Last night, the New York Times “broke” the story that General Motors and Chrysler/Cerberus were discussing a merger. The report lacked only one crucial component: facts. As RF reported in his initial blog on the subject, the story unravels by paragraph two. We learn that the entire story is based on “two people close to the process.” While anonymous attribution is common new industry practice, a story without independent corroboration is a nothing more than rumor— especially when it defies common sense. General Motors’ assertion that they routinely talk to other manufacturers about collaborative efforts doesn’t count. But it does reveal the truth of the matter.

In fact, the GM – Chrysler/Cerberus meetings are an open secret. As The General’s spinmeister intimated, GM regularly engages in tech sharing discussions with a wide range of carmakers. Given Chrysler’s yet-to-be-realized tie-up with Nissan, its decision to provide re-badged minivans for VW and ongoing attempts to create a Chinese hook-up, GM is a logical “partner” for Chrysler ongoing campaign to outsource product development. And cut costs.

GM and ChryCo could be discussing rebadged Malibus. Or a Chrysler badged Cobalt. With materials costs soaring, the two ailing American automakers might be examining the possibility of sharing resources. Or looking for economies of scale re: suppliers. And, lest we forget, General Motors owns 49 percent of endangered auto and mortgage lender GMAC; Chrysler’s masters hold the other 51 percent. If GM and Chrysler are NOT talking to each other about GMAC’s future, there’s something seriously wrong (more wrong?) with both companies’ executive management.

It’s no wonder Times scribes Vlasic and Sorkin backpedal on their GM – Chrysler merger story. They tell us that their two sources estimate chances of a merger are “50-50.” There could be “significant roadblocks,” not including the fact that sewing two losing companies together merely makes a bigger losing company. But the real argumentative implosion comes buried in the story: “neither side has yet to dig into each others’ private financial books and records.” How serious can the merger talks be if the lawyers and accountants haven’t even begun diligence? Answer: they can’t.

Clearly, the providers of “all the news that’s fit to print” didn’t give the merger story a fitness test. In fact, this is a classic example of what GM shill Rush Limbaugh calls “drive by media.”

The 24 hour news cycle (of which this writer, typing after midnight, is a member) was quick to pick up the story and discuss all the implications. The CNBC network, “the recognized world leader in business news,” called in the big guns for comment: Ray Wert of Jalopnik. While we understand the mainstream media’s ongoing fascination with the “new hotness” of blogs, Wert screwed the pooch on this one.

Wert claimed that GM and Chrysler “have two different lineups that actually are very complementary.” This is just wrong. GM and Chrysler have nearly identical lineups, with some niche-product distinctions. Recognizing this, Wert contradicted himself in his next comment. “They’re both looking to sell a lot of large trucks and large SUVS, and it makes sense for them to manufacture them on the same platform.”

The CNBC hosts ask Wert about the financial issues in a merger. His vaguely dishes “My assumption is that Cerberus has probably bit off a lot more than they can chew, and with credit kind of crunching in right now it makes a lot of sense for them to try to jettison a company that isn’t providing something that isn’t to their core business plan.” Except that’s not what anyone is talking about. The story from The New York Times: Cerberus would end up with an enormous stake in the hypothetical GM-Chrysler firm.

CNBC concludes by asking Wert about potential issues with a merged GM-Chrysler and organized labor. “I think it’ll be easier for them to get some economies of scale on UAW talks. It’ll be easier to work out one deal as opposed to two deals.” Efficiency in labor talks is a secondary goal (talking for less time, paying fewer labor lawyers). The actual issue is concessions. There is no quantitative academic evidence to suggest that it would be easier for a gargantuan company to negotiate with the UAW and CAW than two very, very large companies. In fact, odds are good the negotiations would be even stiffer.

CNBC failed in its background research. They should have read the editorial Wert published the same day: “GM Will Go Bankrupt: Why That May Actually Be Good For The General.” Considering Wert’s previously held belief that GM would benefit from Chapter 11 filling, why did he suddenly decided that a GM-Chrysler merger be well-advised? Something to do with publicity perhaps?

All of this discussion blatantly ignores the glaring issue: a GM-Chrysler merger would be a disaster. And that’s the truth.

I was walking the dog the other day when I heard a V8 bellow. I turned around to see a perfect example of a latter day muscle car: a Chevy Silverado pickup truck. I was surprised by my surprise. Although the Northeast represents Middle America’s automotive tastes about as well as Harvard professors reflect conservative political values, I wondered if society has reached the point where the sound of unabashed engine power has become, well, boorish. Has the average American automobile, once a symbol of status, virility and pride, been castrated? And is that a bad thing?

Focus on the word “average.” Yes, hundreds of thousands of enthusiasts continue to bask in the aesthetic, accelerative and aural afterglow of octo-cylindered SRT8, SS, GT, M and AMG-branded products. Widen the remit to include the tuned-four cylinder machines favored by the ricer set, and it’s clear that American car culture is alive and well and living in a comments section near you. But these vehicles cater to a relatively small subset of American consumers.

By the same token, you have to discount the eco-whips favored by equally passionate “green” car enthusiasts. In a recent study re: popular attitudes towards mass transit, four percent of respondents said they’d consider switching to mass transit on environmental grounds. While the survey methodology wasn’t entirely reliable, it supports a common sense conclusion: auto-oriented environmentalists proselytize from outside of the American mainstream. The media may swoon over hybrids, PHEVs, hydrogen fuel-cells and the like, but the average American aspires to a plain Jane Toyota Camry.

Or not. Post-September sales results, the general decline in vehicle sales (their lowest level in 15 years) and Detroit’s disastrous truck sales slump (down by 20-plus percent across the board) received the ink it deserved. Meanwhile, according to the American International Automobile Association, the Chevrolet Silverado and Ford F-Series scooped the top two sales slots.

Startling discounts may account for the fact that two American-made pickups edged-out the Toyota Camry in last month’s new car showroom hit parade. And there’s no question that the U.S. automobile market is undergoing an epic, convulsive shift, as hundreds of thousands of Americans abandon their SUVs (if and when they can) for more fuel efficient vehicles. But you have to wonder if falling gas prices and, more importantly, long-standing consumer tastes, mean that the death of the Great American Land Yacht has been greatly exaggerated.

Consider the much-lamented– if only by enthusiasts– “bloat” of the average American automobile. And by that I mean, of course, the Honda Accord and Toyota Camry.

In their early iterations, these Japanese cars were relatively diminutive compared to their American counterparts. Consumers chose the transplants for longevity and frugality and put-up with relatively tight packaging (especially when compared to their aging American counterparts and gas-guzzling SUVs). Today, numbers three and five on September’s sales chart are significantly larger than their predecessors. And they’re bisected by the Impala, an older Chevy that outsells its smaller and more modern “replacement.”

High gas prices or no, the automotive up-sizing trend continues. Even the new Mazda6 has traded zoom-zoom for elbow room. But something has been lost. (Don’t say handling, ‘cause that’s just you, a pistonhead, talking.) Thanks to mechanical and ergonomic improvements, the idea that a small-engined car is, ipso facto, a penalty box has left the building. While there’s some V6 up-selling down at the dealership, the vast majority of these popular cars are four-cylinder automobiles. More importantly, there’s no apology needed.

Mpg bragging rights have replaced engine envy. In a few short years, “That thing have a Hemi?” has gone from a come-on to a turn-off. At the risk of contradicting myself, the Toyota Prius has almost single-handedly made it “cool” to save gas. You can no more imagine the average American car buyer showing off his new car/truck by revving the engine than you can image a Dodge Challenger SRT8 driver whipping out his gas receipts.

This transition in the American automotive psyche– from a passionate lust for sheer horsepower to a profound admiration for fuel efficiency– is far from complete. But when a “car guy” like GM Car Czar Bob Lutz, the man who helped unleash the Dodge Viper and the Pontiac Solstice, spends his days touting the plug-in electric – gas hybrid Chevy Volt, you know which way the wind’s blowing.

