5 Things I Think I Think

Hey Bob, the link doesn't work. Hopefully you talk about what you think about your Purchasing group ruling the roost at GM, and how their poor decisions and ill-informed metric based controls continue to put a hurt on Michigan's economy as well as GM's sales performance in North America. The fact that so many suppliers have gone under and needed to be helped by others last year (basis of NAIAS awards) speaks volumes about the misguided approach of this group. If GM has any hope of remaining #1 in the world, this has to be fixed - and fast.

Bob,

Great thoughts!

I know my opinion is worth what is paid for it (nothing), but here is what I think about the 5 things that you think you think:

The Golden Age of Cars: We are absolutely in another Golden Age for the auto industry. As a whole, there has never been a better selection of high-quality well designed vehicles on the road. Ever. Yes, there are a lot more foreign manufacturers now, but when you look at the market as a whole the cars being sold today (even Hyundai) are leaps ahead of what we were driving even a decade ago. Kudos to GM for re-inventing itself and leaping back to the top of the heap on many fronts.

In regards to E85, whatever automakers and enthusiasts might think, it's up to the oil companies and gas station owners to put in the pumps. Given that these pumps wouldn't be selling a product that they produce much of (only 15% is gas after all), they don't seem to have a big incentive to help with this revolution. Same deal with biodiesel - great fuel, lowers dependence on foreign oil, but we still have to depend on the generosity of the oil companies to deliver it to customers. Given the record profits from the oil industry, generosity doesn't seem to be in the cards. That's why electric cars are so appealing - you cut out the middle man! Everyone already has electricity running to their home. Everyone knows how to plug a plug into an electrical outlet.

On sales leadership: Thank God!! Has anyone else noticed that in the last year-and-a-half since Toyota began to be projected as the world's largest automaker they have received more negative press and publicity over recalls, customer satisfaction, and the environment than they had in their history?!?! Look at the stress POTENTIAL market leadership has put on thier corporation. Executive defections are occurring rapidly, Watanabe has publicly stated that he is unhappy with the quality of new products, and their Tundra launch has turned the Green lobby against them. A famous comedic filmmaker once said, "It's good to be the king!" However, in today's media world, it's generally better to be a prince or duke. You get to flirt the princesses without having to make policy for the rest of the realm. Keep making beautiful cars, trucks, SUVs, etc and let the sales take care of themselves.

Auto Show Buzz (or lackthereof): It's the job of journalists today to sell magazines or newspapers, not to faithfully and honestly report what really happens without their poo colored glasses tinting the view. Enough said.

Electric Vehicles: Yeah, they're the future, but they will only lead to more problems. The current electric grid nationally cannot handle the amount of power that will be needed to power all of the vehicles on America's roads. Even if the infrastructure could handle the power needed, we don't currenlty have the generating capacity to create that electricity. The only solution is to build more power plants, but coal-fired powerplants pollute like a son-of-a-bitch, and the Jane Fonda's of the world won't tolerate nuclear powerplants even though the technology has advanced to the point that they are infinitely safer than coal fired plants. Natural gas plants aren't economically viable anymore given the skyrocketing price of natural gas (closely linked to oil as they're generally discovered together). Wind and solar are pipe dreams for large scale applications, but might be the ticket if every house was required to have a 10 X 20 solar array in the room and a single small wind turbine on the chimney. Of course, that would add another 10-30k on the price of a house, but nobody wants to talk about that.

The fact is, there is no perfect solution (and there never has been). A combination of things is what will take us into the future. Bio-fuels will be the first step, and it will take an act of Congress to force the oil companies to install the pumps and take delivery of the fuel. Nuclear power will become a reality in the next 2 decades through government intervention, streamlined approval processes, and cheaper-to-build plants and reactors that are done off of a common design instead of completely custom one-off fabrications. This will pave the way for more electrical capacity, especially for automobiles and high-speed rail lines on the East Coast and in the MidWest. The left-coasters will still be in love with solar and wind, and probably tidal power generators sunk into the shoreline of the Pacific ocean, but they'll happily take the power shipped in from the rest of the country in order to run their electric cars.

Gee, this future sounds alot like what you're predicting Bob, only you're a lot nicer about it than I ever could be.

Bob,

Thank you for giving us the truth. As far as im concerned, Congress has the reverse Midas touch. Everything they touch turns into cr*p. I find it pretty ironic that the same people voting for these Café standards, are among the biggest polluters. They fly in private jets, they have fleets of heavy gas guzzling armored vehicle, and they burn more fuel in there mansions then some small countries. Is there a need to reduce foreign oil demand, of course! But, it should be up to the market to dictate change, not some Rich fat cat with an agenda. Unfortunately, It appears that yet again the middle class will have to suffer. I still need haul stuff, but now it will cost me a fortune for gas, and an thousands extra for the technology to get 35 MPG out of a truck. Ugh, I think ill have one of those beers you were talking about...

Hello Bob welcome back, you must be exausted, thanks for representing us car lovers and GM die hards, but here in Orange County Cal. it is going to be hard not only to get the kool-aid toyota drinkers to the showroom but when they see the run down facilities like the broken windows, 1970's furniture, leaky roofs, cracked floors well you get my point, they would rather spend their money at the new showroom next door with people that stay there longer than 6 months as an employee, thathas to change and change fast because here in so. cal. there are a lot of toyota zombies that need our help for change.
thanks for your time

Bob,
One thing that's clear to me is that you are staying on top of many of the most pressing concerns in regards to Automotive technology. I'm incredibly impressed with the level of energy being poured into the development of your alternative fuel and electrically driven vehicles. It is refreshing to see such efforts being made in the US auto industry. The way in which GM seems to be developing products is totally different than even 5 years ago.

