GM CEO: Chip shortage expected to ‘last until 2023’

General Motors CEO Mary Barra speaks with Yahoo Finance’s Andy Serwer at the 2022 Milken conference about the global chip shortage, electric trucks, and the outlook for EV investment and adoption.

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BRAD SMITH: Welcome back to Yahoo Finance, everyone. This year's Milken Conference continues in person in LA, bringing together heavyweights across industries, including companies like GM. We take you there live with Andy Serwer, Yahoo Finance Editor-in-Chief, at the Milken Conference. Andy?

ANDREW SERWER: That's right, Brad. I'm here with Mary Barra, CEO, General Motors. Mary, so great to see you.

MARY BARRA: Well, thanks for the opportunity. Good to be here.

ANDREW SERWER: You just announced earnings last week, a nice solid strong quarter. How much of that had to do with raising prices and what you're able to get in your showrooms? And what should consumers expect going forward with pricing?

MARY BARRA: Well, we still are seeing some constraints in products, so frankly, right now, the demand for our products. And we have some new products coming out right now, like the next generation of our Chevy Silverado and our GMC Sierra. So we're seeing really strong demand. I think people are going to continue to see that there's not a huge availability of vehicles. And that is leading to stronger pricing. But we also think there's value there with the new innovation on these vehicles.

ANDREW SERWER: I do want to talk about your product line, because it's really exciting all the changes that you're making-- the new vehicles. But I do want to ask you a little bit about supply chain.

MARY BARRA: Sure.

ANDREW SERWER: Everyone's heard about the chip shortage, Mary. How is that affecting what you're able to do?

MARY BARRA: Well, it still is having an impact. You know, what we see is kind of quarter after quarter, it gets better, but I think it will last into 2023. We're changing the way we do semiconductors. So over the longer term, we plan on having fewer versions of semiconductors. We're going to standardize on three families. But for right now, we're working through the constraints. And I have to give a big shout out to our supply chain team. They do a phenomenal job.

ANDREW SERWER: Another headwind, particularly from the consumer front, is higher interest rates. And I'm wondering how you're considering that, factoring that in in terms of demand from the consumer side?

MARY BARRA: Well, interest rates is something we watch very, very carefully. And again, though, right now, though, I think the demand for our products is outweighing that. Generally, people might make a different decision on what features and functionality they get on the vehicle, but it really hasn't impacted demand. So it's something we continue to watch.

ANDREW SERWER: And what about the model with the car dealers? You know, obviously, there are others that are doing DTC. That's a big buzz word these days. Are you considering going direct to consumer and what is your thinking on that?

MARY BARRA: Well, I really think over the long term, our dealers are a strategic asset. They have the relationship in the community with the customers. And our offering is going to be, what does the customer want? If they want to buy the vehicle completely online and have it delivered to their home, that's an option. If they want to go into the dealership and literally kick the tires, they can do that too.

But we've dramatically changed the process. That was one of the silver linings out of COVID, that we really accelerated our online shopping experience. So we're going to meet the customer where they are.

ANDREW SERWER: And in terms of getting back to normalcy with regard to COVID, in terms of your workforce, in terms of being able to operate your plants and facilities, where do things stand right now, Mary?

MARY BARRA: Well, you know, I have to just say, across the globe, so many of our people who need to be at work to do their work, they stepped up. They followed our safety protocols so they could safely come back to work. And they continue to do that. Now, as we're getting to the point for those who can work from home, they're starting to come back. But our practice there-- we call it work appropriately. And it's not, I want you in the office or I don't want to be in the office. It's where can you do your best work?

And that kind of flexibility is I think what we need to offer today's workforce where we can. And we're seeing that. We're in early days. I've also told them, look, we're going to start and we're going to learn, and we'll adapt as we go.

ANDREW SERWER: But the assembly plants full bore now?

MARY BARRA: Oh, you know, back in 2020, about five or six weeks after, for instance, the US shutdown, our people came back. And they came back in masks. They followed the protocols. I mean, the only time we've had downtime is more for parts shortages, not because of the team. So again, really a strong performance and commitment by our GM team members.

