GM Vows Work on Volt, Other Green Technologies, Will Continue in Bankruptcy
By John O'Dell June 1, 2009Downsizing Won't Kill Automaker's Initiatives, but Demand for Quick Profits Could
As General Motors Corp. begins reshaping itself in a complex, government-assisted bankruptcy process that leaves taxpayers as its major investor, one thing remains clear -- the automaker's future depends on its ability to develop cars that are both fuel-efficient and desirable.
To do so in an era of economic uncertainty marked by sluggish car sales, wildly fluctuating fuel prices and consumer confusion about the best car-buying strategies as we wait for the new generation of advanced technology vehicles to appear is going to require a degree of discipline that so far has been woefully lacking at GM and other domestic auto companies.
So it was heartening to see this morning that GM accompanied its filing for a pre-planned Chapter 11 reorganization
with the promise that even as it pares expenses to the bone it would "continue and increase its investment and leadership in fuel economy and advanced propulsion technologies."
Chevy Volt "extended range EV' is one of the cars on which GM is betting its future.
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But the rest of that vow, contained as it was in a statement undoubtedly edited and approved by the Obama administration, shows that GM so far is on the right path, and is pursuing it with government backing.
The Chevrolet Volt, GM's gamble on a potentially game-changing fuel-efficiency technology, will continue on schedule for launch in late 2010, according to this morning's statement.
Additionally, GM said it will continue development of conventional gas-electric hybrid technology, with 14 models due in the market by 2012, and will continue outfitting cars and trucks with flex-fuel systems so that by 2014 a full 65 percent of its vehicles will be capable of using ethanol or other alternative fuels, such as biodiesel.
We know GM also has been working on battery-electric and fuel-cell electric drivetrains and expect that R&D effort to continue as well.
Go Long
There will be many stumbling blocks to be overcome in the GM bankruptcy, but with the purse-string controlling government so far signing off on the automaker's intent to make fuel-efficiency and the development of petroleum-free powertrains a centerpiece of its recovery effort, things are getting off to a good start.
If the Feds succumb, though, to the cult of immediacy that has hamstrung so much of American industry for so long -- the demand by investors and market analysts for ever-increasing growth and profitability at the expense of solid long-term planning -- then all bets are off.
Already the question of the Volt's continued viability is being raised as some market watchers question whether some of the more than $50 billion in taxpayer money being invested in GM should be used to pursue the launch of a vehicle that doesn't stand a chance of being profitable in its first few years.
We urge the government planners and policy makers who doubtlessly will be looking over GM managements' collective shoulder not to fall into that trap.
We're all for profits -- our salaries at Edmunds wouldn't be paid without them -- but GM needs to be aiming for sustainability.
That's going to require that, for a change, the company look beyond its next quarterly statement, make plans for the long run and stick with them.
Losing To Win
As the fate of the Volt and other advanced technology vehicles is considered, take a page from Japan Inc.'s playbook.
Had Toyota Motor Corp. been expected to make a profit from Day One on its newfangled hybrid technology, the Prius would never have been launched.
But investors and government policy makers in Japan understand the need to sometimes swallow a sting of losses to foster a long-term strategy. Toyota was allowed to subsidize the Prius for nearly a decade of relatively slow sales, during which the automaker continued to refine its hybrid technology, preach the gospel of hybridization and introduce the technology into other models.
Now its hybrid technology is widely believed to be the best in the world, it is building 500,000 Priuses a year for global consumption and, if the company is to be believed, is making a profit on every sale.
And yes, Toyota likely was helped by government trade and currency manipulation policies, but GM is now a government-owned enterprise. We've got a big bridge we'd be happy to show anyone who really expects the Obama administration to be a passive investor.
Raising the Bar
The Volt could be the next-generation Prius if GM is, indeed, allowed to continue with it.
The automaker's design of what it calls an extended-range electric vehicle raises the bar for conventional and plug-in hybrids.
The Volt, according to GM specifications, will provide up to 40 miles of all-electric drive from a battery pack charged from the commercial power grid, then continue to roll along on electric power supplied by a small internal combustion engine that serves as an onboard generator.
Unlike a battery-electric car whose range is limited by its battery pack , the Volt and subsequent model that use its "E-Flex" powertrain technology, can keep going when the grid-charged battery are depleted.
And the powertrain, designed in the Volt with a gasoline-burning engine-generator, can be adapted as technologies permit and fuel availability demands, to use diesel, biofuels, hydrogen or a fuel not yet dreamed of.
Yes, it will be pricey at first -- around $40,000 before any federal and local incentives are applied. And no, GM won't be making a profit from Volt sales any time soon.
No Future in Standing Still
But gasoline isn't going to stay at $2.70 a gallon forever -- energy watchers already are predicting a doubling of crude oil prices by 2015 -- and the economy isn't going to remain mired in recession (or, if it does, we're all doomed anyhow and none of this matters).
The Volt isn't the answer to the search for clean, sustainable personal transportation. But it can serve as an important addition to the mix of technologies we'll have to depend on until the answer is found.
To kill the Volt and other promising-but-expensive-to-develop technologies before giving them a chance in this rapidly changing market would be to surrender to instant gratification at the expense of the future.
If the past 18 months have shown us anything, it is that the demand for profit and growth above all ultimately leads to collapse.
John O'Dell, Senior Editor
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