In short, the bellowing, brash automobile, the car as a symbol of virility (a.k.a. penis substitute) is destined to become an increasingly obscure concept, even within the mucho macho pickup truck fraternity. BUT– automobiles are still, and will always be, a status symbol. And Americans will always love their faithful steeds, for one reason or another. Whether or not this petro-chemical reliant relationship (for now) is a good thing or not is irrelevant. It just is.

Doesn’t the human race EVER learn? Why must we continually have to go through the same pains, trials and tribulations that our parents, grand parents and great grand parents went through? Same with the automobile industry. Same with how our nations handle their affairs– economics included. Even politics. Forever, politics.

1928: Times were “Terrific”. The “Roaring Twenties” they called them. After a short, sharp, 18 month long economic recession in 1920 – 1921, where the deadwood and dry brush was cleaned from the U.S. economy by an economic forest fire, new growth came along and prospered.

Even so, Chevrolet had come in at number one, selling 1,193,212 cars against Ford’s slow ramp-up of production of 607,592. Willys-Overland and sub-marque Whippet were third at 315k cars, with Hudson and sub-marque Essex at 282,203 following at number four. The total new vehicle market in the United States was 4,361,579.

Henry Ford finally listened to his son, Edsel, replacing the ubiquitous Model T “Flivver” with a new Model A car styled somewhat like a shrunken Lincoln. Yes, the great Henry Ford nearly destroyed his own nascent auto company with his stubborn demand that no change be made to what had been successful for so long. The Model T was his alter-ego, emphasis on ego. Finally, the market spoke and he at long last heard – at huge cost to his son who possibly alienated his father from that time on.

By August 1929, car sales dropped precipitously – even prior to the Great Depression which began on October 29. Even so, 1929 new vehicle sales amounted to 5,337,087. August car sales gave a warning that nobody heard.

1930 sales: 3,510,178 (a 34.2 percent drop year on year).

1931 sales: 2,472,359 (a 29.5 percent drop year on year)

1932 sales: 1,431,469 (a 42.1 percent drop year on year, a 73.2 percent reduction in sales compared to 1929. An auto market only a quarter the size of four years before).

1933 sales: up 38.7 percent year on year, to 1,447,018. (Still only about a third of the size of 1929).

1934 sales: up  45.5% year-on-year, to 2,669,963 (a 45.5% increase year-on-year). An auto market less than ½ the size of 1929.

The Great Depression dragged on until 1942, only interrupted by the great build-up of war materiel for America’s entry into World War II. Recently, only a year or so ago, people in charge of “The Fed” reluctantly admitted that the actions – or inactions – of their forbearers had not only caused, but exacerbated the Great Depression. “We’re sorry, we won’t do it again.”

So what are they doing now? Pretty much the same lever-pulling “never mind that man behind the curtain” antics that caused the ruination of the nation some 79 years ago. Throwing more paper money into a fire does nobody any good.

And things in 2008 are moving much faster than 1929. We have mountains of cash being thrown into a fire. The bail out with taxpayer money is for the sole “benefit” of the elite wealthy bankers.

Reminiscent of the Titanic, but instead of ladies and children getting the life-boats, it’s first class male bankers passengers, only, thank you – and the rest of you get locked into the hold to go down with the ship. Tough shit. We’re suddenly aware, as a people, that the politicians sworn to protect and “serve” us all have just locked us into a doomed ship and given the life rafts to others.

Are bank holidays next? Iceland’s economy has totally collapsed just within the last few days, the world’s economy is ever more interwoven. Messrs. Smoot and Hawley are ghosts now, but they are likely to begin haunting us again with protectionism rearing its head, further exacerbating the depth, length and longevity of the oncoming tsunami, just as happened in the 1930’s.

Much like our current “choices” between Presidential candidates, we can choose protectionism and certainly wreck our country, or choose a free market and watch it continue to be wrecked as it has been over the prior 40 years, when corporate managers began to decide to export jobs overseas in earnest. Is there a third way?

Yes. Ron Paul and others have been warning about the possibilities of all of this happening, and was ignored or received derision.

The underlying problem? As always, with humanity: a lack of morals. Corporate managers wanting more power and money at the expense of others. Union leaders and members wanting more power, money, less work and more influence at the expense of others. Politicians wanting more of everything and no accountability. Likewise bankers and financiers.

So how will this all affect Detroit, Inc? We’ll surmise about what might be happening very soon, in our next installment.

Hear that sound? It’s the fat lady singing a dirge for $7.5b of taxpayer money ($25b at risk in total). It’s now as good as spent on a few undeserving automakers. Industry executives and union bosses alike are celebrating their lobbying victory, ignoring their still-dire position for the glorious moment. Congress may have made with the cash in short order, but they aren’t rid of the freeloaders just yet. In fact, no sooner had the ink dried on President Bush’s signature on HR2638 than industry backers were telling the media what TTAC has surmised all along: $25b is only the first step. In its first story on the new law, the Detroit News reports that “Michigan lawmakers plan to return next year to seek another $25 billion in loans for 2009 and 2010, and more flexibility in how the funds can be used.” And why wouldn’t they?

Last year, Congress passed the Energy Independence Act (EIA), directing the Department of Energy to supervise a $25b low-interest loan program to “retool” 20-year-old American factories to build fuel-efficient automobiles: vehicles that must be at least 25 percent more miserly than “similar models in their class.” Since then, with increasing desperation, Motown has been agitating for fewer and fewer strings attached.

Thanks to tireless industry lobbying efforts (and the electoral clout of Michigans pols), it looks like Motown will get its way. This bailout is shaping-up to be the least accountable giveaway since the 1993 Partnership for a New Generation of Vehicles– which ended-up costing taxpayers $1.25b and produced sweet F.A. for American consumers.

Now that the appropriation has been signed, the law goes into the part of the government that School House Rock didn’t tell you about: the regulatory process. Designating the loan program an “emergency requirement,” HR 2638 gives the Department of Energy 60 days to write the specific rules under which the loan program will be administered. This despite Energy Secretary Samuel Bodman’s assertion that it could take “six to 18 months” to award the loans.

To help Bodman draft regulations on such a short time frame, legislators have appropriated a further $10m for “outside consultants” and other professionals. (The EIA originally requested $100k to be spent on administrative costs, but Congress decided to multiply that number by 100.) In essence, American taxpayers will be spending the money to hire industry lobbyists to ensure that that the loan program rules are as weak and Detroit-serving as possible.

Not that there are even that many preconditions for the industry to gut. Other than the hundred-fold increase in administrative expenses and shortened regulatory period, HR2638 doesn’t add any caveats or terms. And lawmakers are already sending messages to regulators, going on the record to say that loans should not be capped at 30 percent of a given plants retooling cost, as originally written.

The upshot of this bailout: it’s custom-built to the needs of only three companies. Sure, there’s money set aside for companies employing fewer than 500 workers. But only ten percent of the total loan package. By not including the 30 percent project assistance cap, lawmakers have ensured that taxpayer funds will pay the entire retooling cost for several factories. This lack of diversification means the Federal Finance Bank will be heavily exposed to the success or failure of a few products and even fewer companies.

This is exactly what Detroit wanted. With the lions share of $25b invested in only three companies, the U.S. government will become a major stakeholder in three highly troubled firms. If those loans “work,” the D2.8 will come back for more. If Detroit’s woes deepen, the U.S. government will have no choice but to step in to further protect their our investment.

And the possible negative consequences are not limited to taxpayer liability for the success or failure of the D2.8, or even the opportunity costs of $7.5b. The loan program is so uniquely tailored to the needs of American firms that a free-trade dispute is not outside the realm of possibilities. There were distinct rumblings coming out of Paris last week, as European automakers intimated that their tolerance depended on a similar bailout across the pond. After another $50b of “more flexible” loans, and European Union intransigence, the other shoe will drop.

