GM's Do-Over Not Likely To Diminish Automaker's Efforts To Green Itself

GM's Do-Over Not Likely To Diminish Automaker's Efforts To Green Itself

Late-Bloomer GM Has Several Green Programs; Vows Chevy Volt Safe From Cuts

By Terril Yue Jones, Contributor

The Obama administration's 60-day extension for General Motors Corp. to take its revitalization plan back to the drawing board and try once more, with feeling, ratchets up the pressure on the automaker to rethink its financial and labor issues and to come up with a plan to design and build greener cars that people want to buy.

In dressing down GM and Chrysler LLC on Monday, President Barack Obama criticized bad management decisions and said tough choices were ignored. The automakers must ask themselves, he said, whether they have "created a credible model for how not only to survive, but to succeed in this competitive global market."

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GM's green tech projects such as the Chevrolet Volt plug-in hybrid are vital to company's future.

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The administration is all over GM and Chrysler because they collectively borrowed $17.4 billion to stave off collapse and now want $21 billion more.

Success, Obama said, includes the ability to become a leader in green cars. "Our companies are investing in breakthrough technologies that hold the promise of new vehicles that will help America end its addiction to foreign oil," he said.

GM Lags Green Leader

The administration's Automotive Task Force suggested, however, that GM has a way to go. The world's largest automaker "is at least one generation behind Toyota on advanced, 'green' powertrain development," the group said in its report.

That led us to wonder which GM green initiatives -- from mainstream, non-rechargeable hybrids to the ballyhooed Chevy Volt plug-in to esoteric hydrogen fuel cell programs -- are likely to survive as the company prepares another stab at a restructuring plan while facing a monumental cash drought?

GM itself says clean-car technology is a major path to long-term viability and pledges to push forward on five green-car initiatives: Internal combustion engine improvements; biofuels; hybrid vehicles; battery-electric vehicles, and fuel-cell electric vehicles.

No Pulling Back 
    
"Given the challenges we have with CAFE requirements and what consumers will demand, I don't see any of those initiatives going to the back burner," GM spokesman Kyle Johnson said.  He was referring to the 35-mpg corporate average fuel economy standard that auto makers will have to achieve by the year 2020.

"The only thing we've said we're going to pull back is diesel engines" to conserve capital as sales slump, Johnson said.

He noted that while GM's new viability plan is likely to focus on financial stability rather than technology and product development, the automaker remains committed to its stated green initiatives.
   
Here's a look at those projects.
 
Internal Combustion:
GM says it is continuously improving gasoline engine performance, with 18 models in the 2009 model year that get 30 miles per gallon on the highway.
 
Technologies such as six-speed automatic transmissions and better fuel-injection systems are expected to rapidly increase the number of GM vehicle models in the high fuel-economy class. The company is also continuing a shift away from thirsty trucks to more fuel-efficient passenger cars and crossovers.
 
Biofuels:
GM will continue to view ethanol-capable flex-fuel vehicles as the most significant way to reduce oil consumption and greenhouse gas emissions from its cars and trucks in the near term.

"We continue to work with advanced fuels, for example to be 50 percent E85-capable by 2012," Johnson said, referring to fuel that is up to 85 percent ethanol. He said GM expects to be building about two-thirds of its new vehicles with E85 capability by 2014.

Hybrids and Electric Vehicles:
GM already has a handful of hybrids in the market, including Chevrolet Malibu, Tahoe and Silverado models, GMC Yukon and Sierra models and the Saturn Vue Greenline.

The company's next-generation hybrids will start arriving in 2010, equipped with more powerful electric motors and more energy-packed lithium-ion batteries for improved range.

The biggest news here, and a product on which GM is banking heavily, is the Chevy Volt plug-in hybrid, scheduled to hit the market late next year.

The Volt is "game-changer technology," said Bruce Harrison, associate director of the global automotive group at IHS Global Insight. "Up until GM introduced the Volt, nobody was talking about doing anything remotely similar."

The Volt is electrically driven, with a rechargeable lithium-ion battery pack that is the only power source for the first 40 miles or so of driving -- a distance GM says will cover 80 percent of North American drivers' daily needs with no-emission, gasoline-free propulsion. The battery can be recharged at home overnight. The Volt's gas engine kicks in only for longer trips, once the battery charge is depleted, and then only to generate more power for the electric motor -- it isn't directly connected to the wheels.

GM says the system can save about 500 gallons of gas a year per vehicle. "We're very positive on the Volt," Harrison said. "It's putting the pressure on everyone else who is talking about plug-in electrics and plug-in hybrids."

