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GM Says It's Future Is Software. Here's Why It's Cutting 1,000 Software Jobs

Running a lean software team can be challenging; any tech company can tell you that. Automakers are now finding themselves square at the center of that struggle as they now need to juggle the number of full-time developers, ensure teams build cohesive functions in software, plus determine the priority of critical issues and new features. The new world of software-defined cars is a game changer and the kinks are still being worked out.

Welcome back to Critical Materials, your daily roundup for all things EV and automotive tech. Today, we're chatting about GM's latest round of tech-related layoffs, President Donald Trump's more solid dig into gutting federal EV incentives, and Tesla's escape from Europe's higher EV tariffs. Let's jump in.

30%: Here's What's Going On With Layoffs In GM's Software Team

In a surprise move, General Motors is eliminating somewhere between 1,000 and 1,500 jobs in its technology division. Around half (634, specifically) of the targeted positions are currently staffed at the automaker's Global Technical Center in Warren, Michigan.

The decision to cut these kinds of tech-focused jobs is seemingly unexpected by the public, especially after GM not only had some rather high-profile software problems with its EVs, but pledged to dive fully into the software of its EVs—including revamping the user experience by eliminating featured used by many such as Apple CarPlay.

Here's a quick recap of what's going on via CNBC:

The layoffs, including roughly 600 jobs at GM’s tech campus near Detroit, come less than six months after leadership changes overseeing the operations, including former Apple executive Mike Abbott leaving the automaker after less than a year in March due to health reasons.

GM declined to disclose the full number of layoffs, but a source familiar with the matter, who declined to be named because the information is private, confirmed more than 1,000 salaried employees would be laid off, including 600 in Warren, Michigan. Impacted employees were notified Monday morning.

The layoffs represent about 1.3% of the company’s global salaried workforce of 76,000 as of the end of last year. That included about 53,000 U.S. salaried employees.

The cuts come as automakers attempt to reduce costs and, in many instances, employee headcount amid fears of an industry downturn — and as they’re spending billions of dollars on emerging markets such as all-electric vehicles and so-called software-defined vehicles.

In a WARN notice filed by the automaker on Monday afternoon, GM revealed that 227 of the positions eliminated were software engineering roles, while 92 others were system engineers.

“As we build GM’s future, we must simplify for speed and excellence, make bold choices, and prioritize the investments that will have the greatest impact,” said a GM spokesman in an email to CNBC. “As a result, we’re reducing certain teams within the Software and Services organization. We are grateful to those who helped establish a strong foundation that positions GM to lead moving forward.”

The GM spokesperson told the Detroit Free Press that these cuts aren't about saving money. Instead, it's about operating more efficiently. "We took a close look at the resources and what people were working on and realized we needed to make an adjustment," said the spokesperson.

An email sent to the affected employees by new department lead Baris Cetinok reaffirmed this decision by hinting that the division was simply ineffective in its current structure. Cetinok, a former senior director at Apple, says that the team will focus on "flattening hierarchies" to avoid duplicating efforts across teams and shifting its resources to highest-priority work.

It's hard to parse what this means exactly, but it does sound like the move was intended more to create a lean, fast-moving software operation staffed by fewer but more skilled engineers—and possibly a counter to GM's infamous bureaucracy

While GM might have something up its sleeve here, the initial view from the outside looking in isn't very confidence-inspiring. I mean, the public is quite vocally wondering just how GM is going to live up to its CarPlay-ridding promises now and also meet its other targets for reliable EV software when, quite frankly, owners say it's still a mess.

Software is hard, though—just ask Volkswagen who recently partnered with Rivian for software solutions despite having its own entire spin-off company dedicated to solving the same problems.

If GM thinks this is the path forward, then the only thing then the world will just have to take its word for it. But if the chess move blows up the automaker's progress on modern EVs, it could be a hefty blow to the automaker's bottom line.

60%: Trump Confirms He May End EV Tax Credits And Bring Musk On As Advisor If Elected

During a rally held in York, Pennsylvania on Monday, former U.S. president and current presidential candidate Donald Trump confirmed that he would be open to ending the $7,500 federal tax credit for EVs—ticking the cock closer to midnight for automakers bracing for the potential impact the loss of the tax credit could have on short-term EV sales.

"I'm not making any final decisions on it. I'm a big fan of electric cars, but I'm a fan of gasoline-propelled cars, and also hybrids and whatever else happens to come along," Trump said regarding the potential removal of the EV tax credit if he were reelected. He later continued in an interview with Reuters: "Tax credits and tax incentives are not generally a very good thing."

