The Wall Street Journal's Holman Jenkins joins the growing media chorus asking "WTF's up with GM?" [paraphrasing]. With GM's stock prices in the $11 per share range for the first time since the 1950s, Jenkins wonders if banking the entire company's future on one model– the plug-in electric gas hybrid Volt– is "nuts." In the grand TTAC style, the scribe observes "to pour hundreds of millions into a race to launch an electric car, the Chevy Volt, guaranteed to lose money on every unit sold, begins to seem a peculiar strategy for a company in dire liquidity straits." Jenkins covers all bases in his Volt diss. "For those who think the Volt's justification is greenhouse emissions, notice that electric cars play Three Card Monte with energy inputs: It all depends on where the electricity is coming from." To drive home his point, he reminds us "Rick Wagoner last week laid out the case to Barack Obama personally for turning GM into a ward of the state," and "that a big part of the company's turnaround gamble consists also of eliciting favor once again from Washington after a period in which the domestic auto makers were nothing but whipping boys on Capitol Hill." In fact, Jenkins only misses the target once: his repeated insistence that "GM executives are not nuts." In that sense, neither are pistachios.
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Whether one believes that corporate welfare is justified in this instance is a separate debate, or maybe a moot point as its probably going to happen (in GM’s and Ford’s case at least, sorry Chrysis).
Lockheed Martin and Boeing do get enviable subsidies already, however, I am willing to bet a college student’s bar tab that if Lockheed and Boeing were run as badly the BoDs of GM, Ford and Chrysis they would have been sacked a looong time ago.
So, I wouldn’t mind a handout as much if the managers of whoever goes belly up were told to take a hike.
Like TTAC, Jenkins is known for his somewhat confrontational style. His piece a couple years ago knocking the Prius down a notch was epic.
The money quote on his current GM piece:
“It’s (GM’s) betting the Volt will trigger a change in Washington’s taste for bailing out a domestic car maker.”
He really blows it with this line about the Volt’sprojected 50mpg when running from the gas engine: (Our guess: The car will be lucky to get 15 mpg under gasoline power.)
But I agree with his argument that the Volt will help GM get fed bail-out money.
The Volt is a political stunt. There is no other rational explanation for it.
“But Mr. Senator, we are this close to producing a mass-market electric car! You have to give us umpteen billion dollars so we can continue our wonderful, philanthropic, selfless work for the good of the nation and the environment!”
Any public official who buys that should be summarily recalled by his constituents.
An article in Tuesday’s NY Times tells about Saudi Arabia bringing a new oil field into production called the Khurais field. The Saudis claim this is a very big field and hope to have it producing next year.
The Saudis are actually worried. They are enjoying the higher prices for oil but they are afraid that their customers will discover alternatives to buring OPEC oil.
As the price of oil goes up digging up Canada’s and the U.S.’s shale, off shore drilling, electric cars, mass transit, hydrogen fuel, biofuel, etc become more interesting.
As many of you have pointed out nothing is ready to take over for OPEC oil but our shade tree mechanics and very smart engineers may come up with some breakthroughs at any time and this actually worries the Saudis.
While oil prices increase some increase their anger and some increase their thinking.
John R, I have news for you: Lockheed and Boeing are run as badly as the others. It’s just that they have so much free money coming in from the government that their incompetence is hidden. I did subcontracting to a company that subcontracted to Lockheed for work on the space shuttle. Lockheed decided that since they were the lead they would waste all the money for the project on travel and other frivolous expenses. Then half way through the project they issued a stop work order because they were over budget and had to wait for the next round of funding. And this happens all the time. Lots of waste and mismanagement of money. It’s just that they get it free all the time at the tax payer’s expense.
With GM’s stock prices in the $11 per share range for the first time since the 1950s,
Is the the actual price in the 1950’s? Is that adjusted to splits and buybacks (if any)?
I wonder what the inflation adjusted price is? $11 in the 1950’s must be worth about $100 today. That would make today’s GM stock worth $1 when measured in 1950’s money.
Doh! The WSJ article answered my question. The adjusted stock price is $1.50.
OK… I just finished the article. The author is wrong on one point. He dismisses the idea of a small gasoline motor to charge the battery getting an estimated 50mpg. He claims (a) if this works, then the streets would be full of such systems, (b) He thinks it will be closer to 15mpg.