Something you mentioned in your speech regarding the development of LI battery technology made me wonder about the potential for vehicular adaptability in order to accommodate ever-faster improvements mainly in battery technology.

Look at it this way: A modern PC is basically just a metal box with standardized components that improve over time and can easily be replaced by the consumer. If he/she wants more RAM, Hard drive space, or a faster processor, a quick removal of the cover allows them to replace components at a fraction of the cost of buying a new PC.

Much in the same way, battery technology will likely change rapidly even after cars like the Volt are launched. In that regard, perhaps an effort to somehow standardize the size and installation process of LI batteries that will fit in multiple vehicles would encourage consumers to 'upgrade' their cars with a few simple tools. This has a potentially lucrative meaning. Your mention that people will possibly keep their vehicles longer for various economic reasons is on my mind a likely outcome for if anything, the effects of what might become a recession. If you can't sell them as many cars, then the incentive to upgrade their cars would provide additional income to partially compensate. Given the chance to boost their vehicles range from say-40 miles to 150 miles on a charge would have consumers gladly spend 2-3k on a battery. The value to them would be immediate.

In summary, if the wave of the future for vehicles is going to be increasingly electronic and hence carries the likelihood of more rapid technological obsolescence, then the means to upgrade are greatly needed.

Bob,

I'd like to congratulate you on the speech. I think you did a great job of explaining the cultural problem you face.

Despite my apprehension with E85, I think your use of the words "near term solution" was right on. That said, I'd love to hear your thoughts on how electric cars are progressing, the problems and hold ups as well as your thoughts on how they will be recharged (aka how will they effect the power grid).

I think it was great to hear some of the "inside" details on the electric vehicle concepts. It makes a great deal of sense to develop the platform, then upgrade the batteries for range as they become available. I look forward to seeing what GM offers next. Keep up the good work. BTW I hope the CTS Coupe makes it to market SOON.

Bob

Back in the 60s my mom and pop used to count how many VW Bugs there were on the road. Do you remember those good ol' days?

Today I drive one. I'm kicking a few tires nowadays and I am particularly fond of the Scion tC and Toyota Prius. I stopped counting Toyota Priuses in California because there's just too many of them now. So yes I am interested in better gas mileage. What has GM to offer that competes with what I am looking for? Nothing. Just promises. Maybe 10 years from now. Sorry, that don't cut the mustard for me.

My brother is looking at his first car too. He likes the idea of a $12,000 smart car.

Mom and pop just traded their gas guzzling Dodge Ram pickup for a minivan.

Seems to me that the marketplace is far ahead of GM.

Please GM, wake up and smell the roses! You can run circles around the competition if you wanted to, but not if you aren't building what the customers are buying.

I'm not totally worried about GM either. Chevy Malibu and Saturn Aura show a glimmer of hope in what would otherwise be a clouded future.

C'mon Bob. Put on some speedos and let's truck on down that road.

Bob you know where you are missing the boat in buzz so to speak. The Firebird bring it back I am 35 grew up on Rockford files, Smokey & the Bandit and Knight Rider. Check out the NBC web site blogs people are ticked that the new Knight Rider car KITT is a Mustang not a Trans am. Your marketers should have taken advantage of my generation and future ones. Fire all your marketing dept reps before they run GM into the ground with boring and miss targeted cars Astra excluded great car might look at on when my Subarus lease is donebut Bringing back a 69 Camaro please to remember that car you gotto be 70 years old or 6 feet under.

Mr. Lutz,

Your speech was very interesting and entertaining, too. I hope General Motors does well with its advanced technology. It is my understanding that Zenith Electronics set the standards for stereo and digital television, but they were not able to turn these breakthroughs into competitive advantages in the marketplace. Please make sure General Motors has the best technology and that it protects its proprietary technology through iron clad patents.

Thank you for posting your speech.

Bob Lutz said, "Which brings us to the fourth thing I think I think: “The best route to a significant near-term reduction in petroleum usage is E85.” It’s just common sense! I kept getting the question at the show… if GM is so gung ho on electrified vehicles and hybrids and fuel cells, then why this emphasis on E85? Why the deal with Coskata?"

Mr Lutz,

Unfortunately, moving to E85 is only "...just common sense" when the ethanol used to make that E85 doesn't come from corn.

As long as the dominant biofuel in the U.S. is corn ethanol, there is nothing common-sensical about E85. Corn ethanol saves no energy; continues our reliance on fossil fuels because of the natural gas needed to grow corn and turn it into ethanol; the large-scale industrial farming used to grow corn for that ethanol will continue to have adverse effects on our environment; and growing food to make it into fuel will have adverse effects on the world economy.

Good luck with Coskata

A tip of the hat to you and Mr Wagoner for having the vision (and courage) to invest in an ethanol process that avoids the traps and pitfalls of corn ethanol. I sincerely hope it works out. The day we can pull into a filling station and fill up with E85 that wasn't made from corn, everything you said in your speech about the value of E85 will be true -- but that day isn't here yet.

By the way: Do you realize that if what Coskata promises proves true, GM could make much more money going whole-hog into the ethanol business than making cars?

Respectfully,

Gary Dikkers

nickey you are correct. if we could get the fat cats out of their mansions, limos and private jets there would be plenty of gasoline for my 2008 C-6 corvette.

