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The news that General Motors is contemplating investing in startup pickup maker Rivian is troubling for a multitude of reasons that have nothing to do with the quality and engineering of Rivian’s slick-looking battery-powered truck.
First, there’s the optics of the situation.
GM is closing plants when it is solidly profitable. If GM is so concerned about future profitability, how could investing tens of millions of dollars — or more — in an unknown product from an unknown company be wise when many internal issues could use funding to make GM’s business healthier?
Amazon will lead a $700 million investment in Rivian, we learned last week.
GM CEO Mary Barra had nothing new to say about the automaker’s potential investment at an event Monday, so apparently nothing has been finalized.
But if I’m a GM shareholder, I would want to see the business case for an electric pickup. I’d want to know how GM has determined that its investment would be profitable and eventually repay the company.
An electric pickup looks like a risky gamble.
What we know about the duty cycle of most pickups is that they are often used for work — towing trailers, hauling with beds full of heavy cargo. Because pickups are inherently nonaerodynamic, it takes a lot of energy to move them down the highway. An electric powertrain in a pickup tasked with towing or hauling would have a limited range.
So let’s be honest: Rivian’s cool looking electric pickup is really more of a fashion accessory — a toy for rich Silicon Valley and California entrepreneurs — than a real truck designed for what real trucks do: work.
I hope Rivian is successful, but not with GM’s money.
And let’s not forget that GM has more experience — all bad — with electrified pickups than any other automaker. It’s tried twice with hybrid versions of the Chevrolet Silverado and GMC Sierra and failed miserably, despite the fact that the 2004 and 2009 versions were solidly engineered and worked well.
I understand that GM fears another Tesla, but an investment in Rivian — or any other startup automaker — is a slap in the face to GM’s own engineers and designers. It tells them in part that GM’s management values the work of another company more than that of its own employees.
Any money that could go to Rivian could be better spent shoring up weak areas inside GM that need immediate attention. Here are a few suggestions:
— Service: Many GM customers know they can’t get consistently good service at all the company dealerships. GM should invest in programs that help dealers raise the level of customer satisfaction for service to Honda and Toyota levels. In fact, this should be job one for GM.
— Cadillac: The brand’s rebuilding could be pulled forward and accelerated with any money GM could use to invest in a vanity project.
— Selling technology: GM could set aside money to figure out how to solve a long-standing problem of successfully selling its technology. No automaker I know of has spent more money to develop technology only to see it fail in the marketplace.
It goes back to the EV1 electric car of the 1990s, carried on to the short-lived four-wheel steering system on GM pickups in the early 2000s — a revolutionary idea that made a Silverado handle like a Corvette — and continued through iterations of hybrids, head-up displays, Night Vision and many other innovations that came out and failed. GM was the first domestic automaker with an in-car navigation system and failed to capitalize on it.
In short: GM needs Rivian like a fish needs a bicycle.