He is wrong. The truth is closer to the middle. The Volt when running in gas mode will function more like today’s Prius, taking advantage of all the efficiencies of the electric propulsion systems. Things like regenerative braking, engine shutoff, etc, etc. He is comparing apples to oranges.
I will agree that if you are taking the whole family on a long road trip in a Volt, your mileage will suck. Those driving conditions are the worse for this type of system. But for running around town with only 1 or 2 passengers, this is best.
Does the stock price reference take inflation into account? I don’t know whether or not that be a given, if not then $11 in say 1955 for example would be $88 now.
EDIT: In the main article it mentions it’s not adjusted, and that if it were the 1950’s GM would be worth $1.50.
Last night it came to me. The Volt is entirely an American type of project, the kind that this country tends to pull off when the chips were down. During World War I, the U.S. had no fighter plane to speak of — in twenty-five years it had the most advanced airplanes in the world. In 1941, the Mitsubishi Zero ran circles around U.S. warplanes, only two years later the Hellcats essentially wiped the Zeros out. The Soviets were first in much of early space flight and ballistic missile technology, but by the late 1960s, the U.S. far surpassed their capabilities.
Point is: it is just plain American to play catch-up. Oftentimes, we do not invent the technology but we move it along better (and even faster when there is much on the line).
So there, I said it. The Volt will happen and will be a success. It’s what we’re good at.
The Volt is misunderstood, and it’s not a wager-the-company project, but it is an important bet.
There’s a simple four-step plan for reflating GM’s stock, regaining traction in the market, and re-establishing relevance. Against a backdrop of spreading the quality achievements of their better cars throughout the line, they are:
1/ Move existing inventory to clear the way for re-balancing retail lots to better match current and evolving demand. The “72 Hour” sale and 0% deals are making progress on this emergency. The public markets will begin to look past the immediate margin hits if they see even incremental progress on defending share and a view of how the company will consolidate gains. The company is inarticulate on the latter.
2/ Boost supply of more efficient drive-trains in existing models. This means hastening availability of 6 speed transmissions in cars that don’t have them, and higher production of 4 cylinder versions of cars that can use the Ecotec engines, where using them will deliver better fuel economy. It also means more aggressive use of the Ecotec 2.0L Turbo in lieu of larger engines in vehicles where more than base power is needed to compete. This step is incomplete and needs more urgent attention.
3/ Product release plan for fast-track, near-term new models to compete in the gasoline sub-compact market, ala the 1.4L small car already mentioned by the company. This step is insufficiently outlined at the moment, which means they are moving too slowly.
4/ “Moonshot” project to establish a new vector for re-imagining the car. This is the Volt, and it must be understood that Volt is a beginning, not an end. Volt is not an “electric” car in the way people think of a car that uses no gasoline. It is an electric-DRIVE car that is powered electrically via a serial-hybrid locomotion scheme combining battery storage, buffering and a gasoline-powered generator. A 15mpg estimate while under gasoline power sounds like balderdash, but no use arguing — we’ll know in time. In any case getting the Volt right will eventually give GM choices for powering a variety of versions of the platform. It can continue with serial-hybrid ICE/battery power with fuel options beyond gasoline. Or fuel cell/battery. Or battery-only — whatever schema are practical for delivery electric power to the motor(s) in mobile form.
Unlike the parallel hybrid, the Volt is the re-start of an architectural vector begun by the EV1, this time giving electrically-powered vehicles practical range while keeping them electric. At some time, or for some vehicle types, toss the ICE and its generator. Sub in an alternative means of generating the required electricity. The primary platform for all-electric motive force remains. Volt is just an opening shot to reset the rules of the business.
Add that all this should be communicated and campaigned to Wall Street, both in measured tones publicly, and steadily with progress reports to analysts, fund managers and bankers behind-the-scenes. With the right investor-relations campaign, Wall Street can be persuaded to support the stock while the whole thing unfolds. Since GM doesn’t do a good job of the public portion of this PR initiative, my guess is they are not conducting the behind-the-scenes campaign well either.