Mr. Lutz,

I wish to comment on the ownership cycle time (period) of GM vehicles in the US. While I agree that turning over the fleet more often is a good thing for technology. It seems to benefit GM more then its customers, since such practice would make vehicles depreciate faster and worth less. Additionally if auto companies would bring out 5 and 10 year in the future technologies today, and cars were desired to last that long (an American tradition), then the problem wouldn't be a problem. As long as GM keeps putting out yesterday's technology today, and today's technology today, the industry is going to remain this way. IF you want to break the cycle you need to get your engineers to invent future technology now and then get it to us by noon tomorrow (figuratively speaking). GM hybrids and electric cars are only expensive to develop while GM has half its resources tied up in older technology development. Quite a perplexing problem with a non trivial solution.

HotCarNut,

E85 and Biodiesel are a temporary fix. The whole idea of less dependance on foreign oil is a bit far fetched at present. It is only viable if the supply is there to make the infrastructure upgrade cost worth while. Until enough biodiesel can be sold to displace petroleum, few places are going to push its sales. And because few places have it few people will need it, and thus further reducing the desire to switch to it. At least GM is trying to break this cycle and create the demand for both of these fuels. The problem I see is that by the time it is common place the next thing will be out (electric and hydrogen) and all the "new" infrastructure will be useless. This kind of reminds me of the current problem with High Definition DVDs, there are Blue Ray and HD DVD, and until the better standard emerges people aren't going to invest in new players, and therefore DVDs won't be released. Fortunately one of them seems to be emerging as a new standard. The question in the auto world is which one will be the new standard, E85 and Bio Diesel, or Hydrogen, or Electric. Currently there are to many fuel options, few places seem interested in having pumps for them all.

Oil companies will sell whatever makes them money, whether its Gasoline, Diesel, Bio Diesel, E85, Ethanol, Natural gas, Propane, Methane, Hydrogen or Electricity. The question is what kind of up front investment do they need to do it.

Don't forget who the stock holders are in many US companies (oil companies included). If I'm not mistaken many retirement funds are tied up in diversified investments which may include the oil companies... Do you want your money now or later?

Electricity is a great idea, but unfortunately the grid can't handle that kind of load right now... sounds like another "no one carries it" problem to me.

Keep in mind that bad news is better then good news and bad news is far easier to make up then good news is (its far easier to discredit bad news then good news).

New power plants are desperately needed if the US is to expect to maintain its life style. The biggest thing that can be done to work with this is allowing hybrid reactor fuels to be made and to start up some production breeder reactors. To bad politics gets in the way of that.

Well if you wish to discuss solar and wind drop me a line.

You are right there is no simple solution, and until recently it wasn't' that big a deal.. except now our energy demands are even higher then ever before.

I don't think an Act of Congress for Bio fuels is the right thing. I have yet to hear that we can produce them without using fertilizers derived from petroleum.

Nicky,

Unfortunately no better solutions seem to have turned up. So the fat Cats are the ones making the rules and getting things done (slowly).

Bluebaby,

I think you are referring to what I call the Ownership experience aka the experience of going to the dealers.... its a huge problem for GM especially their Cadillac brands (since they are the luxury brand).

Edvard,

you make a great point, but how many companies really want to develop a product that can be upgraded. Its a great idea, but how are they going to make income without selling new cars. Thats exactly why Bob commented on how we need to turn the fleet over faster. Maybe the problem is the expectation of the stock holders that a company will profit all the time.... At some point its not really possible to continue to profit... merely sustain.... when is that point?

Maybe though you are onto something... imagine repairing a vehicle by fixing worn parts rather then replacing the whole thing after a few years. Imagine if you could swap exterior and interiors.. it kind of reminds me of a skate board concept car I once saw. I forgot who made it (ok not really...)

I like the idea of a gradually increasing gasoline tax. The tax proceeds could be split between transportation infrastructure and giving generous rebates on efficient or alternative vehicles like the the Chevy Volt (perhaps as much as $6,000 per vehicle).

It seems to me like there should be a political coalition large enough to make this happen--especially with growing concern over foreign oil dependence, environmental effects, road congestion, infrastructure detoriation (old bridges, etc).

I would think the auto industry could support this since the rebates would lead to new vehicle purchases.

Note to jamie from California: YOU LIVE IN CALIFORNIA!!!! Come out to Colorado (aka: the REAL world) and count how many Priuses you see. I think I saw one at last years Denver auto show, couldn't really tell though, with all those Tundras in the way. I just can't picture a cattle rancher or a farmer hauling a trailer full of produce or his prize bull up I-70 into Jefferson county CO, in a Prius. A full size Silverado dual-mode hybrid yes, Prius....No. Ok, my rants over, what I really want to write about is E85. I'm ready, I'm ready to stop buying gasoline completely (except, of course, for 15% that's in E85,) I'll go out of my way to find it, I'll pay a little more for it. You just haven't made the right car for me yet. I presently drive a BMW Z4, (Sorry, Mr Lutz,) THATS the kind of car I want,a Pontiac Soltice GTP that runs on E85 (Albeit, with a real trunk and a power top.)or 2+2 sports car that runs on E85! Hmmm maybe like a, lets see....a 350hp, turbo charged V6, E85 drinkin' Camaro RS. (or,dare I dream it, Pontiac Firebird Formula.)A flexFuel DI V6 AWD CTS coupe! (It snows here in Colorado, alot, AWD comes in handy.) That Hummer HX has me putting a little cash aside every month, just in case. How about something like a Fiat Panda 100HP? Yea, I'm sure on of your Asian manufacturers could develope a 130HP subcompact that ran on E85 in no time flat. As for availability of E85, how much would it cost to put a stand alone self service E85 pump in every GM dealership in America? Think about it, buy your car here, get your fuel here. You could use it as an incentive, buy a GM flexFuel vehicle get discounted GM E85 for a year. Why not? You already have your foot in the door with that Coskata deal, why not take it a bit further.

