General Motors and the Electric Car Revolution: Boom or Bust?
(9 pages of text)
Case (Pub Mat)
By February 2019, General Motors Company (GM) had evolved into one of the three dominant North American automobile manufacturers, selling over 10 million vehicles annually. However, GM’s global market share had been declining over the previous 10–15 years due to intense competition in the small and mid-sized car segment from new entrants with a cost structure unlike global competitors and a product marketing strategy more focused on price than quality products. This development forced GM to rely heavily on sales of its pickup trucks and sport utility vehicles to increase gross margins that had been consistently below industry averages. At this point, the industry was also shifting toward a new automotive platform and related business model dominated by autonomous and electric vehicles. GM had to find a way to transform its current business and profit model to meet the needs and trends of an emerging electric and autonomous vehicle industry.
This case provides an opportunity for students to understand the key features of an industry’s business model, and how key competitors conform to this model while attempting to differentiate themselves and their offerings. It also illustrates how the evolution of an industry’s core technology can introduce a disruptive business model that can change an industry forever. After completion of this case, students will be able to do the following:
- Analyze GM’s business model relative to the newly evolving business model associated with the electric car industry.
- Understand what a disruptive business model is, and discuss whether the mass adoption of electric autonomous vehicles will disrupt the auto industry through a fundamental change to the industry’s profit model.
- Discuss how incumbent competitors like GM can (or cannot) change their business in reaction to a new disruptive business model.
- Discuss the difficult strategic question of what GM should do to survive the fundamental changes transforming the automotive industry.
Transportation and Warehousing
United States; Europe, China, Large, 2018
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