In this scenario, execution on the two critical middle steps is murky. Clear intent and precision execution on intent can correct that quickly. Let’s see. But the 1st step, however late and painful, is showing unusual effectiveness, and the 4th step is sound but the advance campaign is ham-handed and the schedule may not be met. Sure, the Volt project is also a political asset if the company has to seek assistance from the Feds, but don’t blame the company for that. That phenomenon is on Congress’ neck. Assuming GM can find the financial help they need, moving with alacrity on these four steps, sequenced for difficulty, puts them in a position where all the tools needed to succeed are at hand. Well, they do need to develop marketing competence again, quickly… Any Federal assistance should come at the price of ejection of the current Board, replaced by outsiders who are not friends of Wagoner. Then compensation and the composition of the exec team are the new Board’s responsibility to the shareholders. Get past your vituperative dislike of the personalities currently in charge, and it’s much clearer that GM is worth rescuing.
Phil
While the Volt should not give GM some kind of a free pass to let the rest of their lineup die on the vine, in and of itself it is a great idea.
Whether or not they will have the capital to pull it off, we will see. But they need a new technology which leapfrogs Toyota. That technology, if successful can then be incrementally refined over time, and rolled out to the rest of their lineup. If successful, GM wins huge in the long term.
That being said, the question marks are 1) Will GM break from their awful past of not incrementally improving their product, 2) Does GM have enough product in the meantime to keep them afloat.
Drifter…
I understand. My point is that the Volt is not simply replacing an ICE with an electric motor. It that were true, then the whole thing is a waste of time and money.
There are other technologies being implemented to make more efficient use of the energy. That is why I compared it to the Prius. The Prius gets its improved mileage from being more efficient. At the end of the day, it gets more miles from a unit of energy being put into the vehicle, which in the case of the Prius, is gasoline.
I will agree that the Volt’s serial system will not be as efficient as Prius’ parallel system. We hope that the Volt, by not needing to tap into the serial system very often, will more than offset this. The Volt system is best suited for short trips from home base in city traffic.
But of course all of this is pure speculation since we don’t actually have any Volts to test.
On the other hand, I could be completely wrong and we might discover that the Volt is nothing but a car where they switched out the ICE and slapped in an electric motor, battery, and a little gasoline powered ICE generator as a lifeboat. I hope not, and I don’t think this is case.
Sorry detroit1701, this isnt the 40’s. We dont lead anymore. We import. Welcome to the global plantation. There is a reason detroit is being dismantled and made to look like incompetence did it, not the unseen hand.
Who can believe that this is GM’s ONLY salvo?
To think that this is their last gasp is ludicrous. They came late to the game in many fads and flares. But they came and played. The Camaro has yet to show. And a new Daewoo is apparently ready, and with the current measuring sticks out there rolling, it’s got to be at least equal. Do I think that a Camaro is gonna right the ship? Not single handedly. Who didn’t read the impact the Malibu was going to have??!? Hell, in the 80’s Opel held up the Deroit bunch single handedly. The China branch wasn’t even a thought.
And what number is the Death Watch up to?
Damn. Talk about a Lemming mentality.
gawdodirt: “Who can believe that this is GM’s ONLY salvo?”
Well, what else does GM have?
gawdodirt: “The Camaro has yet to show…”
Explain to me the point of re-introducing the Camaro when they killed it just a few years back because of poor sales? Check Mustang’s sales – they’re trending down, too. Fairly vigorously. The Challenger beats the Camaro to market and swipes some of the Camaros sales. Then there’s the whammy of gas prices going up (which was always in the cards, didn’t GM notice they’re now doing business in China?). After the initial rush, Camaro sales will probably settle down in the 6-8K units/month range. I’d consider a bet on less than 6K but I’d want odds.
So, the Camaro not only isn’t “going to right the ship” but it’s going to add a heavy deck cargo of fixed costs.
gawdodirt: “…a new Daewoo is apparently ready…”
Bet a turnaround on a Daewoo? There’s a plan doomed to failure.
gawdodirt: “Who didn’t read the impact the Malibu was going to have??!?”
It sold 13K units this month. Go take another look at the volume associated with the top-selling car in America. 13K Is not it. Do you suppose 25% of Accords or Camrys go to fleets? I don’t know about this month but that was the figure for Malibus to fleets for the first 5 months of 2008.
gawdodirt: “Hell, in the 80’s Opel held up the Deroit bunch single handedly.”
If that was a good plan… why isn’t Opel still a staple of GM’s domestic offerings?
And there’s no way an Opel, built in euros can save a North American GM when sold in dollars. The Astra sold 888 vehicles this month. The Americanization cost $100 million. Each of those Opels had to contribute $113,000 towards the amortization of those R&D costs.