Re: Hot Car Nut's comment that the current electric power grid can't handle all the new electric cars:

This is incorrect. Electric cars will be recharged during the night. The electric power grid is vastly under-utilized during this time period and has ample spare capacity.

Nate,

I'll discuss biofuels, wind, solar, nuclear, etc any time. Unfortunately, your email address isn't visible.

E85 and Bio-diesel are long-term as well as short term solutions. Even with the electrification of the automobile, there will still be a need for fuels for the engines on the vehicles (i.e.- the "generator" engine on the Volt) as well as for heavy-duty applications such as long-haul trucking and farm equipment. What biofuels will allow us to do is to domestically replace imported oil and drastically reduce greenhouse gas emissions. Like I said, it's the best short term solution, and it's got a secure place in the long-term as well. We will never be completely free from the need for fuel.

As for the oil companies, you are making a major assumption: that they will profit in some way from selling biofuels. It's a bad assumption. Most of the big oil companies have avoided significantly investing in alternative fuels, so they have very little of the pie currently. Also, there is a great deal of capacity in terms of ethanol production, but they simply don't have a distribution network that is big enough to serve it to the public (only 1400 pumps nationwide). What incentive is there for an oil company to push the station owners to install biofuel pumps? Practically none. They don't produce the fuel, and margins on the retail end of the chain are very small (1 or 2%). The majority of the money is made in the exploration, pumping, and refinement of the oil.

In regards to the stockholders, they will simply switch to buying shares of the publicly traded alternative fuels manufacturers and large farm Co-ops that will develop. That is the wonderful thing about our market: just because you hold the stock today doesn't mean that you have to hold it tomorrow. The market will flow where the profits are, and the profits always follow the consumers. If consumption rises for biofuels, and profits increase, then those gains will be reflected in increased stock price gains and further investment.

I don't think Congress will mandate the use of biofuels, merely that they may have to mandate the AVAILABILITY of biofuels. The oil companies have a monopoly on the US fuel distribution network, and the US government generally has intervened when monopolistic practices have hindered competition in a free market. That is why I think that it will eventually take intervention by Congress, the FTC, and maybe others in order to get the oil companies to play ball. After all, we are talking about drastically reducing their livelihood, and they won't take that laying down.

Nick,

I see the logic in that argument, and it's one that I've heard many times before. However, that's assuming that nobody will plug them in while they're at work so they can make the commute home, or that people who carpool won't leave their car plugged in while riding with a friend. I worked with large industrials and utilities in the electrical industry for several years, and they are all concerned about the state of the electrical grid. The biggest concern comes in the summer when load is at it's peak, but a lot of utilities are one major event away from catastrophic customer power loss.

I get your point, but there will still be a lot of extra strain on the grid even if the majority of it is in the evenings.

Hey Bob, Great speech! It has got this blog started on a great debate with many educated points of view. This is great to see as many blogs out there are full of flame type comments. I have to agree with what you think you think as the world has so many options to power future automobiles. The number of power sources are abundant, but who will provide the leadership to direct which way this boat is going to sail? Naturally that would be you. It is always entertaining to read your speeches. I think I still have a copy of the speech you wrote to all of the employees at GM just after you first started. That too was a powerful motivator for change at the time. Look at how far you guys have come since you joined GM and wrote that speech. You released the full potential of GM into what they are today. The new GM has what it takes to move forward now in a clear path with excellent new products and a focus with resolve. Gone are the days of just getting by or poor product executions. It is too bad the CAFE target was moved, but I have confidence now that you guys and girls will do what is needed while making great looking and driving cars in every catagory possible.

A couple things I did not like though from the Detroit Show - the stickers and badges on the new hybrids are tacky. Especially on the Cadillac Escalade - the vent is huge and looks over done with the HYBRID written in the middle of it, then again down the lower sides of the vehicle, and another sticker in the windshield... I get that you want people to know about it being a hybrid, but come on. Educated and classy buyers of Cadillacs will not want all of those extra stickers etc. The model that defines how you should badge your hybrids is the Provoq. Simple, blue, and distinguished. You see that badge and you know that it is a hydrogen powered car. The green "H" stands out enough on its own as well. Modesty in badging style, smart consumers will buy these because of what they do, not because it shouts out what it is... that is so "Prius" owner-ish. The rest of the line up looks fantastic though. I sat in the G8 for the first time... wow, unbelievable job! CTS coupe is a real stunner, even the little Vibe looks sharp... it embarasses the Matrix, and finally the three door Astra XR - Blue... you know the one at the show - simply fantastic. Please drop the 2.0L DI Turbo in it and call it a Redline. I would go hunting for GTIs and Mazda Speed3s all day long. Or, I could do that in the yellow Cobalt SS Turbo, but the Saturn is more refined inside... decisions decisions...