As for all-electric vehicles, last summer GM joined a coalition of 30 utility companies in North America to bring plug-in electric vehicles to the market, and says it intends to follow that course for EVs it is developing but not yet discussing in public.

Fuel cells:
GM is testing more than 100 Chevrolet Equinox fuel cell-powered crossovers (right) in what it calls the largest-ever fuel-cell vehicle market test. "We've just passed 500,000 miles with consumers on public roads," said GM spokesman Johnson.

Widespread commercialization of fuel-cell vehicles -- which run on hydrogen and produce only water as a by-product -- remains well in the future and is dependent on the creation of a viable hydrogen fueling infrastructure and clean methods of producing the tremendous amount of electricity needed to make fuel-grade hydrogen.

But GM, despite its financial woes, insists that it remains committed to fuel-cell research.

While Chrysler recently has shown off some prototype plug-in hybrids and battery-electric vehicles, the administration's plan doesn't assume much in the way of green tech from a company best-known these days for its gas-guzzling Ram pickups and  Hemi V8 muscle cars.

Instead, Obama has given Chrysler 30 days to complete a partnership agreement with Italy's Fiat SpA, which is expected to bring some of its small-engine, diesel and turbocharging technologies to Chrysler to help it improve its overall fuel economy.

What If New Revitalization Plan Flops?

The president said in his announcement Monday that a fresh start to implementing an auto industry revitalization "may mean using our bankruptcy code as a mechanism to help (GM) restructure quickly and emerge stronger."

If that happens, it is likely to be what is called a surgical, or structured, bankruptcy with all the details pre-arranged in concert with the administration's automotive task force.

It would be over quickly and industry watchers don't expect GM to fail and cease operations even if it would have to cut products and emerge from the process a much smaller company.

Even if a bankruptcy -- or a new revitalization plan -- would result in curtailment of some of GM research programs, many analysts believe GM's green programs would survive, given the administration's insistence that fuel-efficiency, alternative powerplants and clean emissions are the way of the future.

"I don't think the green technologies would be at the top of the list" of things to go, said Jeff Jowett, manager of North American powertrain forecasts at automotive consultancy CSM Worldwide.

GM has "got a lot of work invested in hybrids," he said. The company is struggling now, "but I think they're positioning themselves very well for the future" and killing green initiatives would be a senseless waste of billions of dollars and millions of hours of research and development.

There's no unanimity over what might happen if GM were to disappear, or determines that it must slash its green research in a desperate bid to curb spending.

Global Insight's Harrison believes that the pace of technology adoption in the industry would plummet; that "the size of the hole that would be left if GM were to cease operations would take years if not decades to rebuild."

His comments come despite a recent study that found that as of 2007, GM was badly lagging other major automakers in the number of patents it has filed for green technologies. That study, however doesn't include the past 18 months of filings -- a period in which GM has been particularly active in hybrid powertrain and battery development.

Joe Phillippi, a former Wall Street auto industry analyst who runs the automotive consultancy Auto Trends, says, however, that if GM were to drop any of its research into green technology, there still would be "plenty of other [auto]makers around the world that will have various types of hybrid technologies on the road" that could fill in the gaps. 

Ford Motor Co. (which isn't seeking government bailout funds) has been testing a plug-in hybrid of its own and has shown an extended-range electric system similar to what GM is using on the Volt. Honda Motor Co. is testing fuel-cell electric systems; Toyota Motor Corp. is preparing a plug-in hybrid and Nissan Motor Co. and Mitsubishi Motors Corp. are among several automakers that have announced plans to launch battery-electric cars in the near future.

Analyst Dave Cole of the Center for Automotive Research agrees with Phillippi that GM's green technology initiatives would be picked up and/or continued by others.

So with or without GM among the players, development of greener, clean automobiles will continue, and the most likely scenarios have GM continuing to play a significant role.

Impact of Fuel Prices

Besides, says Cole, it's not so much the presence, or absence, of any one company that will determine the level and speed of green tech development in the auto industry in coming years.

"The big question, and it's a biggie, is what's the price of fuel going to be in the future?" Cole asked.

If fuel prices remain low, around $2 a gallon, and the cost of advanced-technology hybrids and other "green" vehicles makes it difficult or impossible to earn back the price difference with savings at the pump, "then forget it," he said of the idea of green cars becoming the volume leaders.

With cheap gas, he said, conventionally powered vehicles will be dominant for a long time.

John O'Dell:  is an AutoObserver Senior Editor. Follow @AutoObserver on Twitter.