ANDREW SERWER: All right, let's talk about some of those new vehicles. But I want to start, actually, with the core of the business, which is what you're doing with batteries. And I think that's a huge endeavor and part of your strategy going forward. So let's take some time and really drill down into how that works.

MARY BARRA: Absolutely. And you're absolutely right. For electric vehicles, it's all about the battery. And that's why we've done two major things. First, about four years ago, we recognized, because of our experience with the Chevrolet Volt and the Chevrolet Bolt, we knew we needed a dedicated architecture for EVs, one that was scalable, and also one that would give us the speed to roll out a whole portfolio of electric vehicles. Because again, when you're looking to get to 50% of what you sell all the way to 100% by 2035, you need to have a portfolio of electric vehicles.

So we started launching the Ultium platform at the end of last year with the GMC Hummer EV. It's also now being launched with the Cadillac LYRIQ that's coming out of Spring Hill, Tennessee. And you'll continue to see more and more vehicles like the Chevy Silverado early next year, the Chevrolet Equinox, and the Chevrolet Blazer. And there's even more coming than that that that haven't released yet.

And so what's key, though, is we also looked at this pivot to EVs and we really assessed our supply chain. And we decided that we wanted to have control over battery cell manufacture. So we formed a joint venture with LG, one of our partners. And we now have a plant coming online this year in Ohio, another one coming online next year, the following year, and one after that. So this is really a significant change in bringing this work to the United States, creating jobs, and also having more control over the chemistry, the technology, and also just the actual ability to make our own battery cells so we can meet the acceleration plan we have for EVs.

ANDREW SERWER: I have so many follow up questions on that. I mean, how many jobs, for instance, do you anticipate creating with these new battery plants in the United States?

MARY BARRA: Well, roughly, every battery plant is around 1,100 to 1,200 people. So if you think about that four plants alone-- and we're not done yet-- that's a significant job creation.

ANDREW SERWER: And these manufacturing facilities-- it's probably more expensive to have them in the United States, but you'd have the trade-off with the safety of supply chain?

MARY BARRA: Well, safety of supply chain, but also logistics. And so when you think about the logistics piece of it, having it close to where we're actually building the vehicle or assembling the battery pack is an advantage.

ANDREW SERWER: And so these batteries, they're basically with your partner LG. They're specific. They're going to be used specifically in GM vehicles? They're different from other manufacturers? I mean, are they ever going to be compatible? Is it ever going to be the case that batteries would be compatible across different manufacturers?

MARY BARRA: Sure. Well, when we look at the way we designed the Ultium platform for our electric vehicles, we, one, wanted it to be chemistry-agnostic. Because we knew there was going to be advancements in chemistry that would improve energy density, range, et cetera, of the battery performance. But we also recognized there'd be different cells, so whether it's prismatic, pouch, or cylindrical cells, the Ultium platform can accommodate all of that.

So we are working with not only LG, but many other partners, and doing our work internally on battery cell chemistry. But we also recognize the breakthrough technology could come from anywhere. And that's why we spent the time to put the flexibility into our Ultium platform. We're really focused on doing it right for the long term.

ANDREW SERWER: Listening to you, I'm reminded that you studied as an electrical engineer, so got some good background there from an education standpoint. And so some of the components of the elements, though, come from-- nickel comes from Russia, and you have to source still from overseas. What are some of the challenges there when it comes to batteries?

MARY BARRA: Well, in the short term, we feel that we've got the supply arrangements in place, so we're going to be able to meet our ramp. But going forward, we're also looking to make sure more of this supply chain is in North America or with strong trading partners like Australia. So we've been announcing several arrangements with suppliers, not only to have the capacity between now and 2025, but '25 and beyond. And, you know, I'm very pleased with where we're at. We have a few more materials to secure, but we're on it.

ANDREW SERWER: Let's talk about some of the vehicles now. And we're talking about America. We're talking about pickup trucks. It's going to be a dogfight. Silverado is going to be ready to go, though, right? Talk to us about Silverado.