Hi Bob,
Great read! Thanks for sharing your "5 things I think I think".
You know what is most interesting about your postings? I don't see anyone else in the industry putting him or herself out for public consumption like you. And you know, what you share publicly is not a lot of smoke and mirrors. Sure, you have to play is close to the vest with the proprietary and strategic information, but what you do share is spoken from the heart and with substance.
Thank you!

Jose,

I'm not sure I'm in total agreement with you on the E85, I'm ready for a non gasoline alternative too... but E85 doesn't look like the right one yet. Not at least for the masses. Additionally I think methane or hydrogen are better or even electric power.

I'm totally in agreeement with you that GM doesn't quite have the offerings figured out yet. How do you like your BMW? Do you think GM could learn anything from BMW? If so what would that be? I personally wish GM had the zero maitenence warranty. I would love to hear some marketing on the AWD CTS and CTC. I'm in 100% agreement with you. I want a 400 HP DI V6 Turbo CTC AWD.

Nick,

While you are partially correct, you need to keep in mind that the amount of KW or BTUs of energy used daily in the US is huge. I've run the math (with approximations though) and I'd be willing to bet that there still isn't enough power to charge that many cars overnight. Additionally Peaking units (gas turbine plants) are needed to handle today's heating and air conditioning loads during peak times of the year (hot summer, and cold cold winter).

If you haven't already done so run the numbers... figure the average car cruises at 60 MPH and uses about 60 HP.... this is about 45 KWatts. figure the average car can run 300 miles, thats about 5 hours so 5 hours times 45 Kwatts = 225 KWatts. The average modern home (in my area) has a 240 Volt, 200 Amp power service to it. Using the simple formula for DC Power (note AC is a bit more complex), you have Volts * Amps=watts... so 200*240=48000watts = 48 KW. SO... in order to charge a 225KWatt battery it would take 4 hours 41 minutes... assuming you could draw a continuous 48KW which you can not.... Soo in a sense you ARE correct, you could actually run SOME electric cars especially since most people don't drive more then 100 miles a day. In theory they could top off the battery at night. I also assume no regenerative breaking and a 60 MPH constant speed. Given the assumptions and variability it is possible to do, however I think the grid is still not up to the task.

Remember the problem in New York a few years ago with the huge blackout? That was because the grid is/was overloaded. Additionally if this country wanted to help get rid of foreign oil, we would replace all the oil and natural gas power plants with Nuclear ones. The operating cost is lower and it would free up the resources to be burned in cars. Two years ago I ran the math on hydrogen generation from electrolysis of water. My numbers were crude but back then America used 80 Million barrels of petrolium a day. Based on those numbers I calculated that it was possible to replace all the oil with Hydrogen at the cost of about $5.50/gallon equivalnt of gasoline. Now the numbers may be a bit off but when you consider the number of BTUS consumed in one day in this country in petrolium alone its HUGE....

So yeah if we updated the power grid, and added some more plants we could do it... we would also have to make electric or hydrogen hybrids to regenerate the power we lose in braking. Of course that IS the way of the future. Getting there is going to be quite a challenge. It will literally take the collective decision and effort of the country to go out and do it... at which point it could be done in less then 10 years... but getting everyone to agree on that kind of thing is going to be tough.

I still maintain my current stance that the grid can't handle it right now... not for the type of cars people will want and in the quantities they want them. Additionally with the current power plants running as much fossil fuel as they are the cost of electric isn't much better then the cost of gasoline. as a quick comparison... gasoline has about 18,000 BTU/pound mass. gasoline also has the density of 6.152 pounds mass/gallon so... 18K * 6.152=110,763 BTUs=32.354 KWatt-hours/gallon. So take $3.05/gallon / 32.354 KWatts-hour/gallon and you have dollars per KWatt-hour. Thats $0.0943 per KW-hour. thats a lot less then I pay for power today. I think I'm paying around $0.018 per KW-hour.

Electrics are getting closer....

HotCarNut,

my email is .... feel free to drop me a message.

Electrocution of the automobile?? (just kidding)

I understand very well that hybrid vehicles need a generator on them. The problem I haver with Bio fuels at present is they rely on crops, and crops need fertalizer and to be harvested. Currently we do both fertalizing and harvesting because we need to eat. And that I'm fine with. BUT... in order to get enough ethanol and biodiesel from MOST crops to significantly displace our current foreign oil supply, we would need to ramp up production to nearly maximum capacity. This is a great thing for farmers no doubt. However there is the reality that currently a larger portion of our food crop and feed stock crop is grown as efficiently as it is by using fertalizers. And the fertalizers they use come from a conversion process usingNatural gas which last I check we still import.

So... E85 looks good, but how practical and cost effective is it? I personally don't want to waste good farm land on fuel when simpler solutions like hydrogen and methane are right there to use. Methane can easily be made from hydrogen gas. Methane is easier to store and transport then hydrogen since it doesn't leak out of containers nearly as easily. Additionally from methane we could in theory make heavier fuels. This is the real long term solution... hydrogen hybrids. What also is nice is that almost every current vehicle on the road can be converted to run some form of either hydrogen, methane or propane. Gas engines, Diesels (with spark plugs). You see my point.

The cost associated with E85 infrastructure is better spent in my opinion developing more efficient cars, and getting a gaseous hydrogen or methane infrasture in place.

The only nice thing about bio fuels is that if the flow of imported oil were to stop.. we could technically run any car on ethanol or at least E85/biodiesel. But if that happened, the US would be in trouble. We rely very heavily on other products that come from oil. including plastics, tar and materials used to make roads etc....