Of course, if it costs more to build the Astra in euros that have appreciated by – I’ve lost track of the percentage… it’s frickin’ huge… call it a gazillion per cent – then they’re not contributing ANYTHING towards amortizing the R&D costs. GM hasn’t booked that as a loss, yet, I suppose. I wonder when that happens?
You know, the money spent on the Volt could have been spent getting an Astra line running here, building Astras to sell both in dollars and in euros. That might have been profitable.
There is a reason detroit is being dismantled and made to look like incompetence did it, not the unseen hand.
The unseen hand…of millions of people driving straight past GM dealerships, and buying a car from someone else.
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Ressler…
So, to sum up your four-step plan for GM, the first step is “showing unusual effectiveness”, they’ve done a “murky” job on executing the “critical” steps 2 and 3, and “the 4th step is sound but the advance campaign is ham-handed and the schedule may not be met.”
Four steps, and the only step they’ve done right is slash prices to sell excess inventory.
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The WSJ article is wrong about Volt gas-mode mileage, but right about everything else. The Volt is a giant PR farce aimed at softening politicians. Expect Lutz to aim his “Volt Nation” at badgering Congress for tax breaks and subsidies. Oops, that has already happened.
Here’s what’s going to happen: after a lot of smoke-and-mirrors, in late 2010, there will be a limited production run of Volts, because there is no way GM can have the facilities, the suppliers, and the custom tooling to build 100k+ Volts/yr in 30 months, given that even the most basic specifications (engine, battery, size, weight) have yet to be determined.
GM will roll-out a few dozen Volts in late 2010, incredibly expensive because they will be basically hand-built, and sell them for some low-price (why not?). The media will fawn over them, gushing that GM has been able to make an affordable plug-in car. Demand will soar, but of course there will not be enough Volts to go around.
THEN, GM will go to Washington, asking for money.
It’s true that compared to a parallel hybrid, a serial hybrid’s ICE has a theoretical energy loss. A direct mechanical drive will always be more efficient than using a generator and electric motors. However, serial hybrids can indeed be efficient when running off the ICE/generator. That’s because all ICE’s are most fuel efficient at a particular rpm, and a serial hybrid runs the ICE in a steady state at that rpm. In a parallel hybrid, the ICE is still revving up and down.
detroit1701, We’re in for a really rough ride because we’re playing it that way.
And what you say is actually at odds with history.
I read somewhere that no airplane was used in combat against the enemy in WWII that hadn’t at least been designed by 1940. If you look at the development of the P-38, the 38 stands for 1938. That’s when the prototype flew. The Spitfire’s roots go back to 1933, I believe. Boeing had figured out the B-29 pre-war.
It’s also not widely known but Roosevelt and Congress expanded the US Army by about 150% prior to the breakout of the war (Eisenhower, “Crusade in Europe”) and was well along in plans to increase the size of and modernize the Navy.
The Manhattan Project started in 1939.
In other words, we did pretty well when we prepared and didn’t wait until the last minute to start to deal with a threat. We certainly weren’t as well-prepared as we could have been but foresight put us in a position to start carrying the war to the enemy pretty quickly, once we were attacked.
Instead of getting out in front of the energy curve and preparing for a soft landing in a post-cheap-oil economy or actively bridging to the post-cheap-oil economy, we’re reacting to $144/barrl oil and praying there IS a post-cheap-oil economy
In my town, an inner ring suburb, 80% of the housing stock was built after President Carter called our attention to the developing – and sure to continue – problem we had with energy. What fraction of my town has solar or other advanced heating systems (e.g., geothermal)? If you guessed “less than 1%,” you’d be right.
We did upgrade requirements for insulation 20 or so years ago and additional improvements were mandated by building codes since but there’s still plenty of energy-deficient construction added here, every year.
In most of the town, line drying isn’t allowed. How deranged is that? You MUST dry your clothes with electricity or natural gas. Have you looked at the price of natural gas, lately?
The entire town is architected around the car. Lots are required to be large. Higher-density developments are limited and, often, isolated. One of the oldest and largest (and poorest) apartment complexes is over 2 miles from a bus stop (their own fault for being poor). It used to be within about 500 yards of a bus stop but an improvement to the interstate cut them off (I suppose you could scale the fence and cross the interstate… make sure your life insurance is paid up).
Distances to be walked are long and, in many cases, inconvenient and unpleasant. There are paths… you could bike and I do that frequently. But a bike ride to the library, city hall, grocery store, is still a fair piece and not everyone would enjoy it, to say the least. A car is really essential here.