There is considerable irony here. As Rep. Sander Levin (D-MI) puts it, “it’s been a struggle here in Washington to secure acknowledgment that a domestic-based auto industry is vital for America.” If Detroit backers are complaining that there was significant opposition to this bailout, then where’s the beef?

Any number of conditions could have been attached to HR2638 to improve accountability, diversification of risk and economic benefits, or even limiting CEO pay during the loan term. Instead lawmakers tailor-made the loan program to Detroit’s specifications while complaining that nobody cares if the automakers live and die.

The chilling reality laid bare by this bailout is not that automakers can already get exactly what they want from DC. It’s that from here on out the going only gets easier. For Detroit, anyway.

Consumers will not buy a new vehicle from a bankrupt carmaker. That’s the over-arching fear preventing GM from filing for a court-managed rescue: a total collapse of consumer confidence in the company’s products. History suggests that a GM C11 would indeed trigger carmegeddon. Ask an automotive  historian to name an American automaker that filed for bankruptcy, survived, emerged and thrived and you get a doughnut-hole shaped answer. But I submit that GM will reorganize successfully. C11 will be a new beginning for GM, its suppliers, dealers, workers and, yes, customers– not the end of everything. But let’s start from the corporate perspective…

Even though GM’s burning through billions it needs for a successful bankruptcy exit plan, the American automaker will still have a number of important assets which will aid its recovery. First, GM’s already accomplished a considerable amount of restructuring, having lowered its structural costs to almost meet its target goal of 25 percent (down from 40 percent). There is plenty of fat left to cut (Gulfstream jets anyone?), but much of the trimming has already been accomplished. Equally important, the company’s stultifying “job for life” mentality may not be gone, but it’s definitely packing-up its things.

Second, GM benefits from the fact that the entire organization will not be in bankruptcy, just its corporate parent and the North American operations. GM’s ongoing, somewhat healthy foreign ops will provide more than just a semblance of normalcy. They will offer the prospect– only now just becoming realized– of global products that provide tremendous economies of scale. That’s once GM jettisons the bureaucratic fiefdoms inherent within its bloated brand structure. THEN it can really tap into worldwide expertise to reduce costs through global platform sharing and reinvigorate its small car portfolio in the USA.

Third, GM has tremendous political capital. Losing GM (and its supplier base) entirely would be just too much to bear for an American President and Congress. While a Federal “solution” may not be forthcoming in terms of cash money, some of the issues which management will (in some cases correctly) blame for the bankruptcy will get new attention: health care cost containment, tort reform, labor laws which rebalance management/labor negotiations, and possibly some rethinking of Corporate Average Fuel Economy and CO2 emissions standards. Measures in these areas will help a new GM get its bearings.

Fourth, Chapter 11 protections will give GM access to fresh sources of capital.

C11 will give GM the freedom to do what it should have done decades ago, but can’t afford to do now. The company can cut dealers, shed even more labor, close factories, reduce long-term liabilities, trim brands, slice models, eliminate duplication and so on. Yes, once this root and branch restructuring is accomplished, GM will emerge from Chapter 11 with a smaller market share and lower sales. But it will be significantly leaner, with two brands (Chevrolet and Cadillac), and one of the lowest costs structures in NA. This “new GM” will be able to attract both investment and world-class executive talent.

From a customer’s point-of-view, as I stated in the previous installment, consumers will see GM stores (albeit in fewer locations) stocked with vehicles offered at tremendous pricing. Americans are mostly payment buyers of cars– and lower prices mean lower payments. Existing owners and new buyers will get a separate new car warranty policy issued by a major property and casualty insurer as a backstop to the GM warranty, valid at most national repair shops, thus allaying any fears if GM closes up shop. Kind of like FDIC insurance for depositors.

GM will continue its online and national media efforts touting its vehicles as if all is well. Most of this effort will shift to Chevy and Caddy– every other brand will fade from promotion before they’re officially pronounced as dead. The American public may fear buying from a bankrupt company initially, but enough TV advertising will reassure them that the company is alive and well and doing the deal.

During this reorganization period, Toyota will enter a crisis– at least at its executive levels. They’ll know that the tea leaves point to a rejuvenated General– concentrating its firepower at two brands– with a lower cost basis, without excessive debt and labor burdens. The U.S. is Toyota’s big profit generator; it can get away with charging more for its products against a weak field of domestic competitors. If Ford does the same as GM in the USA, the easy profit days for Toyota will be over. Toyota will become the GM of yore, with too many products, an older and more expensive labor force, and no competitive advantage.

GM just has to make it through its reorganization. As always, the key question is leadership. GM’s Board, who precipitated this disaster as they stood by their man, Rick Wagoner, can’t remain in place.  Otherwise, it will just be another opportunity missed as the empire finally craters for good.

The biggest surprise at last Friday’s Consumer Reports’ press shindig: no plug-in electric – gas hybrid Chevy Volt. Not a mock-up. Not a mention. Oh, GM was there– with two hydrogen fuel cell Chevy Equinoxes. So never mind all that talk of “reinventing the automobile.” At “The Future of the Car,” the car of the future’s just like your current ride, only cleaner and, mostly, a lot less practical.

The major message from manufacturers’ reps at the scenic East Haddam, CT auto test site: incrementalism. Brett Hinds bragged about Ford’s EcoBoost (formerly Twin Force). Ford’s Advanced Engineering Design and Development Manager called their 3.5-liter V6 twin-turbocharged direct injection engine “a near-term solution… with improved fuel economy and less CO2.”

Diesel loomed large– in more ways than one. Audi’s Christian Bokich claimed that European manufacturers had refined diesel engine efficiency for two decades. He alluded to racing TDI Audis recently at American Le Mans and Sebring. But the Audi Q7 TDI, which will launch next year, is a porky (>5000 lbs) torquey (406 lb-ft) gas-guzzling (25 mpg highway) SUV.

Not to be outdone (as if), Rob Moran of Mercedes said MB is planning an ’09 release for a gas – electric hybrid S400 (with lithium ion batteries) and a diesel hybrid. According to Rob, despite the higher cost of diesel over gasoline, oil burners offer a 15 percent lower cost of ownership. According to Consumer Reports’ literature, fuel accounts for about 26 percent of the cost of new car ownership over five years. Never mind.

BMW’s Dave Buchko (he of the TTAC press car ban) quoted an Environmental Defense Fund report that concluded that BMW’s fleet average for CO2 emissions dropped by 12.3 percent between 1999-2005– despite bigger engines, bigger, safer cars with “six airbags instead of one, ABS, ESC, etc.”

Two new offerings glossed BMW’s green sheen. Their new 2.0-liter, four-cylinder twin-turbo 123d belts out 204hp/290 lb-ft while sipping 45/50 mpg (Euro-only, Euro specs). And the new 335D, a 3.0-liter variable twin-turbo 265hp and 425lb-ft@1750 rpm inline six, rates 23/36 mpg (USA specs). Buchko reports he achieved 37 mpg on the way back to headquarters last Friday, at 75 to 80 mph (tsk-tsk). Both cars were a hoot to drive around CR’s aggressively windy, hilly test track; the engines felt very refined. Alas, no clutch stateside on the 335D.

Nonetheless, burning a gallon of diesel emits about 15 percent more carbon dioxide than gasoline, so diesel mpgs exaggerate their greenitude (BMW in particulate).

The somewhat ad hoc nature of the event was belied by the presence of a three-wheeler that looked like it’d lost its way to Boston’s Larz Anderson Auto Museum’s annual microcar show, and two backyard battery electric conversions.

