In a bold move that signals a new direction for General Motors (GM), the company has officially banned the word “normalization”. In a candid conversation with investors, GM’s CFO, Paul Jacobson, explained that this shift reflects a broader change in how the automaker approaches both market challenges and long-term goals. Gone are the days of reacting to every economic fluctuation with knee-jerk adjustments. Instead, GM is focused on consistency, strategic restraint, and an eye on sustainable growth—no matter what the future holds.
This mindset is particularly crucial as GM steers toward its ambitious goal of becoming an all-electric vehicle (EV) company by 2035. The company is navigating turbulent economic waters, including potential shifts in U.S. policy under the incoming Trump administration, yet remains steadfast in its strategy. Let’s take a deeper look at how General Motors is evolving, how it’s tackling industry challenges, and why its approach to the EV market is gaining attention.
Why GM Banned “Normalization” and What It Means for the Future
The word “normalization” is no longer allowed in GM’s boardrooms. CFO Paul Jacobson shared that the company’s management became increasingly frustrated with the term. In his view, normalcy is subjective and constantly shifting. GM’s strategy no longer revolves around returning to the way things were but embracing the idea of “new normals” that adapt to both market fluctuations and consumer needs.
Jacobson’s comments highlight an important shift in how GM views its operations in the face of both good and bad times:
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A new approach to production: GM has recalibrated its approach to vehicle production to prevent overproduction during boom periods, which once led to heavy discounts and erratic profits. Now, the company exercises restraint, focusing on controlling production and maintaining price stability.
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Consistency, not volatility: GM aims for a more predictable business model, even if it means sometimes leaving money on the table in strong market conditions. Jacobson admitted that by producing fewer cars, GM might sacrifice short-term gains but it avoids the severe cost-cutting and sales incentives required when sales slow.
This shift away from short-term thinking and volatility-driven production is part of GM’s strategy to ensure the company is resilient during economic downturns and more profitable during recoveries.
GM’s Strategy: Restraint During Good Times for Stability in the Long Run
A key aspect of GM’s evolution under Jacobson’s leadership is the company’s shift to a more measured, long-term strategy. Rather than focusing on immediate profit by increasing vehicle production during boom times, GM has adopted a conservative approach. This means focusing on:
- Lowering risk by keeping production levels steady.
- Controlling incentives to avoid price wars.
- Maintaining strong inventory management to ensure that supply and demand are well balanced.
Jacobson acknowledged that this strategy may leave some potential profits unclaimed when demand is high, but the long-term payoff is worth it. By avoiding the peaks and valleys that previously marked GM’s performance, the company is setting itself up for greater financial stability.
This model has worked well so far. GM now faces fewer of the market swings that once created massive challenges, such as overproducing vehicles when demand is high, only to scale back with heavy discounts during a downturn.
GM’s Resilience in the Face of Trump Administration Challenges
Looking ahead, GM’s strategy will be tested by changes in the political landscape, particularly under the incoming Trump administration. Jacobson addressed potential risks, such as:
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The future of the $7,500 EV tax credit: With predictions that the Trump administration may scrap or reduce the federal EV tax credit, GM’s push for electric vehicles could face setbacks. However, Jacobson expressed confidence that GM’s commitment to EVs would continue, regardless of regulatory shifts.
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Tariffs on vehicles produced in Mexico: With GM’s Mexican production facilities supplying a significant portion of its U.S. market, the potential for higher tariffs presents a challenge. Yet, GM is prepared. Jacobson highlighted the company’s strong U.S. presence and investment in battery manufacturing as key factors that will help mitigate the impact of any new trade policies.
Despite these risks, GM is unwavering in its commitment to its long-term goals, including its EV transition. Jacobson emphasized that the company is more focused on its strategic vision than any short-term disruptions, whether from policy changes or economic fluctuations.
Strengthening GM’s Position in the EV Market
A central part of GM’s future plans is its electric vehicle push, which is set to culminate in the company becoming fully electric by 2035. This ambitious goal will require extensive investment in battery technology, manufacturing infrastructure, and consumer adoption.
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Partnership with LG: GM’s collaboration with LG Energy Solution in the Ultium Cells joint venture is a critical part of its EV strategy. The partnership helps GM produce battery cells for its Ultium platform, which powers a growing line of electric vehicles, including the Chevrolet Blazer EV and Equinox EV.
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Domestic Manufacturing Focus: Jacobson highlighted GM’s commitment to building its battery production capabilities within the U.S., with plants in Ohio and Tennessee. This effort is part of GM’s onshoring strategy, which aligns with the Trump administration’s goal of creating U.S. jobs and reducing reliance on foreign suppliers.
Jacobson believes this strategic focus will help GM stay competitive in the global EV market, even as it faces challenges from both domestic policies and international competition.
The Road Ahead for GM: Balancing Stability with Innovation
As GM continues its transformation, the company is placing significant emphasis on its long-term sustainability and adaptability. Jacobson’s remarks underscore GM’s focus on balancing stability with the need for innovation, particularly in the growing electric vehicle market.
The company’s ability to weather economic cycles, policy shifts, and market volatility will ultimately determine how successfully GM navigates this period of change. However, with its focus on consistency, restraint, and a commitment to EV technology, GM is positioning itself for continued success in the years to come.
