Roughly 5,000 General Motors employees accepted the company’s buyout offer.
The decision made by white-collar workers at GM prevented the auto giant from having to lay off workers.
The buyouts will save approximately $1 billion per year, half of the $2 billion the company plans to cut annually by 2024, which was announced on the fourth quarter earnings call by CEO Mary Barra.
General Motors offered the buyouts to free up capital as the company aggressively shifts from internal combustion engines to electric vehicles (EVs). The company has outlined a goal to sell only EVs by 2035.
GM is tackling the expensive challenge of developing an all-new lineup of EVs while simultaneously continuing to produce vehicles with internal combustion engines.
“The steps we are taking will allow us to maintain momentum, remain agile, and create a more competitive GM,” the automaker said in a statement, per WFAA.
With the reduction of vehicle complexity and the increased use of shared parts between conventional vehicles and EVs, GM says it will save an additional $1 billion. The company also plans to reduce spending on travel and marketing.
As a result of the buyouts, GM CFO Paul Jacobson said the company would take a $1 billion hit in the first quarter but save $1 billion annually thereafter.
The buyouts were offered to white-collar workers that had worked at least five years with the company and global executives with two years of service.
Jacobson said that the total of 5,000 workers that accepted the buyouts was roughly the number that GM expected, and the company said it was a way to cut costs without laying off employees.
“It’s important that we were willing to pay for the voluntary program to incent people to go who maybe were closer to retirement or had just decided they wanted a change in career or lifestyle, at the same time to do everything we can to try to avoid involuntaries or layoffs,” the CFO said, per WFAA.