Floor the 1989 Jetta EV conversion and it feels like someone’s [barely] pushing. The other: EV: a 1981 DeLorean (of course). When the absence of commercial non-hybrid battery electrics was noted in the discussion, Jennifer Watts of the Electric Drive Transportation Association said, “We’re all looking to see how the Tesla performs.” (Join the club.) She also mentioned A123, an MIT battery-building spinoff [still] hoping to supply the Volt’s cells. Unfortunately, these pose no apparent threat to ICE.

Honda’s hydrogen fuel cell FCX Clarity has the understated elegance associated of an Audi inside and out. The FCX’s crisp steering and handling, and responsive acceleration, comes with just a hint of a whine from the power plant. If you live in LA and you’re lucky enough to be Jamie Lee Curtis, you can lease one for $600/month for three years. The range is 280 miles, similar to an RX-8. The EPA fuel economy is 74 mpg equivalents on combined cycle.

The General currently boasts more than 100 fuel cell vehicles on the road. GM’s Dan O’Connell noted that 40 customers have driven GM’s fuel cell vehicles roughly 350k miles. The Equinox SUVs “average close to 50 mpg equivalents, and have a 170 mile range.” The Equinoxes feel a little bloated, and they kick you in the pants when you first hit the gas.

O’Connell said that real world fuel cell reliability is improving, costs are falling, and it’s all Big Oil’s fault. “I’ve seen little evidence of motivation to delivery hydrogen on the part of oil companies,” he asserted.

Spencer Quong of the Union of Concerned Scientists, (who did not attend the event) told TTAC that the auto manufacturers have made huge progress on fuel cells over the last ten years. But “they’ve picked all the low-hanging fruit,” and success is by no means assured. “We’re hoping in ten to twenty years you’re going to see a cost effective vehicle.”

If global warming is as urgent as experts would have us believe, the CR green car hoe-down indicates that manufacturers are fiddling while Rome burns (ice caps melt, etc.). If not, well, get a new four-banger Bimmer and party on!

When a company doesn’t have enough money to pay creditors what they’re owed, it’s considered insolvent. By this definition, GM is insolvent. The American automaker’s working capital stands at negative $20b. Cash outflow for the half year through June 30 remains negative, at over seven billion dollars. And it’s getting worse, as cash calls arrive on a regular– and irregular– basis. There’s no more credit to tap, and GM has few assets of meaningful value left to sell. Oh yeah, GM’s gonna file for bankruptcy. Then what?

The timing of GM’s C11 depends on its management’s psychology. At some point, somewhere around the $10b-in-the-bank mark, CEO Rick Wagoner, COO Fritz Henderson and CFO Ray Young will realize that they can no longer maintain “plausible deniability.” In other words, GM’s managers’ fiduciary responsibilities will compel them to enter bankruptcy protection with some cash rather than none– lest they lose control of their company in the reorganization to follow.

GM will file for bankruptcy late in the day, early or in the middle of month, right before the automaker has to pay its suppliers. The filing will be just a few pages of legalese– nothing grandiose. Only the news media, Washington DC and the general public will react with shock. Wall Street will not be surprised; the stock market won’t crater. By the time the company cries uncle, only true believers will own GM stock. Within hours of the filing, GM will be de-listed from the NYSE. Dow Jones will remove GM from the DJ Industrial Index.

True to their nature, GM’s execs will accept no responsibility for the company’s catastrophic failure. They will blame the economy, energy prices, government regulation, their own bankers, anything, everything, anyone and everyone but themselves. As before, their “victim of circumstance” sob story will convince many that it’s somehow a political failure, even as the men in charge admit defeat, unfurl their golden parachutes and prepare to surrender power they should have never held in the first place.

[In truth, Wagoner should have directed GM to file for bankruptcy in December 2005, when The General still had significant assets to sell. The automaker would be reorganized by now, with fewer dealers, brands and factories. And a clean balance sheet.]

Aside from an uninformed not-to-say oblivious public, the damage to Wagoner and his team’s personal reputations will be total. But the company’s C11 filing will not take down the whole GM Empire. C11 will be limited to the overall corporate entity and GM North America. Europe, Latin America and Asia will be spared the financial ignominy.

Initially, nothing much will change inside GM. The company brass will issue an internal memo to frightened workers promising a bright future. There will be no immediate layoffs or job losses; paychecks and benefits will remain in place. Later in the reorg process, a few key executives will receive “retention bonuses,” while many in the rank and file lose everything.

While the filing will not mention dealer termination, the smarter Buick, GMC, HUMMER, Pontiac, Saturn and Saab dealers (in whatever combination) will immediately understand that their days are numbered. They will either close-up shop or expand/satellite with one of their import brands. Those dealers who try to ride it out will experience a slow death for a year or so– until the reorganization plans outlines the end game for GM’s superfluous brands.

Bankruptcy will not sound the death knell for GM’s sales. Responding to commercials touting The General’s “Next 100 years,” patriotic buyers in the flyover states will flock to GM stores to do their part– especially when they see the mind-blowing bargains GM will use to clear inventory. The General’s public will not foresee the fact that only Chevrolet and Cadillac will survive. The initial sales rush of sales will convince many that the dead brands walking will live again. But they won’t.

GMAC will not be able to bankroll these fire sale purchases; it too will be subject to Court oversight (thank you Rescap). So instead of subvention paid to GMAC to move the metal, GM will use “outside” lenders to the same end. Smart bankers will experience a windfall– financing good credit customers at rates higher than justified (compensated by GM) to make consumer credit available at below market rates. Credit unions will scramble to partake in the new largess. Leases? Forget that.

The biggest casualties from a GM bankruptcy: Chrysler and Ford. Of course, Chrysler’s already toast. It’s only a matter of time before they go into liquidation. But Ford will face an epic internal struggle to avoid C11, and resulting loss of Ford family control. After the initial pall, when GM’s killer deals come on-stream, The General will steal food directly from FoMoCo’s table.

But once Ford files, and Chrysler goes into liquidation, the no-longer-Ford-family-controlled automaker will be able to clean its house and match GM’s deals. The biggest loser in all this? Toyota. We’ll discuss that in our next installment.

A fine-handling car carries on a conversation with the tips of your fingers and the seat of your pants, and not just near the limit of adhesion. Whether the engine’s up front, in the middle or out back; whether the powerplant propels the front, rear or both wheels, a true “driver’s car” is a master of communication and balance. While many cars have been successfully marketed based on their “ultimate driving,” very few are capable of delivering such erudition. Many are downright pigs, offering nothing more than understeer followed by more understeer. As Jonny Lieberman’s review indicates, the Mazda RX-8 is not amongst them. It is an under-appreciated gem.

Only two cars in the RX-8’s price range arguably handle better: the Honda S2000 (in its final year) and Mazda’s own Miata. Neither has a rear seat or is remotely as livable as the RX-8, and the Honda is insanely expensive to insure. And i enjoy driving the RX-8 more.

While I haven’t always been a fan of Motor Trend, the October 2008 issue includes a “giant handling test” that’s well worth reading. They lead off with instrumented testing, where the RX-8 doesn’t fare well against a group that includes the Dodge Viper ACR, BMW M3, Mitsubishi Evo, Porsche 911 Turbo, Nissan GT-R and Audi R8. So I figured they were going to bury the RX-8 in their rankings.

But another part of the comparison test involves a subjective component, where professional road-racer Randy Pobst ranked the RX-8 third, behind only the $120k Audi R8 and $63k BMW M3 (the light steering apparently comes alive on the track). Ahead of even the Porsche— and Pobst races a Porsche.

In the purest sense of a sports car, the rear-drive RX-8 is the most satisfying through corners. I felt like it was a glove on my hand. I could put it right where I wanted. Extremely well balanced, easy to drift, unfettered by weight. The all-wheel-drive cars tend to understeer, and then when they do break loose it’s a big event and a lot happens. In the RX-8, on the other hand, things happen a little bit at a time. It’s just so much fun to drive. The more powerful cars feel like riding a horse. The RX-8 feels like wings bolted right to your arms.

