According to the Detroit News and Reuters, General Motors Co. is laying off more than 1,000 salaried employees globally in its software and services organization, including more than 600 employees working at its Global Technical Center in Warren (Michigan), to streamline its operations under new leadership.

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

GM has been rethinking its software strategy after struggling with issues since launching several new EVs. Most recently, the automaker recalled more than 20,000 electric Cadillac Lyriq all-wheel drive SUVs for a software glitch, and earlier this year, GM placed a stop-sale order on the electric Chevrolet Blazer because of a software problem.

On Monday, GM spokesperson Kevin Kelly said, “As the company builds its future, it must simplify for speed and excellence, make bold choices, and prioritize the investments that will have the greatest impact. As a result, we’re reducing certain teams within the Software and Services organization.”

New leadership

The layoffs signal the Detroit automaker’s intensifying focus on the software embedded in new vehicles. In June, GM executives put Apple Inc. veterans Baris Cetinok and Dave Richardson in charge of the organization. Armed with years of Silicon Valley tech experience, both joined GM in September 2023.

Cetinok has more than 25 years of experience in product, engineering, and design at companies including Apple, Amazon.com Inc., and Microsoft Corp. Richardson worked at Apple for 12 years as an engineering leader responsible for driving innovation and efficiency in infrastructure for services including iCloud, FaceTime, and Siri.

Software issues

GM isn’t the only one having software problems. Just lately, Volvo Cars has seen some glitches. We all know about Volkswagen AG’s issues with its Cariad software subsidiary, and Tesla Inc. has also had its part of the trouble, to name some examples. All major automakers have had their problems.

“A big part of the challenge legacy automotive companies, both automakers and suppliers, have faced has to do with their organizations and their processes that were not set up for modern automotive software development,” said Sam Abuelsamid, principal e-mobility analyst at market research firm Guidehouse Inc. in the Detroit New.

“They’ve been doing software for decades, but the nature of software development has fundamentally changed in recent years, and developing modern software-defined vehicles is a much more complex process than it has been in the past,” he added.

Spending and cutting

GM and many other automakers are trying to reduce costs while spending billions on new EV launches and keeping their internal combustion engine line-ups fresh. In January 2023, GM announced it wanted to cut costs by $2 billion, and last year, the company succeeded in cutting administration costs by -8%.

US competitor Stellantis, for example, is also pursuing cost-cutting measures, including buyout offers to salaried employees. Stellantis has not revealed which functions would be targeted for reductions or how many of its 11,000 US salaried employees would receive buyout offers.

One of the biggest concerns of manufacturers is the switch to SDVs (software-defined vehicles) and how to make money with them. They also want to raise income with recurrent revenues, like subscriptions for entertainment services, localization services, and even professional activities.