A succession of laissez-faire Presidunces and Congresses (look how well that turned out in the early part of the 20th century) have consistently failed to look down the road and steer the economy away from the rocks.
Now, we’re on ’em.
Even the realization that oil dictatorships were not developing friends for us (9/11/2001) didn’t stir the Party in Power to take steps to secure a better energy future.
20 Years ago, even up to a couple years ago, a tax on oil could have allowed us to depress demand for it, which would have depressed the world price, improving our balance of trade problem, and could have funded projects that would make us more secure, long-term.
Today, we’re deep into deficit spending and we can’t afford the investments we need.
So, now, here we are, looking at $144/barrel oil and, at least in the short-term, no choice but to pay it.
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Altoids, you’re right about most things but not the timing… the Volt will “start” “production” in very late 2010 but GM will go to DC for the money before that happens.
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Phil Ressler, you continue to amuse.
1. What was the lesson learned – or not learned – about dumping vehicles into the consumer fleet back in 2005’s “Fire Sale for Everyone?”
High incentives are used to pull sales forward and then sales decline. GM spent a lot of money this month (and the Toe Tag Sale continues through the 4th – guess I oughta git me a new Jimmy before they’re gone) to ensure that August is awful. There is no substitute for the right mix of competitive product.
And it looks to me like GM is worsening GMACs potential exposure. They ARE loaning well over vehicle value on very long loans. Those loans will be upside-down for 48 of the 72 months – or longer. This is not healthy.
2. Hey, we agree on something. Which makes me wonder, have I been smoking crack? The problem, of course, is that item 4 is draining resources from item 2.
And why the aych-ee-double-hockeysticks didn’t Wagoner and Lutz get going on this years ago? Fuel economy is partly an image thing and GM has done nothing about this since Wagoner took over, except to blab about how many vehicles eke out 30mpg on the highway while Toyota and Honda strive for 40 and produce a couple of cars with outstanding fuel economy.
An entire generation of buyers is programmed to think fuel economy is the province of Toyota and Honda. They should have started to turn this around with the introduction of the Cobalt some 3-4 years ago.
3. Also suffering due to item 4 and GM’s inability to do anything quickly. Why should the Volt take almost 4 years? The Prius was done in 2.5. One of the other posters here alleges that Saturn did its first car in less than 3 years. See if those guys are still alive and get them back on the job.
I also have to wonder about the morale of teams NOT on the Volt project. The Volties can have anything they want. Lutz actually answers the phoone when the Volties. Why isn’t every GM car project like that? How demoralizing is it to be on a project that might have great unit sales and revenue but can’t get the attention of the GulfStream set?
4. “… establish a new vector for re-imagining the car…” That sounds like Corporate Communications. That’s not a compliment.
Here’s what bothers me about the Volt…
First, in EV-mode, it’s carrying around an engine which, in EV-mode, still has multiple functions. It decreases range and reduces useable space. Well, I didn’t say these were useful functions, did I?
Second, in charge-maintenance mode, it’s carrying around a battery which still has multiple functions. It decreases range and reduces useable space. Useful functions? Erm… no.
GM has stretched the range of an EV by including an on-board charger. But they’ve had to seriously compromise the vehicle to do it. A plain-vanilla EV would be almost as useful, cheaper to buy, probably easier to make, with more design possibilities and would have greater range for the same amount of battery.
To get a breakthrough improvement in the Volt, GM needs a battery improved in not just cost but also in bulk and weight. This same breakthrough will likely yield a pure EV with really impressive range. For a lot less aggravation.
And developing a “vector for re-imagining the car,” is not what GM should be doing. GM should be making money. GM is not a “vector” company, they are an automobile manufacturer. According to Lutz, the first generation will not make money (what’s a generation, 5 years?). That’s unacceptable. It’s not 1997 and GM is not a pioneer in gas-electric technology. They are an also-ran. Toyota is not going to be building a gas-electric car in 2014 that doesn’t make money, they’re making money now.
If they develop a new car, it should be to meet what they estimate to be a market need and tney should be planning to do it at a supportable cost to make money.
In most of the town, line drying isn’t allowed.
That’s a seriously dysfunctional town council you have there.
1. What was the lesson learned – or not learned – about dumping vehicles into the consumer fleet back in 2005’s “Fire Sale for Everyone?”