Note that Pobst says “the most satisfying through corners,” not merely “one of the most.” I couldn’t agree more. I’ve driven an RX-8 on WV16 and OH26, two roads packed with challenging curves. It was the most satisfying driving experience I’ve ever had.

I’m aware of the arguments against the RX-8, most of which center around the rotary engine. Yes, the Wankel’s fuel economy is poor. In my experience, the car gets 15 mpg in all-out hooning mode, 17 in typical suburban driving, and 21 when cruising on the freeway. But plenty of vehicles have been sold that do worse. And the recent fuel price spike indicates that it’s not all about frugality. In the first eight months of last year, when gas prices were lower, Mazda still only shifted 4,417 RX-8s.

Next up: the lack of low-end torque. There’s a fix: downshift. Where some engines reward a downshift with a raucous fuss, the rotary begs to be revved. Sure, the RX-8 doesn’t launch strongly, but once underway on a winding road, power is not an issue. I’ll grant that there’s a certain adolescent thrill to rocketing oneself and 3,500+ pounds of metal and plastic forward by merely pressing down on a pedal. But is this really what performance driving has devolved to?

Apparently so. Mazda developed a unique engine and chassis for the RX-8— bits not shared with a midsize sedan. They’re offering a lightweight car with outstanding handling and a livable ride. They even toss a usable rear seat into the deal, AND an amazingly low price for a bespoke low-volume car (under $30k new, under $20k used with low miles). And yet Mazda sold just 2,591 RX-8s in the first eight months of 2008.

The unavoidable implication: handling simply isn’t a high priority for more than a few thousand people a year. When driving enthusiasts have to choose between handling and torque, nearly all of them choose torque. This certainly lets a lot of other manufacturers off the hook; torque is much easier to provide than communicative steering and a finely-balanced chassis. Just drop a powerful engine into a sexy-looking car (e.g. any of the new wave V8 muscle cars), and sales will follow.

In the future, when electric motors drive the wheels and steering is via wire, the torque temptation will only increase. Electric motors can certainly deliver low-end grunt, so few people will mind that any steering feel these vehicles provide will be entirely artificial. My advice to those with limited budgets who really care about handling, whose driving isn’t all in a straight line: buy a Mazda RX-8 while you still can.

Back when The Big 2.8 were fighting the United Auto Workers (remember them?) for contract concessions, the automotive press considered it the battle to end all battles. Once the New Deal was ratified– courtesy gi-normous union bribes and epic deferred costs– the pundits proclaimed themselves satisfied. It was time for Detroit to roll-up its sleeves and compete. No more excuses! Well, it’s been exactly a year since the UAW OK’ed the GM deal and we’re [still] hearing nothing but excuses. Oh, and the sound of your tax money lighting CEOs’ cigars.

Let’s face it: federal loans will do fuck-all to save the domestic auto industry. Even if you’re not a student of TTAC’s Chrysler, Ford and GM Death Watches, the idea that The Big 2.8 will resurrect their fortunes by sharing $25b+ of your hard-earned tax money is completely, utterly, mind-blowingly preposterous. To even CONSIDER this boondoggle, your elected representatives had to ignore a prima facie case that these companies are past saving.

The single most important and [you would think] inescapable fact arguing against the loans: lost market share. In 2004, ChryCo, FoMoCo and The General accounted for 60 percent of all vehicles sold in America. Just three years later, that number dropped by more than 12 percentage points, down to 47.7 percent. J.D. Powers’ most recent stats on consumer preferences indicate that the domestics’ slide into the heart of darkness (or at least relative obscurity) is set to continue, if not accelerate.

Why wouldn’t it? As America switches to more fuel-efficient vehicles (a.k.a. cars), Detroit simply doesn’t have the kind of frugal machines that consumers want to buy. Notice the qualifier: “the kind.” Even if Motown (via Korea, Mexico, Canada, etc.) offered class-leading vehicles, decades of brand dilution, lackluster models and dealer shaftage have created a built-in barrier to sales success. If not for fleets, flag-waving and force of habit, The Big 2.8 would already be dead in the water.

So how can Uncle Sam’s handout– I mean, “hand-up” reverse the curse?

It can’t. Think of it this way: no one in Detroit wakes-up in the morning and says “How can I create a crap car today?” What you see at the dealership is the best they can do. Ford, GM and Chrysler aren’t dying because a lack of funds. (Lest we forget, they were RAKING it in during the SUV boom.) They’re on the ropes because of their greed, sloth, arrogance, stupidity and insularity. Your $25b+ ain’t gonna change that.

Common sense says that The Big 2.8 can’t compete in the future because they haven’t been able to compete in the past. If they could have, they would have. And if they had, or even looked like they could in the future, someone other than you and me would have been happy to lend them the money to do it.

Oh wait! They already did! Look how THAT turned out. GM has burned every stick of furniture in its corporate house– and it’s still paying over $250m in interest on its debt. Ford has hocked everything up to and including its logo. Chrysler is on private equity life support, only a RAM away from total collapse.

Throwing federal tax money at this situation is worse than pissing in the wind; it’s like buying an alcoholic a brewery.

Please do NOT tell me that the plug-in electric – gas Chevy Volt will reinvent the automobile for all time and, by the way, save GM from bankruptcy. Or that a hybrid Chrysler minivan will end our dependence on foreign oil and breathe new life into ChryCo’s rigor-ridden corpse. Or that the Ford Fiesta will usher in a new generation of high margin small cars for the Blue Oval Boyz, and keep Bill Ford from taking the bus to work. Hail Mary, schmail Mary. It’s too little, too late.

While Motown’s planning on using our taxes to try and reinvent itself as a profitable maker of something other than large SUVs and pickup trucks, its competitors are busy reinvesting their profits, creating new and/or improved non-truck vehicles that sell in sufficient quantities (at enough of a price premium) to maintain the profits so they can reinvest enough money to maintain their lead over Detroit and (they hope) everyone else. Funny how that works. Or, in Detroit’s case, doesn’t.

No matter. Detroit’s short-term future doesn’t depend on its near-future products. Chrysler, Ford and GM’s survival now depends on their ability to convince the Department of Energy (DOE) to change the rules for their share of the $25b low-interest federal loans, so they can somehow use the cash to keep the lights on.

Good luck with that. Contrary to popular opinion, I predict that the Department of Energy will not bow to political pressure and hurry their due diligence for Detroit. The Big 2.8 may not run out of excuses. But they will run out of time.

The first time I met an American muscle car, my friend Ben was encouraging me to carve the donut in the Sears parking lot just a little tighter and give it just a little more gas. He wanted to hear the 1977 Chevy Malibu’s big block snarl like he knew it could when you pressed the pedal all the way to the floor boards.

The “Green Machine,” as we called it, would eventually die and give way to my friend Eric’s equally green 1969 Chevy Impala, motivated by a freshly rebuilt small block 327. If we weren’t busy buying gas, we were taking Eric’s ride out to the city’s unofficial drag strip (if they didn’t want racing, why did they build a quarter-mile stretch, straight as an arrow, right along the water front?) and going head-to-head with all varieties of tuned imports.

Oh, how those times have changed for my two friends. Eric has since moved to the big city and has sworn off cars, while Ben cruises around in a gas-sipping, 2wd Rav-4. Don’t even bother asking these two about either of their cars–Ben will laugh it off and remind me of the spade of problems the Malibu had and the family of raccoons who took up residence in the trunk once the car was put out to seed. Eric might reminisce for roughly 30 seconds before glancing down to the street and realizing he has about as much a chance of parking an Impala in New York City as Tara Reid does of being granted sainthood.

So what happened? Reality, that’s what. Before the this generation’s car buffs turned their attention to Hondas and Scions, the only reasonable thing to buy was eight cylinders of American power. As gas prices began steadily rising out of their $2 resting place, my friends were losing their $100-a-tank cherries well before $4-a-gallon fuel was even being fathomed by Detroit. The Impala was great, but at $100-a-week to drive it, there wasn’t much left over for date night.

