General Motors CEO Mary Barra earned $29.5 million last year, and it’s hard to argue that she isn’t earning her keep. The automaker sold more cars in the U.S. than any other company last year, and its profits have doubled in her 11 years as CEO. Credit her ability to please her most important customers—politicians. Their command is her wish.
While doubling down on manufacturing profitable gas guzzlers, Ms. Barra promoted electric vehicles to ingratiate herself to Democrats who want to eliminate the products that churn out profits for her company. She again proved her flexible principles last week by praising President Trump’s auto tariffs, which the company estimates will dent its profits by $5 billion this year.
“I think tariffs is one tool that the administration can use to level the playing field,” she said. What she omitted is that the playing field has been tilted in GM’s favor for decades by a 25% tariff on pickup trucks, which gives domestic automakers an effective monopoly. Also: Mr. Trump’s new 25% tariffs on all cars and parts not made in the U.S. will hurt GM, but they will wallop its foreign competitors even more.
In 2018 Ms. Barra got a crash course in politicking when she announced a corporate restructuring that involved closing four U.S. plants that produced low-selling sedans. Her goal was to make GM leaner and more profitable. In this she succeeded, but she blundered by not throwing a bone to Mr. Trump, who thinks CEOs answer to him.
“I spoke with her when I heard they were closing and I said, ‘You know, this country has done a lot for General Motors,’ ” he said, adding that he had encouraged Ms. Barra to keep its Lordstown, Ohio, plant open: “You better get back in there soon.”
Mr. Trump was right that GM is a willing ward of Washington. In addition to the longstanding 25% pickup tariff, the U.S. government invested some $51 billion in the company as part of its bankruptcy, only about $39 billion of which it recovered.
The first Trump administration also went to bat for GM and other automakers by rolling back its predecessor’s burdensome fuel-economy standards and revoking a waiver that allowed California to impose costly EV quotas. Ms. Barra no doubt knows that her business is at the mercy of a mercurial government, and better keep the rulers happy.
And so she did. In 2019, GM announced plans to create 450 new factory jobs in Ohio, as well as a joint venture with LG Chem to build a $2.3 billion EV battery plant near the closed Lordstown factory. Mr. Trump repaid the favor with the U.S.-Mexico-Canada Agreement, which included wage mandates and domestic content requirements for tariff-free imports from Mexico and Canada that disadvantaged GM’s foreign competitors. Ms. Barra attended Mr. Trump’s USMCA signing ceremony.
After Mr. Trump lost re-election, Ms. Barra began kowtowing to her new master in Washington. GM rapidly did a U-turn on California’s EV rules. “We believe the ambitious electrification goals of the President-elect, California, and General Motors are aligned to address climate change by drastically reducing automobile emissions,” Ms. Barra said in November 2020.
On Jan. 28, 2021, GM announced plans to go all-electric by 2035, conforming its business plans to California Gov. Gavin Newsom’s mandate. That August, Ms. Barra cheered Mr. Biden’s plans to rev up fuel-economy standards at a White House event.
A few months later, Ms. Barra lent her support to the Democrats’ $5 trillion Build Back Better legislation, notwithstanding its costly new entitlements that would be paid for in part with corporate tax hikes. Never mind that Ms. Barra had been just named chairman of the Business Roundtable, which was lobbying against the legislation. Paramount for Ms. Barra was the bill’s $12,500 tax credit for EVs built with union labor, which would have put GM’s nonunion competitors like Tesla at a disadvantage.
Although that bill failed, Ms. Barra continued to advocate for its successor, the Inflation Reduction Act, which included rich subsidies for EVs and battery production. The Biden Energy Department repaid Ms. Barra by awarding GM a $2.5 billion low-interest loan for its battery joint venture with LG.
Now that the political tides in Washington have turned, Ms. Barra has too. GM this spring lobbied Congress to reverse the federal waiver for California’s EV mandate. “Shameful what GM did behind our back,” Mr. Newsom snapped after the Senate approved the resolution and sent it to Mr. Trump’s desk.
Last week, GM scrapped a plan to make EV motors at an upstate New York factory. Instead, the company will make high-tech V-8 engines for full-size trucks and SUVs, which Ms. Barra called “the most significant engine investment we’ve made in history.” Music to Mr. Trump’s ears.
If it’s any consolation to Democrats, Ms. Barra will surely be at their beck and call next time they control Washington. Can you blame her? When government has sweeping power to pick winners and losers, a CEO’s responsibility becomes to keep the company’s overlords happy so it always comes out a winner.