High incentives are used to pull sales forward and then sales decline. GM spent a lot of money this month (and the Toe Tag Sale continues through the 4th – guess I oughta git me a new Jimmy before they’re gone) to ensure that August is awful. There is no substitute for the right mix of competitive product.
And it looks to me like GM is worsening GMACs potential exposure. They ARE loaning well over vehicle value on very long loans. Those loans will be upside-down for 48 of the 72 months – or longer. This is not healthy.
You’re missing the point of the current sale. In the context of the situation GM is in at the moment, risk of tanking August sales by pulling presumed future purchases into the present is secondary to the benefit of quickly rebalancing the inventory at retail. In a crisis, you address the emergency standing in front of solving the rest of your problems. So the “72 Hour Sale” and attendant financing is the right call to unkink the hose. August will be better managed against a backdrop of reduced truck inventories in the field.
And why the aych-ee-double-hockeysticks didn’t Wagoner and Lutz get going on this years ago? Fuel economy is partly an image thing and GM has done nothing about this since Wagoner took over, except to blab about how many vehicles eke out 30mpg on the highway while Toyota and Honda strive for 40 and produce a couple of cars with outstanding fuel economy.
That’s spilled milk and not worth the hand-wringing of answering the question. What GM has to do now is curtail the internal fingerpointing, instead knuckling down on solving their problems. Looking back at what should have been is not productive.
4. “… establish a new vector for re-imagining the car…” That sounds like Corporate Communications. That’s not a compliment.
I’m not fishing for compliments. The Volt project is exactly what I’ve described. It is the bridge to Hy-Wire or a platform inspired by the AUTOnomy idea, which yields a car dramatically different from what we think of as an automobile now. Even if GM’s own exec team seems unable to articulate this, the lineage connecting EV1 to Volt to Hy-Wire is as obvious to an outsider paying attention as Mercury and Gemini were to Apollo.
Here’s what bothers me about the Volt…
First, in EV-mode, it’s carrying around an engine which, in EV-mode, still has multiple functions. It decreases range and reduces useable space. Well, I didn’t say these were useful functions, did I?
Without that engine, a battery-powered Volt would have to have a much larger battery, at greater weight and volume penalty, to achieve similar range. The same disadvantages you cite apply to parallel hybrids as well, with the added liability that neither the battery nor ICE alone can deliver acceptable performance.
Second, in charge-maintenance mode, it’s carrying around a battery which still has multiple functions. It decreases range and reduces useable space. Useful functions? Erm… no.
It’s carrying a battery that is both buffer and store for recovered mechanical energy. Now, what happens if the roof is covered with solar cells? All hybrid architectures are carrying something extra.
GM has stretched the range of an EV by including an on-board charger. But they’ve had to seriously compromise the vehicle to do it.
How?
A plain-vanilla EV would be almost as useful, cheaper to buy, probably easier to make, with more design possibilities and would have greater range for the same amount of battery.
But a plain-vanilla EV would not suffice as a sole or primary vehicle for most people. It’s range cannot be made sufficient anytime soon. The Volt will meet the needs of any single-car household that would otherwise be content with a same-size car. Nevertheless, since the Volt is an all-electric drivetrain car, GM retains the flexibility to build an enlarged-battery version sans the ICE at very little additional development cost, as a potentially cheaper offering for the second-car or commuter market.
To get a breakthrough improvement in the Volt, GM needs a battery improved in not just cost but also in bulk and weight. This same breakthrough will likely yield a pure EV with really impressive range. For a lot less aggravation.
And when that battery breakthrough comes, it will be nearly effortless to release such a variant or successor on the platform. In the meantime, the serial hybrid scheme allows them to get to market sooner with a viable primary car while launching the electric drivetrain vehicle enabling the option you advocate.
And developing a “vector for re-imagining the car,” is not what GM should be doing. GM should be making money. GM is not a “vector” company, they are an automobile manufacturer. According to Lutz, the first generation will not make money (what’s a generation, 5 years?). That’s unacceptable. It’s not 1997 and GM is not a pioneer in gas-electric technology. They are an also-ran. Toyota is not going to be building a gas-electric car in 2014 that doesn’t make money, they’re making money now.
Re-imagining the car for upcoming market realities is exactly what a GM that believes it has a future should be doing. All good companies have to devote a significant portion of their energy paving road for the future, not merely capitalizing on the present.