From the girlfriends’ perspectives, switching to a car where the steering little less slippery and the acceleration a little less powerful was a good thing. The looks of European and Japanese cars were also easy bargaining ploys. Why should they drive something that (in their opinion) looks bloated when they were trying to keep their own bodies from appearing that way? For the ladies involved, a sensible Corolla was a no brainer–of course, this was before the automotive industry realized that a chrome bedecked grill and window trim are good things and not necessarily an out-moded design concepts.

But what was so great about these muscle cars wasn’t their design or their power (all though these factors did wonders for attracting hordes of allegiance pledging teenagers to the hot-rod cause), but rather their simplicity. With an engine compartment roughly the size of my first apartment, we could literally climb inside the Impala and take apart its carburetor or adjust the throttle control, the air filter, or whatever part was rattling around this week.

With today’s cars, people don’t even bother to look under the hood. When something as simple as a headlamp goes out on a Nissan Altima, those of us mechanically-disinclined begin groaning and looking for a qualified service rep. Now that every car has a transverse-mounted four banger shoe-horned into a compartment three sizes too small, the last thing a car nut (or anyone else for that matter) wants to think about is changing a starter, let alone tinkering around for another 20 or 30 horsepower.

Somewhere in the build up of technology toward more and more efficient cars, working on them stopped being fun and starting being a scary, confusing, diagnostics-machine-requiring money pit and therein lies the problem with the notion of an American muscle car. Unless Detroit can find a way to make them fun–not just to drive but to work on, too–we’ll never have the same passion for this particular automotive genre again. If gas prices continue to rise, the best American muscle will come in the form of highly tuned V6s or diesels that sip their fuel, rather than guzzle it by the gallon.

All this is not to say we shouldn’t keep trying. My lovely, modern-car disparaging wife sites the PT Cruiser and the Chevy HHR as her favorite cars, not because they’re loaded with muscle (which they ain’t) but because they made risky design choices during a time when dull was the automotive standard. As she sees it, if we can’t make them fun (i.e. faster than hell) let’s at least make them pretty. Until America can strike that happy balance between muscle and beauty, the big 2.8 are doomed to the go the way of that ’77 Malibu: up on blocks with a family of raccoons living out of the back.

[This article is presented without editing.]

Sounding every bit as superficial as the redneck poseur he portrayed, the expression on actor Warren Oates’ face as he uttered those words in the 1971 cult classic “Two-Lane Blacktop” spoke volumes about what a muscle car was and what it was built for.

As his right foot slammed through the firewall and the big ’70 Judge GTO lunged forward, the contrast between Oates’ character and the two car-obsessed drifters he raced across the U.S. couldn’t have been starker: his brand-new orange Pontiac was a mean machine, but their beat-up primer-gray ’55 Chevy was the real deal.

In a recent blog, Motor Trend’s Angus MacKenzie pontificated about the fate of the muscle car.  Mainly, he opined as to the engines and body styles it might possess in the not-so-V8-friendly future.

No offense, but I think Angus bypassed an important point.  His view of what will happen to the muscle car and how it must change assumes that the concept’s definition is relatively static.  History says it’s not.

Few would call the seemingly junkyard-ready Chevy in “Two-Lane Blacktop” a muscle car.  Yeah, it was fast, but it didn’t particularly look fast to the non-automotive bystander.  On the other hand, The Judge looked every bit the part, but by 1970 Pontiac performance had taken somewhat of a back seat to the appearance of Pontiac performance.

I’m not saying that muscle cars are all about style over substance.  If anything, I think they were originally meant to embody the style of substance.  But that style is subject to debate and (as Mr. MacKenzie correctly notes) evolution.  Still, the dynamic nature of the concept makes prescriptions for the future somewhat risky.

A “muscle car” was originally defined as an inexpensive, small or intermediate (by 1960’s standards) two-door with the high performance engine/drivetrain from a larger, more expensive vehicle.  The idea was to create a brand-invigorating yet affordable factory hotrod that would garner lots of buff book ink and make teenage boys drool.  Exhibit A: The original Pontiac GTO.

Except if you do a Google image search for “1964 Pontiac GTO,” you’ll see a smallish workaday coupe that doesn’t look quite as tough as a muscle car is supposed to.  Now google “1971 Dodge Challenger R/T” and check out those photos.  This car will certainly look more like a muscle car to most people than the ’64 Goat.  Both are muscle cars, but the original more-true-to-the-concept Pontiac looks less muscular than the Challenger-esque archetype.

Some combination of a bad-ass performance image and big horsepower fun is definitely required for any version of the muscle car recipe to work.  But here’s the rub:  If the formula can’t keep changing (and changing more than MacKenzie allows for), the term “muscle car” will either become universally misapplied or will die.

The big question seems to be whether or not the definition of a muscle car evolved much after the early 1970’s.

In the late Seventies, domestic cars shrunk and large two-doors became the size their intermediate counterparts were fifteen years earlier.  In 1964, stuffing the brawniest of mills in a Riviera coupe would most definitely not have launched the concept we know today, but the 1980’s T-Type turbo Buicks transcended their “regal” origins to become honest-to-God muscle cars by almost any gearhead’s standard.

Allow for two more doors, FWD, and fewer cylinders, and even the putrid little K-car-based ‘91 Dodge Spirit R/T seems to capture the essence of what Pontiac was thinking in the mid-1960’s vis-à-vis “cheap car + big power = sales-boosting image builder.”

Stretch the definition that far, and what’s next?  Do we ditch the “intermediate-sized” restriction and include powerful large cars (‘94-‘96 Impala SS, etc.)?  If we do that, why can’t we say that any subcompact shitbox with a turbo four is a muscle car?

Okay, it’s gotta stop somewhere.  But something else transcends the physical definition, anyway.

I’m willing to bet that “muscle car” is as much of a feeling as it is a tangible product.  Maybe it’s when you feel as tough as a ’71 Challeger R/T looks, or when you own the crazy grin of Oates’ character in “Two Lane Blacktop.”

Yes, a special automotive formula is needed to elicit those reactions, and as technology, consumer preference, and economic reality all change, the formula will have to change, too.

But constraining muscle cars to a set blueprint and allowing only certain aspects to evolve is to ignore the bigger point of why muscle cars exist in the first place.

They exist for the same impractical reason – maybe an existential reason – that a mid-40’s GTO driver would race two kids thousands of miles for the pink slip to their ragged ’55 Chevrolet.  And as long as that spirit is alive and well, the muscle car will never die.

[The above article is presented without editing.]

Yes, you little nimrods! The American muscle car does have a future! Detroit simply needs to stick to a few basic principles. The first thing it mustn’t forget is that any muscle car worth building will have a V-8, expensive fuel or no. To any camel admirers ready to start preaching the gospel of turbonium and other unnatural elements, I’ll just say that no other amount of cylinders or configuration can match the distinctive presence of a V-8 – especially a good ol’ American one. Sound MATTERS. Nothing brings out the hairy chested, knuckle dragging Neanderthal in me faster than a carnivorous sounding V-8. If it’s cammed up, it’s all over. I’d be ready to run the Mille Miglia after a vasectomy.

Proximo, a muscle car must be RWD. I believe that on any car, and specifically on those motivated by brute force, FWD is an abomination no more desirable than exchanging fluids with one of the half breeds on The Island of Dr. Moreau. But wait…AWD has its merits you say? Fine, just remember that a muscle car flaunts said muscle the old fashioned way. AWD is to one of these cars as another tattoo is to Kat Von D’s epidermis: unnecessary and ruinous. Transmission wise, a proper stick or a traditional slushbox is all that’s needed at muscle beach…paddle shifters here would be akin to vein augmentation surgery. And sorry, Dodge Charger. Sedans have no place in musclecardom. Leave the four door bruisers in the hands of coppers. Or piston heads of questionable character. Oh, and Ford? ALL muscle cars should have an IRS. Live axles are more modern than the suspension on Ben Hur’s chariot…but not by much. The drag strip crowd can fend for itself via the aftermarket. Where there’s a will there’s a way.