So to me Bio fuels sound cool and look ok until you look at the big picture and see what really is going on. They even have the potential of working if the US can diversify its fuel sources... but so far thats seems to be about as easy as pulling teeth. Besides how many fuel pumps do you want each gas station to have?

Most big oil companies are making so much money on current fuels that it doesn't matter. They know where the energy market is going, and how its going to get there. They also have the engineers and technical people on payroll to figure it out very fast should a breakthrough happen and it become economical to make alternative fuels. The truth of the matter is that no good alternatives yet exist at current gas prices. And until that changes they have no good reason to switch. I'll bet they are all developing alternative fuel technologies now.

I can't think of a single fuel that is cheaper then gasoline is right now... not natural gas, not propane, ethane, methanol, ethanol, biodiesel... they function on cost per BTU or KWatt.

The reason biofuels aren't at the pumps is that we don't have enough quantity of them to supply the country. That is one of the reasons they picked E85... its a good start and straight ethanol isn't quite so simple. nor is straight Biodiesel. The distribution network isn't the problem really... the pumps aren't a problem... for the most part all they'd need to do is update one or two parts at the gas stations and they could essentially use their gasoline tanks to sell E85. In fact if they were smart they'd drop 87 Octane and sell E85 instead. Problem solved... all they need to do is do it. The pumps, hoses and measuring equipment for E85 distribution is already in existance. I wish I could say its that simple to switch... in a sense it really is as simple as a nationwide decision but that in itself isn't a simple political issue. Our engineers are way ahead or could be if they were told to be. Its a matter of politics and current production limitations... not distribution limitations.

You are correct that money is made with refinement.. or more correctly not lost. If companies replaced Oil with bio fuels they would have additional problems. Like where to get plastics and tars for other products.. and then there's the problem of what to do with their billion dollar refineries.

I'd be willing to bet on the "Oil" companies buying out the farms and migrating to bio fuels long before the stock holders dro their oil stocks. It will be a gradual process and because of that the oil companies will have time to addapt and maintain profits while switching to whatever the energy source of the future will be. Not tha I'm saying I support the oil companies.

While you may be correct with a monopoly on distribution network... I don't think thats totally true. I think the time isn't quite right for bio fuels for a long list of reasons... mainly the loop of logic they are stuck in.

I think its a matter of demmand, and supply... and in this case no demmand (in terms of people to buy the product) causes no supply of the fuel... and of course no available fuel causes no available cars and no demmand... fortunatly that is slowly changing... and as the demmand goes up, science will find a way to make bio fuels more profitable and the supply will go up... and things hopefully reach an equillibrium. The only question is whether that will happen before we can perfect hydrogen fuels at the same or lower cost. The real question to answer is which of them to use and which will get there first... Thats my version of the Chicken and the Egg problem.

Hey Bob,

On Friday 25-January-2008 they had a review in the Wall Street Journal of the Malibu versus the Honda Accord.

The reviewer rated the Malibu much, much higher. That's a big change in the press!

The ship is turning.

It isn't a game, but it's too bad the media does not mention the fact that Toyota sells 2.4 million vehicles in Japan and GM maybe sells a few thousand, all because the Japanese market is all but impenetrable to American autos.

wow some long responses so far.. I'll keep mine short

5 things I think:
1. In general, the fuel economy of RWD cars is NOT worse than FWD cars. GM should not whimp out and cancel all their RWD cars.. People want them more than ever!!

2. GM is still unable to look at the big picture.. It still reacts to market shifts, financial presssure and legistlation as if it never saw them coming..

3. When GM does react it focuses on the issue at hand so much it looses sight of the big picture and allows its competitors to gain ground

4. I prefer lemon meringe too

5. GL

I don’t think I quite understand the third thing that I think you think. You state (or perhaps imply) that Americans will not pay $30k for a premium small car. I am not sure Americans consider Chevrolet Cobalt to be a premium small car. Furthermore, in some regions of America, buyers are already paying premium prices for premium small cars like BMW series 3 and similar cars from other imports. Frankly, I always wondered why domestic name plates do not produce a genuine premium intelligent efficient small car.

Mr. Lutz,
This is a great speech. You may be one of the last people in Detroit with their head on staight. I like where you are heading GM. It is great that you are working so hard to get the Volt to production before some one else beats you there with a plug in. And I would also like to say what a sweet car the new ZR1 is. No other auto maker in America can come close to what GM is doing. Keep up the good work! Bruce

But I do think we are in a golden age of automobiles. But that golden age is happening in China, India, Russia, and the rest of the world.

Just think of what GM has done in the last five years. They are selling Chevrolets in the Eastern Block and in India, Buicks in China. They are selling Hummers in Australia, Cadillacs in Europe. As GM takes more of its brands around the world and improves those brands the world is learning what it means to have a GM in the automobile world.

Imagine one day when anywhere in the world they walk into GM showrooms and they can choose between a Camaro, Cadillac CTS Coupe, a Riviera, or a Corvette. Imagine the day when anywhere on the globe they can choose between a Cadillac Provoq, Saab 9-4X, a Chevrolet Traverse, or a Buick Enclave. Just image if in the Middle East they can choose a pick up in the Hummer H2T, GMC Sierra, or Chevrolet Silverado varieties.

That to me would define the international golden age of the automobile. In the USA what would the Golden age look like.

Well excitement happens when people see something unexpected. For example, excitement is the Giants winning against Green Bay, Michigan winning the Miss America contest, or to the business world Apple shrinking the CD player to a wafer or a laptop to the thickness of a 20 page notebook.