Right, GM is not a pioneer in what you call “gas-electric” automotive technology as you define it because your imagination is limited by “Hybrid Synergy Drive.” Volt is not an attempt to pioneer “gas-electric” technology or build another Prius. GM *is* a pioneer in modern all-electric automotive drivetrains. The Volt is only gasoline-electric in that the launch version is going to use a gasoline-powered generator. It is an electric car. The gasoline part is incidental and non-critical. The charging system could be propane, nuclear, coal, diesel, hydrogen, fuel cell, kerogen powered, or built as a battery-only plug-in. Moreover, it’s not merely a charging system. When the Volt’s EV-only range is spent, the ICE-driven generator is powering the car’s electric motor(s) in real time.
If they develop a new car, it should be to meet what they estimate to be a market need and they should be planning to do it at a supportable cost to make money.
GM can make money on more prosaic vehicles. That they haven’t lately does not preclude fixing their conventional car business so they can. Like Toyota and Honda before them, they can subsidize new technology introductions through a combination of conventional sales and government incentives to consumers.
Phil Ressler, you continue to amuse.
The bliss of mutual mirth…
Phil
I think the problem here is not that the project itself is not feasible technically, but the intense competition it will face when it is launched. Toyota will have a plug in hybrid by 2009, the model is already fully designed and likely in production as I type this. The volt is still in drivetrain testing with mules. By the time the volt is released it will have to compete with a large number of hybrids, plug-in or otherwise. Given the choice between a cheap, proven tech like the Prius and the expensive(40k!) unproven volt, consumers are unlikely to choose the latter.
But it gets worse, even if the volt is successful, it would be a simple matter for Toyota or Honda to create something similar. Both companies already have tech which would be fairly simple to convert to serial hybrid configurations. The Fcx clarity Honda is leasing out is basically a volt with a fuel cell instead of an ICE. If it turns out that ICEs are the way to go, I have no doubt they could crank out something within a few years. In the meantime, the existing hybrids would still be eating the Volt’s lunch.
Personally I think the fact that the Volt is a Series Hybrid, consequently allowing GM to change the power supply from ICE to whatever in the future, is the key weapon over the Prius. Each component, elec motors, batteries, ICE or alternative can be updated withour requiring changes to the other parts.
I wonder if GM will allow upgrading to existing Volts in 2011-2012 in the manner of Volt 1.0 upgrading to Batts/Elecs/ICE of Volt 1.1, 1.2 etc.
Cheers Matthew
Phil Ressler: “That’s a seriously dysfunctional town council you have there.”
Oh, yes…
Phil Ressler: [Volt is seriously compromised.] “How?”
The battery, drivetrain and size constraints necessary to the energy budget are squeezing everything.
The Volt is going to have very little trunk space and room only for 4; there will be no middle place in the rear seat. If I understand the bodystyle correctly, it will be a coupe, which says no one’s putting baby seats in it. In spite of its 4-seat limit, it will still be relatively wide.
GM is talking about a fuel tank of 6 or 7 gallons, which they want us to think leads to an effective cruising range of 300 miles. In fact, this is not the case. The Volt will do, without recharge, no more than 240 miles comfortably, if it gets the 7 gallon tank, and 200 if it doesn’t. No one cruises until the tank is dry… when you have 100 miles range remaining, you start to think about a gas station. There’s lots of places you can be driving in the US where having less than 100 miles left causes you some concern.
We take an annual trip to the East Coast, 1300+ miles. If we take the Rav4, I refuel every 300-380 miles or when we stop for the night. If driving the minivan, I refuel every 400-450 miles or when we stop for the night. If range wasn’t important, no manufacturer would mention it in their ads. But they do.
In spite of the Volt’s allegedly impressive fuel economy, compared to my minivan, it will want refuelling twice as often.
Any gas-electric car is, necessarily, a bag of compromises. The Prius is a successful one because they picked the compromises that work for people. The Volt is not going to do that. With the exception of a very noisy minority, few people are dying to get off gas at any price. The Volt is for them. And them alone.
Phil Ressler: “But a plain-vanilla EV would not suffice as a sole or primary vehicle for most people.”
So? What family owns just one car? Nobody in my neighborhood. We’ve got three. At times, we’ve had five. At no time were ALL of them twenty-five miles or more away from the house. The Volt is going to have limited appeal, why should other vehicles with limited appeal be dismissed out of hand? Especially when they’re likely to be more cost-effective for their primary mission?
