By Michael Elkins
General Motors (NYSE:GM) announced internally on Tuesday that the company will be cutting hundreds of salaried positions as it follows other major companies, including competitors, in downsizing headcounts to preserve cash and boost profits.
The timing of the cuts comes roughly a month after GM CEO Mary Barra and CFO Paul Jacobson told investors that the company was not planning any layoffs.
The cuts, first reported by The Detroit News, could affect around 500 positions across various functions of the company, according to a person familiar with the plans.
In a Tuesday letter viewed by CNBC, GM Chief People Officer Arden Hoffman confirmed the company's goal of $2 billion in cost savings over the next two years, which "we'll find by reducing corporate expenses, overhead, and complexity in all our products."
The letter said the cuts, which follow performance evaluations, would impact a "small number of global executives and classified employees following our most recent performance calibration." The cuts started Tuesday and will continue based on location.
"Today's action follows our most recent performance calibration and supports managing the attrition curve as part of our overall structural costs reduction effort," spokesman David Barnas said in a statement. "This action impacts a small number of salaried employees and executives globally,"
GM is currently investing billions in EVs. This year, the Detroit automaker expects its capital spending to total between $11B and $13B, which is up the $9B to $10B it previously expected to spend this year. Much of that is earmarked for EVs. GM is now expected to spend more than the $35B it previously said it would spend on EVs and AVs starting in 2020 through 2025.
"We continue to shift resources to EVs, with around 75% of our product-specific capital dedicated to EVs and AVs," GM CFO Paul Jacobson told investors during the Jan. 31 full-year 2022 earnings call.
Wedbush Securities analysts said in a statement that "GM is going through a major EV transition and cost-cutting is part of this process."
"It's a fluid time for the Detroit stalwart as they make this EV transition in 2023 and beyond with margin stability a laser focus for GM," the analysts said.