GM’s Inability to Learn Its Lesson



General Motors once kept a dirty little secret that cost people their lives. In 1973, one of their engineers wrote a memo — called the “Ivey Memo" — basically placing a price on a human life. Ed Ivey was just two years out of grad school when he was assigned to work on fuel systems at Oldsmobile. The auto maker knew it was making pretty cheap, crappy fuel systems, and knew they could be a problem in a collision. The force of the impact could knock pieces loose, spraying fuel everywhere, and causing raging infernos in family cars. Ivey carefully laid out the parameters of the issue. There were roughly 500 fatalities a year in GM cars where the victims were burned to death. The value of each payout in the event of a death could reasonably be estimated at $200,000, a figure Ivey sourced from a government study. There were 41 million GM vehicles on the road. Analyzing these figures indicates that fatalities related to accidents with fuel fed fires were costing General Motors $2.40 per automobile. Considering it would cost them $6 per vehicle to fix the problem, they decided it was cheaper just to pay the lawsuits. Eventually, the document came out in 1998, and the walls fell, but it was too late for many drivers. In July of 1999, GM was ordered to pay $4.9 billion in damages to six plaintiffs who suffered severe burns when their 1979 Chevy Malibu exploded. Did GM learn its lesson? No, it happened again in 2014 when it was discovered that an ignition problem was causing deaths and GM had known about it since 2004 and done nothing.