer, Fedex, over the next year. It will also offer the EP1, an electrically powered pallet for moving packages.

“We have already tested it with FedEx and demonstrated an efficiency increase of over 25% because we are not only concentrating on the van itself, but are developing a software solution for it and devices starting with the (EP1) and actually covering the first and last mile” said Wexler.

As GM’s self-driving subsidiary Cruise is working on self-driving cars, this will open more doors to invent new software or subscription options, according to Wexler.

“At some point, driving in the back seat of a vehicle will be very different than it is today. In terms of software, services and experiences, we can offer and create new experiences for people, ”said Wexler. “It’s going to be great for the people, but also for the business, and we lean against all of that. Running like a big company because we have the size, the tech, the people and the culture. But also like a small businesses act “we are thinking about developing software and services for the future.”


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