General Motors Co. is making several top-level hires to its Washington team as it seeks to influence Democratic policymakers who share its vision for an electric transportation future.
That might come with big taxpayer-funded incentives the auto industry is seeking to help build out electric-vehicle infrastructure. But the federal largesse also comes with a catch: a heavier regulatory hand that experts say is likely prompting the automaker to strengthen its ranks in the capital city.
GM is aiming high. The Detroit automaker hired a former George W. Bush-appointed Department of Justice leader, a former administrator at the National Highway Traffic Safety Administration appointed by Barack Obama, and, most recently, a niece of President Joe Biden, among others.
Now, perhaps more than ever, automakers need top-notch teams in Washington pitching their EV plans since the costly switch to battery-powered vehicles is likely to disrupt lives, reshape businesses, even transform entire industries. GM also is pledging to deploy self-driving vehicles, a technology that promises even more disruption in the next automotive century.
"You're into a period of potentially very significant change in the industry. And then when you look at some of the global issues that are involved in this, not just the national issues, the wise company is going to try to provide a team that is capable of playing whatever game emerges," said David Cole, chair emeritus of the Ann Arbor-based Center for Automotive Research.
"It was one thing when you were looking to safety issues ... but now when you're looking at major structural issues tied to the industry, the politics is a really big deal. You have to deal with that adequately."
Policy surrounding EVs and AVs will be a top priority for GM's team as the automaker aims to field an emissions-free lineup of vehicles by 2035 and works to move forward with AVs through Cruise LLC, the San Francisco-based self-driving company it controls.
Omar Vargas, hired last summer to lead global public policy, is spearheading these efforts. A former senior vice president and chief government affairs officer for 3M Co., he also arrived with experience working for the Justice Department.
In an interview with The Detroit News, Vargas said he joined GM to grow his career "in a really important way ... by being a part of a company that has dynamic leadership, fantastic people, great culture. And we're doing something critically important, and that is the transformation of the company into being a leader in electric-vehicle and autonomous-vehicle technology."
New president, new team
The additions to GM's Washington team over the last year came as Biden followed Donald Trump into the White House, though GM also made some additions to the team in 2019 ahead of the presidential transition. Liz Reicherts, vice president of external affairs, joined the company that year from Siemens AG.
"The Biden administration is putting a much higher priority on regulation and setting standards for the industry," said Brett Smith, Technology Director at the Center for Automotive Research. "That means the industry ... really needs to be proactive" if they want a seat at the table.
Last spring, GM tapped Craig Glidden, GM's general counsel, to assume the newly created role of executive vice president of global public policy, reporting to CEO Mary Barra. Glidden was charged with selecting a new vice president of global public policy to serve under him after the departure of Everett Eissenstat.
The former senior vice president of global public policy departed the company last year. Eissenstat came to GM after serving in the Trump administration as deputy assistant to the president for international economic affairs and deputy director of the National Economic Council.
Vargas, selected as Eissenstat's successor, started at GM in August. Before heading into autos, Vargas was senior vice president and chief government affairs officer for 3M Co. He also worked in government affairs at Praxair (now Linde AG) and PepsiCo. From 2001 to 2006, Vargas worked at the DOJ where his positions included working on civil rights, national security and immigration.
Last October, GM added David L. Strickland, a U.S. Senate staff official, to the team as the next vice president of global regulatory affairs, replacing Bob Babik, who retired after 20 years with the company. Strickland was the staff director of the Senate Committee on Commerce, Science and Transportation and previously worked as the administrator of NHTSA from 2010-14.
GM recently hired Missy Owens, a former official in the Obama administration and niece of Biden, to head environment, sustainability and governance policy. She will work in sustainability and lead policy efforts on ESG, an investment community acronym for environmental, social and governance-aware investing. She will be a part of GM's Global Regulatory Affairs and Transportation Policy Group, under the leadership of Strickland.
GM's Washington team additions are "a big deal," Vargas said. "These are important investments in talent and in our growth opportunities, but this underscores the importance that we attribute to the public policy space, and how the right supportive policies will help GM."