The former president's comments echo the calls to "take away the subsidies" from his new friend, Tesla CEO Elon Musk. During the same event, Trump confirmed that he would be open to offering an advisory role or cabinet job.

"He's a very smart guy. I certainly would, if he would do it, I certainly would. He's a brilliant guy," said Trump.

Musk, already stretched for time and accused of being an "absent CEO," seemingly replied on his social media platform, X, accepting Trump's invitation. Replies from X users sparked a series of AI-generated images of Musk and Trump in the thread following the CEO's post.

 

Earlier rumors of the EV tax credit being pulled as a result of the election have set off alarms in automakers, many of which have heavily invested in U.S. infrastructure in order to comply with assembly and sourcing requirements. Some, like Hyundai, have even begun to throw piles of cash at U.S. lobbying firms to ensure the best chance at recouping their investment.

Trump also appears to be up to cutting off contingency plans for automakers (including Chinese car companies looking to circumvent U.S. tariffs) that may look to pivot to Mexico for vehicle assembly. The presidential candidate says that he would also take steps to discourage the production of new cars in Mexico, despite negotiating for preferential import terms during his previous term as part of the United States-Mexico-Canada Agreement.

"If you put tariffs on those cars, they're going to make it here," Trump said. "It's very simple. It's not complicated. If you tell Mexico, 'look, you're stealing our car industry,' which they're doing now."

While there are no concrete next steps in Trump's comments, it's clear that his eyes are fixed on the EV tax credit. That's enough to worry automakers about the outcome of the election, especially as the market is taking longer for the EV market to materialize that originally expected. Whether or not the tax credit disappears could significantly affect the timetable for widescale EV adoption in the U.S.

90%: Tesla Escapes Higher EU Tariffs For Chinese-Built Model 3, Y

After petitioning the European Union for lower duty fees, Teslas imported to Europe after being built at the Shanghai Gigafactory are soon set to get a break on the EU's newly imposed Chinese EV tariffs.

Currently, Tesla pays a whopping 30.8% tariff on any EV assembled in China that it brought into Europe. This means levying the fees on any Model 3 or Model Y built at Tesla's Shanghai factory, which is the main source of import to Europe for either nameplate. The new rate drops the tariffs to just 19%—10% for Europe's standard import duty fees and 9% for the newly reduced tax on Chinese-built imports.

Reuters explains:

The [European Commission] set a new reduced rate of 9% for Tesla, lower than the 20.8% it had indicated in July, and said some Chinese companies in joint ventures with EU automakers may receive lower planned punitive duties on Chinese-made EV imports.

The tariffs are on top of the EU's standard 10% duty on car imports.
 
Tesla had requested a recalculation of its rate, to be based on the specific subsidies the company had received. The Commission said on Tuesday it had verified that the U.S. company received less subsidies from the Chinese government compared to the country's EV makers Brussels had investigated.

Europe argued that EVs built in China received "unfair subsidization" from the Chinese government, essentially causing undue economic harm to both the European countries and the entire developing EV industry in Europe. As such, it instituted a set of tariffs on imported EVs to make locally-built cars more competitive from a price standpoint.

The duty fees levied against imported vehicles from China to the EU are set on a per-automaker basis and range as high as 38.1%. If the automaker complied and assisted the EU in its initial investigation of Chinese-built EVs, it may have received a lower import duty fee. If it didn't, the company received a higher rate. For example, BYD received an initial tariff of 17.4% and SAIC received no breaks in its 38.1% rate.

Tesla's argument is that since it received fewer subsidies from the Chinese government than other automakers, it should receive a lower rate than others who received more government assistance. That argument seems to have worked, setting Tesla's duty fees to drop by 11.8%.

Now, the change won't be immediate. Instead, the adjustments are planned to be implemented after the European Commission concludes its investigation into government-sponsored subsidies for EVs built in China. It will then levy "definitive duties" across the industry by October 30th. If automakers are deemed to be less disruptive, competitive, or comply with the investigation more than others, they may receive a reduced rate on imports.

100%: Does Elon Musk Even Have Time To Serve In An Advisory Role?

Despite a recent win for his $56 billion pay package, Musk has been accused of not being all there when it comes to Tesla. In fact, shareholders have expressed concerns that Musk is distracted and isn't even appearing to make Tesla his top priority. Another high-profile role just adds to his many hats—and that hat rack is looking a little bit full.

Do you think that Musk has the capacity to continue to run Tesla, his six other companies, and serve the U.S. government? Where should his priorities be? Let me know in the comments.

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