For the love of Benji, I wish Detroit would lighten its muscle cars up. The new Challenger’s a 2 ton pig. The Mustang and Camaro aren’t far behind. Ideally, these cars should weigh no more than 3,500 lbs. Weighing less, they could employ smaller motors while retaining impressive performance. The whole size thing is a bloody travesty. The Mustang, Camaro and Challenger are as big as they are because the big 2.8 have resorted to one-upmanship, plain and simple. It’s more than a horsepower race. Cost cutting, safety and emissions regs and platform sharing all factor in, yes, but providing more car (pork?) than the competition is the misguided ethos right now. Leave the bloat fest to the Accord, Camry, and Altima camps.

A smaller, lighter car needs less engine to get the job done. That’s a fact. Detroit needs to stop putting the biggest and dumbest V-8’s it can fit into its muscle cars.  The added complexity, cost and packaging issues of DOHC valve trains more than justify themselves. I’d rather have a 4.0+L, 7,000+ RPM DOHC fire breather than some big, dumb and slow push rod fossil any day. Yeah, pushrods have their benefits, I read up on the Corvette. But c’mon, brothers, at what cost progress? How many more improvements can be made to the same basic design? The constant improvement to and evolution of the basic design of the 911 is a marvel to behold. But even magnifying glass focused Porsche knew when to abandon its air cooled boxers. Change is inevitable. For nostalgia’s sake though, I will admit that in a classic muscle car, a push rod motor is in its natural habitat.

Speaking of nostalgia, trips down memory lane make me feel alive.  Those Sha Na Na and Leif Garrett clips on You Tube…never mind. Let me just say it. Whatever numbskull at Ford thought to go retro with the 2005 Mustang needs to be skinned alive and dipped in iodine. Twice. Enough with the friggin’ retro already! What a way to lead by example, Ford. What ever happened to imagination and creativity? And shame on you Chevy and Dodge for letting yourselves be lured into a fad that will eventually crash and burn as hard as one of those Libyan MiG’s that tried to do the tango with a Tomcat.

While the hybridization of just about every automotive segment continues apace, muscle cars should remain immune to this. Either you’re a carnivore or you ain’t. So yes, even in these conservation and efficiency conscious times, there indeed is a future for the American muscle car. We want and need them. Unlike the pick up trucks that are never used to haul or tow, or the SUV’s that never go off road, a muscle car’s existence and use is justifiable on just about any road, at any time. No other type of car could serve as a better antibiotic to the ills of fuelmiseritis and its bedfellows. You can bet your grandpa’s fillings on that.

[The above article is presented without editing.]

If cross-country road trips are the quintessential American journey of the 20th century, I’m a quintessential American. I’d ridden thrice between Seattle and Boston by the time I was eight. At 17, I drove from Boston to Palo Alto, then back a year later, in a beat up ‘62 Falcon. I crossed the US another eight times—including once respectively by train and bicycle—while a student at Berkeley. Three decades later, I’m longing to do it again. Unfortunately, the 20th century is over. Since it began, the US and world populations have quadrupled. We’re straining world oil production capacity, and the specter of global heating and acidified seas from CO2 emissions is causing cognitive dissonance in my car-loving head. Driving’s future seems uncertain. But a new company, Better Place of Palo Alto, has a plan.

Already, two tiny Massachusetts-sized countries, Israel and Denmark, have signed-up for Better Place’s plan. Another 25 countries, both small and big, as well as Hawaii, are reportedly interested. Better Place offers a few rays of hope for a healthy planet free from thrall to oil-soaked thug-nations. Nonetheless, in this brave new world, the romance of the open road is but a dream.

Why? Batteries. And don’t hold your breath for technological deus ex machina. “Electrochemistry is, by definition, hell on materials,” says John DeCicco, of the Environmental Defense Fund. Lithium ion phosphate, which will power the Better Place fleets, improves power density and charge-cycle endurance—to a claimed 2,000 cycles. Even so, some 500 lbs. of batteries will limit the Israeli and Danish Renaults’ range to 60 to 100 miles.

By 2011’s end, Better Place promises to blanket Israel’s 10,000 square miles with a grid of 500k charge spots, about 50 per square mile. Israeli customers will be able to replenish their battery at home, at work, and all over the place. If they must push the range limits, they can exchange their depleted battery for a fully charged one in less than five minutes at one of Better Place’s specialized battery swap-out stations—no extra charge. But these will number only 100 in this 290-mile long country. Nonetheless, Israelis and Danes will save big on the 70 percent and 180 percent taxes their respective countries levy on internal combustion engine (ICE) cars.

According to Dan Sperling, battery swapping raises some red flags. Its “many flaws” include “the issue of standardizing across model lines, never mind across car companies,” maintains the director of the Institute of Transportation Studies at UC Davis (who erroneously thought Better Place might be switching to fast charging). Greg Nowell, of SUNY Albany, worries about the cost of transporting all these 500-pound replacement packs to the swap-out stations. He also warns of the possibility that peaks in demand—such as holidays—may present intermittent supply problems.

Should the program come to America, the cost for the mileage contract would run around $500/month. A Better Place spokesperson says the precise figure would vary with mileage. But a substantial monthly rebate would accrue, varying according to local costs and incentives. The EVs would be competitive with ICE cars. You would, in theory, save $10k-12k on the batteries. All this is very roughly equivalent to the cost of new car ownership.

Could it work in a country the size of the U.S.?  Better Place says a “mass roll-out” of the infrastructure here would cost $100b. “When compared to the $500 to $600 billion the U.S. spends on oil imports annually, we’re talking about a five year plan that will change our economy,” the spokesperson says.

The EV company says that if 84 percent of America’s 200m cars switched to electricity overnight, no new power plants would be needed. Indeed, all those batteries could aid the transition to renewable energy sources, by storing excess coming off of wind and solar farms.

Competition? All else equal, the far simpler EVs should be cheaper than hybrids (or even conventional ICE) to manufacture and maintain, and potentially more reliable. From government’s point of view, Better Place is great for balance of payments and geopolitics. But “battery electrics won’t out-compete gasoline hybrids anytime soon,” Sperling admits.

That said, Sperling says Better Place is “all very doable,” adding that “there has to be resolve by government, risk-taking by companies, and willingness to change behavior on the part of consumers.” At current gas prices, which he says will not go higher long term without aggressive fuel or carbon taxes, he foresees a market potential of about 25 percent, chiefly among two car households.

Better Place may not be the dream of a high octane pistonhead, but it could well relieve pressure on all that we hold dear.

During the Civil War, General George McClellan headed the largest army in the North. McClellan was an astounding capable soldier– except for the part about fighting and winning a war. He was also insubordinate, rude and a potential political rival for President Lincoln. The president’s Cabinet recommended McClellan’s dismissal. “Who should replace him?” Lincoln asked. “Anybody!” they replied. “I can’t give the job to ‘anybody,’” Lincoln argued. “It will have to be a “somebody.” In the same sense, who can replace GM CEO Rick Wagoner?

It’s true: Rick Wagoner’s career is toast. And not a moment too late. By any metric you can name– profits, market share, market capitalization, debt load, brand strength, anything– Wagoner’s administration has been an unmitigated disaster. In fact, the feds missed an important opportunity to eject Wagoner in exchange for bailout billions. Never mind; his day is done.

But replacing CEO Rick Wagoner won’t be easy. Using a more modern comparison, securing a new General Manager for a professional football team is a walk in the park. There are perhaps fifty candidates who are more-or-less qualified to run an NFL team. Anyone who is anyone in the business knows who they are. Finding someone with the experience to run a global automaker– with millions of sales, dozens of factories and worldwide reach– is a relative bitch.