Phil Ressler: “Re-imagining the car for upcoming market realities is exactly what a GM that believes it has a future should be doing.”
Revectoring imaginary cars that will turn a profit in 6 or 7 years, if things go well, is something that profitable companies can do. GM can’t afford it.
And if GM was any good at forecasting “upcoming market realities,” then they wouldn’t be in the pickle they’re in, would they?
Phil Ressler: “Right, GM is not a pioneer in what you call “gas-electric” automotive technology as you define it because your imagination is limited by “Hybrid Synergy Drive.” ”
The idea of a serial hybrid occurred to me long before I heard Lutz babbling about the Volt. As for the limits of my imagination, that’s unimportant compared to the limits that we term “physics” or “the state of the art in materials science.”
The Chrysler minivan broke the mold (or, perhaps, discovered a little-used mold originally owned by VW and fixed it up for market acceptance). A vehicle company can imagine new uses for a vehicle and new formats (within limits) for a vehicle and have a good chance of realizing them but they can not imagine a new powertrain into existence the same way.
Phil Ressler: “GM can make money on more prosaic vehicles.”
They can? Then why aren’t they?
Phil continues, ignoring my obnoxious interruption: “That they haven’t lately does not preclude fixing their conventional car business so they can.”
It’s a matter of finite choices. GM is running out of money. As a business, are they doing what’s appropriate to stay in business so that they can someday realize The Dream? No. For some reason, they would rather do an Institutional Moonshot, rather than take the steps necessary to fix their current product. They don’t have the resources to do it all.
Phil continues: “Like Toyota and Honda before them, they can subsidize new technology introductions through a combination of conventional sales and government incentives to consumers.”
Ahhh… we get down to cases… A different flavor of the Government Bailout to save a Valued Element of the National Economy.
Well, it’s true that the Prius enjoyed some government largesse (Toyota denies receiving funding from the Japanese government… which makes some sense because they don’t share the resulting tech with Honda). Tax credits, to some extent, kick-started the market for hybrids. But that was years ago. The market for hybrids is established. Several companies took advantage of it. GM chose to let the opportunity go by. Where’s the societal impetus to do it again? What happened to all the Precept money?
What are my other choices? I can think of plenty of things to do with government money that make much more sense than supporting GM so that they can bring a vehicle of questionable utility to market in an completely untimely fashion.
Phil Ressler: “The Volt project is exactly what I’ve described. It is the bridge to Hy-Wire or a platform inspired by the AUTOnomy idea, which yields a car dramatically different from what we think of as an automobile now. Even if GM’s own exec team seems unable to articulate this, the lineage connecting EV1 to Volt to Hy-Wire is as obvious to an outsider paying attention as Mercury and Gemini were to Apollo.”
This comment, the lineage of the EV1 to the Volt and on… brings me back to something else… what makes anyone think GM can actually build a Volt?
Let’s look at GM’s record: The BAS system is a flop. The two-mode hybrid is a flop. The Volt concept went into the wind tunnel in the late fall of 2007, 9 or so months after GM had started showing it off at auto shows and committed to it and GM had to re-learn a lesson from the EV-1: aerodynamics is critical. And the Volt concept aerodyamics apparently sucked rocks. Did it occur to GM to ask, “Why does the Prius look the way it does?” Or “Where are the files from EV-1?” Or “Can anybody find the Precept files?” The perfectly conventional Camaro is late. GM is still talking about supply issues for the Malibu and the Enclave. They’re going to do the world’s most allegedly advanced vehicle and not lose their shirts? They’ve allegedly got EV-1 and Precept experience, yet they’re relearning lessons from those programs?
It was reported, elsewhere, “We can get anything we want.” That’s a really bad way to run a project. God help anyone that tells me I can have whatever I want to do a project. It will be beautiful (because I’m extremely good at what I do) but it will cost a fortune. And it will be late.
There was an article – a great article – in Atlantic Monthly, recently, about the Volt project. It was blogged on TTAC. [paraphrasing…] At the beginning, the author happens to relate that, due to various schedule slips, underbody testing time will be squeezed to the minimum allowable. Towards the end of the article, the chief engineer, Farah, is lamenting something that’s not going right. “Well,” the author remarks, “at least as one of your top execs said, you’re building on a well-tested platform, so no worries there?” Farah shoots him a look… “There’s a giant hole in that ‘well-tested’ platform where this battery goes.”