Excitement in the automobile industry in the US will have to come the same way. A car that is designed like the Holden FJ Efijy. A vehicle that runs on hydrogen, or electricity and uses no to little gas. A small car designed to have the luxury of a large luxury car. Excitement, the golden age, anything you want to call it, it has one similar characteristic in any field and that is...

SURPRISE!!!

The only company on the planet right now that seems to get it is Apple. Constant surprises with product, showroom excellence at their stores (GM you need to learn from this.) and products that perform unexpectedly well. Make a movie like Cloverfield, done in a way that has never been tried before. That is how you spark interest.

Surprise me, make an Efijy, make a fine Buick showroom and dealership for once. Maybe a 600 hp car is already expected, that is no going to be a surprise or generate interest you see WE ALREADY EXPECT IT. You would have done better with the Tata.

GM- You want Apple style excitement then do the unexpected. Yes, make the Volt, but continue to surprise and inspire us. Make a better showroom experience like Apple. Make the killer style cars that we hoped Lutz would make in an affordable package.

What should GM do next?? It's your call there are a million things you can do, but the last thing you want to do is stand in the way of someone that wants GM to do something because you don't know what the market is or how it will turn out.

The unexpected cannot be a committee decided effort. It's gotta come from the gut.

There is your answer, the golden age of the automobile is anything, anything but the norm that is today.

Good Luck GM and I hope to God you heed this blog.

Mr. Lutz,
I believe it would be more optimal to market the Volt as a premium car. Give it a $65k price-tag and either make it a Buick, Cadillac, or a new brand. Make sure the interior is very nice.

Why? Because its alright if this car is a halo-car. Its a revolutionary idea. It will probably have issues. It will probably not be as nice in some ways as a normal car. People who can afford a car in that range are looking to make a statement and don't care as much about practicality. Plus, GM can worry less about its profitability, and focus on developing the technology while still being able to claim they were first.

Who would buy it? If one was available, my Mom would be on the waiting list.

Hi
I'd like to congratulate you on the speech.

Something that might need to be considered as part of the whole ethanol equation is the cost of land. As can be seen recently, the price of farmland in states like Nebraska are going up, and primarily due to the interest in property investment per future production of ethanol.

Higher property values causes higher corn prices, which in turn creates higher E85 prices for the consumer. I'm unsure if there is a solution to somehow keep this in check, but if property values escalate to a point where the final cost at the pump is more, than this will create a serious disadvantage.

GM needs to build some economical, fun small cars, like the Mini Cooper. A Cooper S with the 1.6 turbo will kick my 3.9 G6 GTP's butt while getting 10 more miles to the gallon! Just put that engine in the Sunbird/Cobalt, and instantly raise both the performance and MPG. I'm sure BMW engineers aren't smarter than yours, so why is the Aveo, with a 1.6 as well, such a pitiful performer in both 0-60 and gas mileage ?

It would also be great if GM could stop tying luxury, safety, and convenience options to engine size. For instance, why not offer the amenities and look of the new Malibu LTZ without having to order the guzzler V-8? Make the V-8 an option on its own.

When I bought my 2006 G6 GTP Coupe, I had to get the big uneconomical engine if I wanted the Stabilitrac and a host of other options that have nothing to do with the engine size at all.

Umm....Ted....the Malibu doesn't have a V-8 option. It's either the 4 banger or the 3.6L V-6.

I will agree that you should be able to get a 4 cylinder with leather and all of the goodies though. Even Honda has that option on the Accord...

I have read your speech and it was very good however, I am concerned by your view on E85. "Which brings us to the fourth thing I think I think: “The best route to a significant near-term reduction in petroleum usage is E85.”
Although I agree E85 is a cleaner alternative it is not a practical alternative until the technology to make ethanol from waste (paper & lumber industries, garbage, etc.) is practical. Ethanol from corn and soybeans is impacting our foodchain. The world struggles to feed itself now without diverting food to ethanol production. Even the U.S. does not have the arable land available to support a nation of corn-derived E85 vehicles. Corn also requires heavy fertilization (many fertilizers are made of petroleum products). I would rather see a focus on biodiesel (or even diesel which requires much less energy to refine from petroleum and diesel engines are easily converted to biodiesel as it becomes more available) than this continued emphasis on E85.

Great ideas, except for the E85 part. E85 and other biofuels as well as hydrogen and "fools cells" are going nowhere. It's a simple fact of infrastructure. The current fleet of cars will be on the road for at least 10 years and most of them will not use any alternative fuels. By the time a minimal E85 or other biofuel infrastructure is put in place, battery technology will have advanced to a point that electric drive will be the preferred alternative. Plus you have to consider all the potential new car buyers, like myself, that will not buy another car unless it's an electric drive.

Bob,

I guess I'm in the vocal minority now, but I have to say I agree with you 100%. Bottom line is that CAFE is joke. People in the USA aren't going to take kindly to being "forced" by our insipid government to buy efficient cars. They MIGHT do it if gas taxes were incrementally introduced over time, starting about 5 years ago. America is slightly different from the rest of the world - we LIKE cars that are FAST, FUN, BIG, and COMFY. It's what America is all about, and I'll be damned if I have to trade in a nice porterhouse steak for tofu. Unless gas prices climb to over $7.00/gal, I have no intention on changing my mind about buying a V8 equipped Chevy Camaro with a 6 speed stick. I'll basque in sheer delight buring rubber in front of some poor sap driving an econobox.