There are far less international automakers than NFL franchisees.The pool of available managerial talent for GM is a lot smaller than, say, The Detroit Lions. While football teams play with one set of rules using more-than-not similar strategies, carmakers must build hideously complex products (on a five-year timeline) that compete for different customers, subject to thousands of rules, all of which are subject to constant change. Finding someone who fully understands the game, never mind how to win it, is “challenging.”

Worse, GM is a closed society. There are fiefdoms within fiefdoms within fiefdoms. Employees have national, brand, departmental and personal loyalties (to name a few). It’s not for nothing that one of today’s blogs revealed that the man in charge of GM’s Strasbourg plant holds a Harvard MBA– just like his CEO and COO. And if you think intra-mural talent is the answer, look at ex-Toyota exec Jim Press’ progress at Chrysler.

Not only would it be hard for an outsider to get accurate information about what’s going on at GM’s sharp end (or filter what info he or she gets), it would be even harder to ensure that necessary changes are implemented.

Mulally at Ford? Nardelli at Chrysler? Apples and oranges. The Ford family owns enough special stock give Mulally the authority he needs. Same goes for private equity group Cerberus and Nardelli. GM has no single shareholder or directors’ block. Anyone who managed to displace GM’s existing mob would need the support of the board and, realistically, the division heads.

Bottom line: unless the GM board was displaced and company’s current infrastructure destroyed, any replacement boss would “have to be” one of GM’s lower bosses. Not that it matters.

Two years after his Cabinet called for McClellan’s head, Lincoln found his “someone.” General Grant discovered that his new/old army was nowhere near the smooth-running machine he’d had out West. One of Grant’s staff offered a simple solution: get Eli Parker (the judge advocate) drunk on the worst whiskey available, give him a knife and tell him to bring back ten major-general’s scalps. Grant was intrigued, “which ones?”

Wrong answer. Grant’s problem wasn’t so much the individual major-generals as the fact there were too damn many of them.

And so it is with GM. Once again, the root of all evil is logistical inertia, or lack thereof. General Motors North America is hamstrung by its surplus of brands; hence products, dealers, marketing and mandarins. Even with GM’s new “four channel” internal and external realignment– HUMMER, Cadillac, Saab; Buick, Pontiac, GMC; Saturn and Chevy– there still are too many hungry mouths too feed. And execs feeding them.

GM’s size was once its main advantage. It’s now its greatest weakness. With the U.S. market shrinking and share dropping, all that once-impressive industrial might just means more to cut. Worse, the sheer size of the company makes it very hard to cut effectively. Every cut must be filtered through the demands of four or more “lines” and double that number of brands. Worse, each change disrupts the balance of power between the divisions within the company and on the market.

Finding another “someone” to create effective regime change at GM, someone who can act decisively then track and balance the progress of his or her changes, could well be impossible. But it’s worth a try. As for the current administration at GM, let’s give “Honest Abe” the last word. “Stand with anybody that stands right, stand with him while he is right and part with him when he goes wrong.”

Chrysler unveiled some primo bailout bait today: three electric vehicles (EVs). Choosing CNBC as point man, ChryCo’s CEO showed-off a fully electric Dodge sports car and a Jeep and minivan hybrid. While the press has been suitably impressed, pistonheads who’ve been following (and following and following) the hoopla surrounding GM’s plug-in electric – gas hybrid Chevrolet Volt are settling-in for the long haul. Meanwhile, we must endure Auburn Hill’s spin on the whole “future vehicles” thing. Or do we? Here’s Chrysler press release…

Looking beyond hybrids…that was the mission of ENVI.

And here I thought the mission was to convince the government that Chrysler is worthy of a federal bail out. That’s why they unveiled the cars on CNBC – they are pitching Chrysler LLC to the business community as a suitable investment.

Revealed today are three electric-drive vehicles, one of which will go on sale in 2010.

One? So two-thirds of this dog and pony show is, to quote GM’s Bob Lutz, “a crock of shit?” Well, no surprise there. So which one will it be? The Jeep is no deal, right off the bat. Too low volume, doesn’t fit with brand image. So will Chrysler do it smart and build the minivan, or try to build the sports car for rich people already on the wait list for a nearly identical Tesla?

The prototypes give a glimpse of the very near future. Chrysler intends to bring advanced, electric-drive vehicles to market quickly,

They are coming very soon, do you hear us? This is not a pipe dream like that Chevy Volt, which is set to come to market in 2010 as a 2011 model. Ours are going on sale in – what did we say above? Oh, 2010 also. Nevermind.

A fleet of more than 100 Chrysler electric vehicles will be on the road in government, business and Chrysler development fleets next year.

What we’re going to do is make nice with the government (probably Santa Monica parking enforcement), then try to sell our investors by letting them drive these cars around as toys for a few months.

The Dodge EV has three primary components: a 200 kW (268 horsepower) electric motor, an advanced lithium-ion battery and an integrated power controller. The 200 kW electric-drive motor produces 480 lb.-ft. of torque, accelerating the vehicle from zero to 60 mph in less than five seconds, with a top speed of more than 120 mph.

This all sounds very familiar. Where did I hear it before? Oh right, Tesla’s website.

The Dodge EV has a range of 150 miles between recharges – more than tripe the average daily commute. To recharge the vehicle, simply plug it into a standard 110-volt household outlet. Or the recharge time can be cut in half by using a typical 220-volt household appliance power outlet.

All subject to change when we switch our design software to CAD from the current NapkinSharpieSoft. Also noteworthy: the idealistic claimed 150 mile range is less that Tesla’s idealistic claimed 244 mile range. Who is making the batteries? Who is dealing with the transmission issue that Tesla – and even partner BorgWarner – had so much trouble with? Would the car be assembled in the US or by Lotus in England?

The Jeep EV is a range-extended electric vehicle that couples the electric motor and the lithium-ion battery system with a small gasoline engine and an integrated electric generator to produce added energy. The Jeep EV has a range of 40 miles of zero-emissions, all-electric operation – no gas necessary. But for longer trips of up to 400 miles, the small gasoline engine produces energy to power the electric-drive system.

Now, since we’re done knocking off Tesla, we’ll move on to knock off the Volt. Don’t worry though. There isn’t a Snickers’ chance in Britney’s kitchen this thing will make it to production.

Since nearly 80 percent of Americans drive less than 40 miles per day, or 14,000 miles per year,

Yes, we all read the same press release from the same study, then heard Bob Lutz drop it into conversation like he thought it up in the shower. You know why people use medians instead of averages? Because averages suck.

The instant high torque and the ability to control each wheel independently results in the off-road capability consumers expect from Jeep.

Sending power to each wheel does sound very cool for off roading. So did the Jeep Rescue Concept. And the Jeep Gladiator Concept. And the Jeep JT pickup. And the Jeep Dakar concept.

The seven-passenger Chrysler EV is, like the Jeep EV, a range-extended electric vehicle that puts electric-drive technology in the segment-leading Chrysler Town & Country minivan.

Segment leading it what way? More Swivel ‘N Go than the Sienna? Leading in fleet sales?

The Chrysler EV can drive 40 miles on all-electric power, or 400 miles with the help of an integrated small displacement engine and generator. The Chrysler EV uses a 255 horsepower motor, producing 258 lb.-ft. of torque, providing zero to 60 mph acceleration in about nine seconds.

It’s a minivan. Meaning you’re supposed to fill it up with kids and hockey bags and other wholesome junk. What’s the range when there’s 1000 lbs of American goodness inside?

And so on. There’s but one takeaway here: there’s nothing to take away. Not now, and not before Chrysler is forced to face the music. Do you know it’s vaporware? No, but if you hum a few bars I can fake it.