Beyond EVs and AVs, those supportive policies include efforts to onshore and nearshore supply chains, especially after the struggle GM and the entire industry has experienced over the last year with the semiconductor shortage induced by the COVID-19 pandemic.
"It's making sure that we have the right resource development in the United States, the right energy policies," Vargas said. "There's a lot to this and we want to be a part of those conversations. We want to have a seat at the table."
And there's a political reason the automaker may need to invest in Washington: Democrats were furious when GM quietly announced it would spend $1 billion to build electric vehicles at a plant in Mexico, according to two federal policymakers who spoke on condition of anonymity.
And the timing rubbed salt in the wounds, they said — it came the day after Biden's first joint address to Congress, during which he told Americans "there's no reason why American workers can’t lead the world in the production of electric vehicles and batteries."
The announcement earlier this year that GM would invest $7 billion in EV-related facilities in Michigan and create thousands of new jobs but observers say they need to see more.
Crosstown rival Ford Motor Co. also wants a voice and has also recently beefed up its Washington team. Ford named one of its directors, Jon Huntsman Jr. — the former Utah governor, businessman, diplomat and onetime presidential candidate — as its vice chair for policy. And Huntsman recruited Steven Croley, a former federal lawyer who worked in the Obama administration, to become Ford's chief policy officer and general counsel.
GM isn't done hiring in Washington, Vargas said.
The change in presidential administrations raises the stakes for all automakers, but GM in particular has a reason to beef up its policy arm. For decades, GM was "the de facto leader" in the U.S. auto industry, said Smith of CAR. When GM spoke, he said, Congress listened.
Now the U.S. auto market is more diverse than ever before, and foreign-owned brands together sell more vehicles in the United States than brands from Detroit's traditional three. Advocacy groups like the Alliance for Automotive Innovation, which represents most leading carmakers in the country, effectively push for policy that is good for the industry as a whole.
But what is good for Toyota Motor Co., Tesla Inc. and GM, might be different.
GM's hiring moves are "a sign of, 'clearly, we need to get to know the Biden administration better by getting insiders and we need to assert the points that are important to us,'" Smith said. "By hiring the pros to come in and help guide this, show strength and show names, GM has said 'we're back in the policy business.'"
What's on the agenda
GM's Washington team is focused first on pushing public policy solutions to challenges in the electrification and safety spaces that lie in front of them.
"A lot of what we aspire to do with our vision of zero crashes, zero emissions and zero congestion requires public policy solutions, and really policy changes," Vargas said. "For example, to advance autonomous vehicle technology in the United States to help ensure that the United States is a leader in this global technology race, we need to change our laws."
Federal safety guidelines still require most vehicles to be built to accommodate human drivers, featuring steering wheels and pedals. Each company can seek an exemption from the rules for up to 2,500 vehicles.
Industry advocates say that is both too low to justify the massive costs of creating the vehicles to be tested and that it would put the United States at a competitive disadvantage as it races China in testing and development.
Lawmakers, including U.S. Sen. Gary Peters, D-Bloomfield Township, previously put forward legislation to dramatically expand the cap to 80,000 annually — and a similar bill in the House would have raised it to 100,000. The measure died in Congress back in 2018 after facing opposition from a handful of fellow Democrats.
GM hopes to see legislation to advance AVs in the United States introduced this spring, Vargas said.
Meanwhile, Biden's Build Back Better plan would have given the three Detroit automakers a $12,500 consumer rebate for EVs, which includes $4,500 for cars built by union labor. Sen. Joe Manchin, a centrist Democrat from West Virginia who's key to passing the act, said in early February he can't support the package, effectively killing it.
The bill would also lift the current 200,000 vehicles per manufacturer cap, which GM and competitor Tesla have already hit.
Democrats are hoping to rebrand the legislation and pass it before the end of the year, when they're likely to lose the majority in Congress following the midterm elections in November. However, Manchin has specifically opposed the EV tax credit proposal, creating a significant hurdle to passage.
"We know that to continue EV deployment and EV adoption throughout the United States, customers of GM should not be at a disadvantage than others," Vargas said. GM is "very optimistic on being able to push this legislation through this year. We know, as with any other legislative item, there's a lot of ups and downs and twists and turns."
