By Paul Allen in strategic leverage — 30 Oct 2025

GM’s EV Layoffs: A Masterclass in Mismanaged Strategic Leverage

General Motors, once the unquestioned titan of American automaking, recently dropped a bombshell disguised as a business decision. Thousands of factory workers in electric vehicle (EV) and battery production lines are now out of work. To put the dagger deeper, two battery factories will be idled for the first half of 2026. On the surface, it looks like a classic case of cutting costs and recalibrating supply chains. But beneath the headlines, GM's move exposes a fundamental failure to leverage systems thinking and strategic advantage in a rapidly evolving industry.

When Leverage Becomes a Double-Edged Sword

Leverage in business is often hailed as the secret sauce for explosive growth — the force multiplier that transforms modest effort into market dominance. But leverage is not an unmixed blessing. GM’s recent layoffs illustrate how high-stake bets without adaptive systems thinking can implode leverage into liability.

Consider this: GM vaulted headfirst into electric vehicles and battery manufacturing electrification, justifyingly betting big on what looked like the next industrial revolution. But high capital intensity, coupled with slow reaction to demand fluctuations and geopolitical supply chain stressors, transformed financial and operational leverage into a drag on the business.

This is a cautionary tale reminding us that leverage without real-time feedback loops and strategic flexibility is corporate folly. It’s as if GM built a rocket but forgot the navigation system.

The Mirage of Linear Thinking in EV Manufacturing

It’s tempting to assume that building more factories and investing massively in battery capacity equals automatic market leadership. GM’s situation shatters this illusion.

Factories don’t operate in a vacuum—they are embedded in ecosystems that require anticipatory agility:

Demand volatility: Consumer preference swings, economic cycles, and competitor moves can quickly erode planned production volumes.
Technological obsolescence: Battery chemistry and EV architectures shift so rapidly that fixed capital investments risk becoming stranded assets.
Supply chain fragility: Dependence on rare earths, geopolitical tensions, and logistics bottlenecks can choke the best-laid manufacturing plans.

GM’s decision to idle battery plants highlights these systemic vulnerabilities. The automaker did not merely cut jobs—it exposed structural misalignment between their capital leverage and the nuanced, interconnected realities of the EV market.

Systems Thinking: The Missing Link

Systems thinking isn’t a buzzword—it’s a survival skill. In manufacturing, especially EVs, strategic advantage comes from integrating production, supply chains, consumer signals, and innovation into a coherent, adaptive system.

GM’s problem is classic: their leverage was too rigid, their system too siloed, and their feedback mechanisms too slow. Instead of a responsive network that can throttle production up or down quickly, GM locked itself into a fixed-capital fortress.

Contrast this with businesses that excel not by brute force but by orchestrating multiplicative leverage through smart, interconnected systems. This approach accelerates innovation velocity, distributes risk, and minimizes costly overcorrections.

If you want a blueprint for what not to do, this is it. For a better path, see our deep dive into Systems Thinking Approach for Business Leverage.

Strategic Agility Versus Capital Heaviness

In the dizzying race towards electrification, strategic agility is the ultimate currency. Companies that can pivot production, recalibrate supply chains, and experiment with new battery tech on low-margin runs will outperform those anchored to massive sunk costs.

GM’s bet on large-scale battery factories for “economies of scale” now seems like an Achilles' heel. These plants require nearly full utilization to justify costs—leaving little room for pause when demand falters.

This reveals the danger of mistaking scale for leverage. True leverage comes from scalable, modular capabilities that can be dialed up or down without catastrophic human or financial fallout.

For a granular look at how scale and leverage intersect, revisit What Is Economies of Scale Explained Through Business Leverage.

Automation and Workforce Strategy: The Human Factor in Leverage

GM’s job cuts spark the inevitable question: what is the human cost of leverage strategies that don’t incorporate workforce optimization?

Manufacturing operations are evolving fast with automation and AI augmenting human labor. Yet, displacing thousands without creating systems for upskilling or redeployment is short-sighted and raises risks of social pushback and morale damage.

The lesson here is twofold:

Leverage your workforce strategically: Workforce optimization isn’t just about trimming costs but about aligning talent with future-ready capabilities. See Unlocking Business Leverage With Workforce Optimization for the playbook.
Combine automation with empathetic transition strategies: The art lies in balancing machine efficiency gains with preserving tribal knowledge, morale, and corporate culture.

Otherwise, you risk creating a workforce of disillusioned individuals staring blankly at futuristic factories now echoing emptily. Turns out – robots can’t fix bad strategic leverage alone.

Leverage Lessons Beyond Automotive: The Bigger Picture

GM’s situation isn’t an isolated industry hiccup. It’s a window into how companies across sectors grapple with leveraging legacy systems amid fast-moving technology disruptions.

If you want to understand how to turn such challenges into leverage advantages—even in notoriously complex settings—check out these Think in Leverage classics:

Turning the Tide: Strategies to Regain True Leverage

GM’s painful cuts are a symptom, not the disease. The cure lies in recalibrating leverage along these strategic levers:

Embed continuous feedback loops: Use real-time data analytics to align production closely with market signals.
Modularize capital investments: Shift away from monolithic plants toward flexible, scalable manufacturing cells.
Invest in workforce resilience: Prioritize redeployment, retraining, and cross-functional teams to smooth transitions.
Strengthen systems integration: Break down internal silos to manage supply chain risks and innovation cycles holistically.

GM’s misstep shouldn’t be mistaken for a decline of EV potential—far from it. Instead, it should serve as a brutal reminder that leverage demands constant recalibration and ruthless systems integration. As we’ve explored before, Leverage Thinking: The Definitive Guide to Finding and Exploiting Leverage Points in Business Systems is the playbook to win this game.

Final Thoughts: The Irony of Leverage and Legacy

It could be tempting to write off GM’s EV layoffs as another corporate blunder, but that misses the deeper irony of leverage in business systems.

Leverage offers the power to transform industries, but legacy systems and mindsets can turn it into a trapdoor. High stakes and big bets are thrilling, but without adaptive systems thinking, they become gambles with human and capital costs that reverberate loudly.

So next time an industry giant cuts thousands and idles factories in the name of the future, remember: the smartest leverage play isn’t just about scaling up—it’s about scaling smart. And as our coverage at Think in Leverage suggests, humans, systems, and strategy will always outpace mere muscle.

For those looking to avoid the costly lesson GM just handed out, mastering the intersection of continuous systems thinking, strategic agility, and nuanced workforce leverage isn’t optional—it’s survival.

After all, the real electric shock to the system is not in the batteries but in how you wield leverage.

Frequently Asked Questions

How can leverage in business be a liability?

Leverage without real-time feedback loops and strategic flexibility can implode into a liability when high-stake bets lack adaptive systems thinking.

Why is systems thinking crucial in manufacturing?

In manufacturing, strategic advantage comes from integrating production, supply chains, consumer signals, and innovation into a coherent, adaptive system. Systems thinking helps in navigating complex industrial landscapes.

What risks are associated with mistaking scale for leverage?

Mistaking scale for leverage can lead to rigid systems that lack agility to adjust production volumes, which may result in financial and human fallout when demand fluctuates.