The Costs Of GM’s Software Woes: A Cautionary Tale
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The Costs Of GM’s Software Woes: A Cautionary Tale

DETROIT, MI – NOVEMBER 17: General Motors CEO, Mary Barra, and U.S. President, Joe Biden, speak … [+] about the importance of electric vehicle rollouts just 37 days before GM suspends the electric Chevy Blazer due to numerous software bugs. (Photo by Nic Antaya)

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This week has been an impactful one for General Motors, to say the least. At the beginning of the week, GM resumed selling its electric Chevrolet Blazer after suspending sales last December due to multiple software defects. As detailed last Christmas Eve, vehicles in customers’ hands experienced “… infotainment screen [crashes] and numerous fault codes made charging the vehicle, apparently, impossible.” In a statement last Friday, Chevrolet stated it “made significant software updates that will improve features and functionality to deliver on the high expectations of our customers. We’re confident these improvements will address concerns heard from some early owners and as promised, we’re carrying learnings over to other products in GM’s lineup.”

Yesterday, GM lost two executives, one being its newly-hired Executive Vice President of Software and Services, Mike Abbott (51), who joined General Motors in May 2023, to oversee GM’s entire software ecosystem. As noted by the Detroit Free Press, just weeks ago Barra was raving about Abbott by saying he “… has brought in an incredible team: hired people from Google, from Apple, from Meta and many tech companies. We’ve already revamped the software development process and more importantly the validation process.” Although Abbott is stepping away for health reasons, it comes weeks after Barra told investors during a Q4 earnings call that GM’s Software & Services team was “working with a huge sense of urgency”. Barra went on to say “We [have] disappointed these customers, and we know it.”

And so anyone reading the automotive press cannot help but wonder, “What has this software mess cost General Motors over the past four months?” The multivariant answer is complex and unquantifiable at times, but here are a few data points to imagine:

· Revenue: The Chevy Blazer was GM’s lower-cost, electric option for consumers that cannot afford the Cadillac Lyriq. Considering GM plans to sell 200,000 to 300,000 electric vehicles (EVs) in North America this year and the Chevy Blazer has traditionally been one of its stronger models, GM might normally sell 45,000 in a year, thereby losing out on 15,000 sales in those four months of suspension. Multiply that by the price-reduced $54,000 per vehicle, and the resulting lost revenue is a whopping $810 million.

· Future Operating Revenue: Per research in 2022, the lifetime cost of operating a car is nearly $689,000. Assuming 10,000 of the aforementioned 15,000 EV zealots went elsewhere seeking an equivalent electric sport-utility vehicle, the lost, associated maintenance costs of approximately $500/year (*Note: EVs have below the $800 average maintenance costs, e.g., no oil changes, fewer parts to replace) results in another $50 million over ten years.

· Reacquisition Costs: To reacquire those customers in a few years, GM will need to spend on advertising and sales. Per Vena Solutions, the customer acquisition cost for manufacturing companies is $723 per customer. That’s nearly another million dollars for those 10,000 customers.

· Engineering Costs: Albeit the expanded Software and Services team shall be needed at all automakers as each attempts to become a software factory while addressing the predicted rise in software bugs, doing so rapidly always comes at a price. For starters, bringing Silicon Valley experts with haste not only equates to top dollar spends on executives, but it also creates silent costs in the form of turnover. As delineated by Brennan Whitfield in 2023, management accounts for 70% of variance in team engagement, turnover increases 18-43% in low-engagement teams with changing management, higher employee turnover correlates with increased product failure and replacing the employees with shifting management costs up to two times their annual salary. In other words, chaos … and more problems.

Adding the quantifiable to the nebulous, $1 billion lost is imaginable. That’s this week’s very expensive lesson.

OCT 2010, NEW YORK, NY: Billionaire Angela Chao and sister to former Secretary of Transportation, … [+] Elaine Chao, as well as sister-in-law to Mitch McConnell, attends New York Opera’s Fall Gala. Chao drowned in a Tesla this past week after failing to put the windows down.

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Author’s Note

You cannot see t the hairs on my neck, which are standing erect as I note a few juxtaposed stories in the past two weeks:

· The Four Horsemen: My foretelling that software development practices in the auto industry (and cybersecurity attacks) suggest a day of reckoning.

· A Bug To The Light: A detailing of the growing obsession with touchscreens and how the exploding tech must be better understood.

· The Death of Angela Chao: How a billionaire’s death might be linked to poorly designed software and confusing user experience within Tesla’s touchscreen and shifter.

· GM’s Software Woes (see above)

If GM’s software snafu cost them $1B, how much will Telsa’s touchscreen cost? How many more such incidents until the automakers realize the depth of the overarching issues? Software isn’t easy. Safety isn’t easy. Security isn’t easy. Mixing the three in hurried fashion is disastrous, and can contribute to drowning billionaires and idled plants.