General Motors is investing billions of dollars into the production of electric vehicles, while simultaneously cutting spending in other areas. In an effort to avoid future layoffs, the company has offered cash to many of its US employees to leave the company. This move comes after CEO Mary Barra sent a letter to employees stating that the company plans to reduce fixed costs by $2 billion in the next two years.
While GM's transition to electric vehicles is not unique, Ford has also announced a similar shift and has already laid off thousands of employees. Both companies plan to spend billions of dollars on reorganization for EVs, with GM aiming to make the electric vehicle business profitable by 2025. However, GM has faced challenges with slow production and quality issues, including a sales freeze for its Hummer EV.
The buyout program, known as the Voluntary Separation Program, is available to all salaried US employees with over five years of experience at the company, and global executives with more than two years.
Employees who choose to participate in the program will receive one month of pay and COBRA medical coverage for every year of service, for up to a year. The company expects to spend up to $1.5 billion on employee separation charges and up to another $300 million in pre-tax, non-cash pension curtailment charges.
GM's previous buyout plan was in 2018-2019, around the same time it closed several plants and laid off thousands of employees. The company believes that by reducing structured costs, it can improve vehicle profitability and remain competitive in the market.
