GM's Startup Incubator Strategy: A Deep Dive

GM's Expansion Beyond Traditional Automotive Business

General Motors has been actively establishing a portfolio of new subsidiaries over the last twelve months. These ventures focus on areas such as electrification, connectivity, and even insurance.

This strategic move represents GM’s broader objective to identify and capitalize on new revenue streams and profitability opportunities extending beyond the conventional processes of vehicle manufacturing, sales, and financing.

The Role of the Innovation Team

Numerous startups are being developed, though not all will ultimately succeed. Their initial development falls under the oversight of Pam Fletcher, Vice President of Innovation.

Fletcher, speaking at TC Sessions: Mobility 2021 on June 9th, leads a team of 170 individuals. This team is dedicated to the creation and launch of startups targeting a combined addressable market valued at approximately $1.3 trillion.

Incubation and Growth of GM Startups

Currently, around 19 companies are progressing through GM’s incubator program. Their goal is to emulate the success of recently established GM startups like OnStar Guardian, OnStar Insurance, GM Defense, and BrightDrop.

BrightDrop, a commercial electric vehicle delivery service, was introduced in January. Fletcher emphasized that continuous innovation is key, stating, “we add new things all the time.”

Challenges and Criteria for Success

Initiating any startup inherently involves difficulties. However, launching several within a century-old automotive company—one with a global workforce of 155,000—presents a uniquely intricate set of challenges.

The criteria for public launch are stringent. A successful GM startup must represent a novel concept capable of attracting new customer segments and expanding the overall addressable market for the automaker.

Furthermore, these ventures must effectively leverage GM’s existing resources and intellectual property (IP) to achieve sustainable growth.

The Significance of the Volt

The 2010 Chevrolet Volt represents a pivotal point in General Motors’ history. It signified the company's initial large-scale venture into electric vehicle technology following the EV1 program of the 1990s.

From 2008 to 2011, Fletcher served as the chief engineer for the Chevy Volt’s propulsion system and highlighted the Volt as the catalyst for a transformation within GM.

This shift ultimately paved the way for subsequent commercial offerings, including the fully electric Chevy Bolt.

Impact on GM’s Innovation

The development of the Volt also spurred advancements in driver assistance systems, such as Super Cruise, and ongoing research into self-driving technology through its Cruise subsidiary.

Fletcher detailed how the process of bringing new technology to market altered GM’s approach to customer engagement.

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The Volt’s legacy extends beyond its technical specifications, influencing GM’s overall strategy and future innovations.

The Rationale Behind GM’s Venture Capital Arm

Given General Motors’ extensive legacy of research and development, a natural inquiry arises: why not simply pursue and scale the most promising innovations originating from their internal laboratories? Fletcher clarified the strategic alignment between the R&D division and the venture capital incubator.

Strategic Focus on External Innovation

The establishment of a venture capital arm allows GM to explore opportunities beyond its internal capabilities. This approach facilitates access to emerging technologies and business models that might not be developed within the company.

BrightDrop and the EV Market

GM is actively targeting the delivery sector with its new all-electric business unit, BrightDrop. This demonstrates a commitment to capitalizing on the growing demand for electric commercial vehicles.

Increased Investment in Electric and Autonomous Vehicles

A substantial financial commitment underscores GM’s dedication to the future of mobility. The company has increased its investment in electric vehicles (EVs) and autonomous vehicles (AVs) to $35 billion through the year 2025.

Synergy Between R&D and Venture Capital

The venture capital arm doesn’t operate in isolation. It’s designed to complement and enhance the existing R&D efforts, fostering a broader ecosystem of innovation. This synergy allows GM to remain at the forefront of the automotive industry.

Expanding Beyond Traditional Automotive Boundaries

By investing in external startups, GM is positioning itself to participate in a wider range of mobility-related businesses. This strategic move extends the company’s reach beyond traditional vehicle manufacturing.

The Innovation Pathway at GM

While the precise financial allocation for the innovation team remains undisclosed, Fletcher detailed the comprehensive journey these startups undertake, from initial concept to full-scale launch.

Fletcher emphasized that their developmental process closely mirrors the typical trajectory of other emerging companies. However, a key distinction lies in the necessity for these ventures to not only achieve independent viability but also seamlessly integrate within the broader General Motors ecosystem.

GM's Sustainability Goals and Future Mobility

• General Motors has committed to achieving carbon neutrality by the year 2040.
• Mate Rimac’s current work focuses on the development of electric robotaxis.

These initiatives demonstrate GM’s dedication to both environmental responsibility and the advancement of future transportation technologies.

The integration of external innovation is crucial to GM’s strategy for maintaining a leadership position in the evolving automotive landscape.

Early-Stage Ventures and Ongoing Innovation at GM

According to Fletcher, the quantity of startups within GM’s ecosystem is dynamic, with concepts continually being evaluated and refined. OnStar Guardian, extending the connected car features of OnStar – traditionally found in GM vehicles – to smartphone users, represents one example from a substantial portfolio of digital products currently under consideration. This focus, however, doesn’t preclude investment in more ambitious, long-term projects.

Fletcher indicated that the exploration of aerial mobility has been ongoing for approximately two years, with concrete plans expected to be revealed in the near future.

Beyond this, GM is also actively investigating opportunities within the realm of smart cities, identifying it as another area of significant interest.

The company’s commitment to an all-electric vehicle lineup by 2040 is also generating new avenues for exploration. Fletcher highlighted the potential of batteries, extending beyond their primary function within the vehicle itself. “Significant value remains within the battery even after its use in a vehicle,” she stated.

This perspective translates into a focus on startups capable of maximizing the value of these assets, ultimately benefiting both customers and GM. Such endeavors may necessitate collaboration between entities that don’t traditionally cooperate, as Fletcher explained.

This could involve partnerships with governmental bodies, competing automotive manufacturers, and utility companies.

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