GM Accelerates Hybrid Efforts [WSJ]
No. 1 Auto Maker Plans Plug-In Saturn SUV
By TERRY KOSDROSKY
November 29, 2006 1:30 p.m.
LOS ANGELES -- General Motors Corp. Chief Executive Rick Wagoner said Wednesday that the U.S. needs to reduce dependence on foreign energy and insisted the No. 1 auto maker is accelerating its efforts to meet the challenge by being the first to offer a plug-in hybrid and by expanding its production of biofuel vehicles.
Mr. Wagoner said GM is using the Saturn Vue hybrid sport-utility vehicle to develop a plug-in hybrid, which can be re-charged from a standard electrical outlet, and will offer biofuel-capable Hummer SUVs. He said "energy and environmental leadership" is a key part of GM's turnaround plan.
Mr. Wagoner, in prepared remarks for his keynote speech to open the Los Angeles Auto Show, said he thinks increasing energy demand from developing countries means oil can't be the sole means of powering vehicles.
The Saturn Vue also will have a front-wheel drive version that will increase fuel efficiency. The hybrid will be able to store more energy, allowing the car to run on its emissions-free electric motor longer. If GM is first to market with a plug-in hybrid, it could help sway consumer perception that GM and U.S. auto makes aren't as committed to fuel efficiency as foreign-based auto makers.
Mr. Wagoner didn't give a time frame for the plug-in, but said it will take "several years" to bring one to market. Mr. Wagoner said GM's prior work on its now-defunct EV1 electric car gives it a good base for the battery technology needed.
GM is in the midst of unveiling new so-called crossover vehicles that are built on car-like architectures but boast the utility of SUVs. One of the crossovers, a new Buick Enclave, was launched on Tuesday. The Enclave, which goes on sale late next spring as a 2008 model-year vehicle, is a key cog in GM's strategy to revive the historic Buick brand.
Hybrid Commitment
"GM is committed to the development of electrically driven vehicles that will help improve energy diversity, and minimize the automobile's impact on the environment," Mr. Wagoner said. "And we'll follow today's announcements with additional announcements during the auto show season, including Detroit, in about six weeks."
Shorter term, Mr. Wagoner said the new Vue will be the "launch platform for the first front-wheel-drive version of our advanced 'two-mode' hybrid system in 2008 ... and this will deliver even more fuel economy for our customers." Mr. Wagoner said the current Vue Green Line hybrid delivers a 20% improvement in fuel economy over the base model. The front-wheel drive, two-mode hybrid Vue should improve overall fuel economy by 45%, he said.
GM also is increasing its use of engines that can run on biofuel. Mr. Wagoner said Wednesday that the Hummer brand will offer biofuel engines across its entire lineup within three years.
Mr. Wagoner reiterated GM's commitment to producing more cars that can run on biofuels such as ethanol-based E-85. GM has two million E-85 capable vehicles on the road. He said GM, along with Ford Motor Co. and DaimlerChrysler AG, will double production of biofuel-capable vehicles by 2010.
But he noted that the availability of E-85 is the main challenge. Mr. Wagoner noted only about 1,000 gasoline stations out of 170,000 in the U.S. have E-85 pumps.
U.S. auto makers, in a meeting earlier this month with President Bush, said they would make half of their annual vehicle production biofuel capable by 2012, "provided there is ample availability and distribution of E-85, as part of an overall national energy strategy."
Stiff Competition
GM hopes it can beat Toyota Motor Corp. to the fuel-cell market, grabbing an early lead with this technology that will change how consumers think of the company and boost the image of its conventional vehicles.
Mr. Wagoner and other top GM executives believe Toyota has gained an edge by jumping ahead of other car makers on gas-electric hybrids. Toyota is now often viewed as the industry's innovation leader, while many consumers see the Big Three Detroit auto makers as laggards that only excel at making gas-guzzling trucks -- and at losing money in the U.S. market.
Fuel cells won't be a real mass-market item for years. GM aims to sell just a few thousand fuel-cell cars in 2011, and tens of thousands a year by 2013.
The company faces fierce competition, though. Other auto makers are also developing fuel cells, and some, like Toyota and Honda Motor Co., have deep pockets to fund their work. GM, by contrast, is burdened with a junk debt rating and is spending more money than it's making in its auto business.
Honda has recently sought to stake out a position as a fuel-cell leader, saying its newest systems are small and light enough to fit in conventional sedans. Honda says limited leasing programs with the redesigned FCX fuel cell car are scheduled to begin in the U.S. and Japan in 2008.
Flat Sales for 2007
On Tuesday, Mr. Wagoner said that he expects 2007 U.S. auto sales will be "probably more or less flat with this year" and said the company would respond to a slower economy by taking more action on the cost side of the business.
Most analysts expect the auto industry to post a relatively healthy sales volume in 2006 as sales incentives, a bevy of new models and other factors contribute to new vehicle demand.
GM is on pace to cut structural costs by $9 billion annually starting in 2007 in an effort to restore the company to profitability following a devastating $10.6 billion loss in 2005 and continued bleeding in North American automotive operations. Mr. Wagoner said that if the economy should worsen, "we're going to have to run harder on the cost side." |