MARY BARRA: Absolutely. Well, the Silverado will be rolling off assembly lines in less than 11 months. And this is a truck with no compromises, from 400 miles of range, faster fast charging, the flexibility of the bed with a MultiPro tailgate, as well as the ability to reconfigure the cab. It's got more storage. And so it's a truck with no compromises. And as we share the details with our dealers and with customers, they are-- it's a truck worth the wait.

And not to mention, we already have the GMC Hummer out right now, and it is a true super truck-- turning radius, you know, the power of the vehicle. And so when we look at all the best features of the Hummer, many of those are going to be on the Silverado as well. And then not too long after the Silverado launches, we'll also have the GMC. So we're going to have a portfolio of trucks. Because what we've seen in the market is truck buyers-- there's a lot of people who are now truck buyers, from those who need it for their livelihood, to people who just want to drive a truck because it's cool.

ANDREW SERWER: And you do have the Tesla and the Ford coming out, and Rivian as well. How do you anticipate that competitive landscape?

MARY BARRA: Well, you know, General Motors has sold more trucks collectively than anyone for several years now. And so with our strong performance and our knowledge of truck customers, we feel very well-positioned to offer choices in the truck market to meet the customer what they want.

ANDREW SERWER: Psychologically, I mean, there is an element that's very macho for trucks, right? You talked about a lot of different buyers of trucks, of course.

MARY BARRA: Right.

ANDREW SERWER: But there is this-- the American, you know, frontier-- you see the commercials, right? I mean, is it really going to be the case that these guys are going to be comfortable driving electric pickup trucks?

MARY BARRA: You know, I'm driving a Hummer EV right now, as well as I'm driving a Bolt. One of the best parts of my jobs is I get to drive a lot of vehicles. But the Hummer EV, it is just-- the turning radius, the instant acceleration, the capability, whether you need towing or payload, it's going to be there. So yes, they are going to be buying electric trucks.

ANDREW SERWER: And so the Hummer is available right now?

MARY BARRA: Yes, yes.

ANDREW SERWER: OK. And these, by the way, are all-electric. They're not hybrids.

MARY BARRA: All-electric. We strategically made the decision of why go halfway to the solution with a hybrid, but go all the way and get to the end game. And that's one of the reasons we're going to be able to have a full portfolio out faster than most of our competitors, because of that investment, because we didn't do hybrids. Customers kind of said, I'm not interested in a hybrid, because I don't want to pay for two propulsion systems on the vehicle.

ANDREW SERWER: This is a thing for all auto manufacturers. When are you going to be all-electric or mostly electric? What is GM's benchmark there?

MARY BARRA: So in the United States, GM has said and our plan is that we will be all-electric with our light duty vehicles by 2035. We're the only one with a full portfolio who's made that commitment. And then we think the solution for heavy duty vehicles is fuel cells. And we have the Hydrotec technology that will be implemented there. So we're moving aggressively to move to that all-EV future.

ANDREW SERWER: And is that hydrogen? I'm sorry.

MARY BARRA: Well, for our light duty vehicles, it will be battery electric.

ANDREW SERWER: Right.

MARY BARRA: We believe the solution for heavy duty vehicles and beyond in other applications for stationary power is fuel cells.

ANDREW SERWER: How do you even have a strategic plan in your mind and with the board and with senior management, with this amazing revolution going on in your business?

MARY BARRA: Well, you know, I have a phenomenal board, and they have been very, very involved in setting out the strategic course and encouraging us to go fast and get to the end game technology, and make sure we do it in a way that we're going to grow share. So what it represents for General Motors is tremendous growth potential, not only in electric vehicles, also in autonomous vehicles, and then the services that sit on top of the vehicle. Because the vehicle really is now a software-defined platform.

ANDREW SERWER: And when is the-- when are the lines going to cross, Mary, for the overall auto market in the US between electric and internal combustion engines?

MARY BARRA: Well, for General Motors, we're targeting by 2030. So five years before our goal to be 100%, we're going to be approaching 50% of our vehicles. I think we're going to be on the leading end there. But I would say, you know, around the end of the decade, you're going to start to see it become a race to what's going to be greater than 50%.

ANDREW SERWER: Mary Barra, CEO, GM, thanks so much for joining us. Brad, back to you.