I can hear all the treehuggers cussing me out as I type this.

Bob, you can build the cars you need to abide by CAFE, but PLEASE don't forget us who want real cars.

GM's problem is the same now as it has been for the past 5 years. Your only focus is COST COST COST. Just about every large supplier that has had a relationship with GM is or has been bankrupt or is on the verge of bankruptcy. You suck the life out of your suppliers and leave them with nothing to survive on, and yet somehow that is still not good enough. It's always what have you done for me this year. Your metric based system is BROKEN, yet nobody has the GUTS to face Bo and his henchmen. You wrote the book on GUTS, Bob. Time to use them and get rid of this guy while there is still some life left in this country.

Frank,

I agree RWD cars can be as fuel efficient. I think it's a matter of vehicle mass though, In general RWD cars are usually high HP cars and thus have heavier structures. GM could easily lighten them up. Heck I'd love to see an AWD.

GM still doesn't see the big picture... although my recent view of the big picture has changed after seeing their commercials for future energy sources. Maybe GM is looking so far in the future that they are missing the now. I honestly think this is more the case. While other automakers are busy selling today, it almost appears GM is worried about 10 years from now. Not bad thing but it sure won't help them now. The fact of the matter is that long term alternative energies are imperative, short term however people want a solution NOW, and I think thats where GM is falling short... aside from not offering the level of vehicle that consumers want GM may end up nailing the target. Though I have no idea what that is.

There is no doubt that in a lot of ways their competitors have gained ground. But I think they are getting that back as the technology playing field is being leveled.

Alex,

I think you perfectly stated what needed to be said. The Cobalt is not a premium car... it could be but its clear to me and many others I think, that the Cobalt is the successor to the Cavalier which has a reputation.

I however do disagree with you on the BMW 3 series being a small car. It isn't, its a small mid size car (if we call the CTS a midsize). I don't think anyone in their right mind would ever compare a Cobalt to a 3 series. Two different classes of car. Now the 1 series or even the Audi A3 might be comparable. But again they are different classes. The problem with GM is that if they wanted to make a 1 series or A3 competitor they would no doubt try to under price it and use parts bin parts to generate a new car, which most customers would see through as just such an effort.

I think genuine premium, intelligent small car is somewhat an oxymoron. I think perhaps the only car of such that comes to mind would be the Mini Cooper. Its seems to be a no compromise for a small car. I can't think of many other cars that fit that bill.

Edward,

I think we are in a golden age of autos because I don't think the production rate will continue to climb like everyone thinks. Even in the countries you mention.

I agree 100% with you that GM needs to be more like Apple. Offer a few products in the high end and do them very well. Buick and Caddy are the two brands to do this.

Chase,

I agree that GM needs to have an extreme premium electric car but I think they need to also put it in the hands of everyone else. The question is how to do both while not diluting the high end with parts from the low end.

Edvard,

I'm not sure I see the price as a direct issue. Then again the situation here is different. Farms aren't worth much compared to housing developments. Thus we are losing a lot of good land to housing farms. Tough problem to solve.

Ted,

I agree with you, GM seems to not offer specific options on all their cars. They really should.

Karen,

Bio diesel is not a much better option then Ethanol. In fact if they were smart (and they probably are) they would get the oil from the corn or soybeans and then ferment the rest into alcohol. But really the problem of growing the crops to make the bio fuels is a real issue in both cases. Thats what a lot of people fail to see.

OzoneLevel,

There is nothing wrong with Fuel Cells or hydrogen as an alternative. especially if cars are designed to run on hydrogen. The big benefit is refuel time. Until batteries can be charged that fast (which is sill in the future).

The fact is depending on the rate of change of energy prices, the current fleet may not still be on the road in 10 years. It totally depends on who's price predictions are the most accurate. In the mean time at least since people aren't buying alternatives forcing E85 gives the now current fleet which will soon be left behind the chance to run on ethanol. It is in no way the perfect solution but a good start. Additionally the time taken to put an electric infrastructure in place will take longer then it should. Sure there is structure there now but it can't support a mass system wide adoption of electric in its current form. Battery technology will improve and this is where fuel cell hybrids will come into play. Hydrogen can be converted from petro based fuels which will allow us to build the demmand and infrastructure for hydrogen power, while at the same time advancing the electronic controls and the electric power system to support the new technology.

Electric very well could be the final solution to energy needs. But how do we get here to there? And how long will it take to make it all happen?

The whole concept of hydrogen power makes a lot of sense. You set up power plants to generate electricity, then use that to create hydrogen from water and distribute it etc... then there is the idea of generating electric and directly distributing it to the houses. This will require upgrading the whole grid. Then the power can be stored in the cars etc... the question is which one is more cost effective and which one more efficient. The total system losses on both are pretty great. Its a tough call. I think in a few years we'll have the solution.

Nate

Great speech! I would like to congratulate you Sir! :) I like your idea on this...

As to the Cobalt, show me a Cobalt that gets the same mileage as a Civic or a Corolla, or an Aveo that gets the same mileage as a Yaris or a Fit, and I'll buy either one of them.

Mr Lutz said: "And in America, instead of raising fuel prices, we’ll end up having to raise new vehicle prices, because of the increased use of lightweight materials and fuelsaving technology."

Mr Lutz,

I've heard you say several times you will have to charge much more for cars with fuel-saving diesel engines as you attempt to meet the new CAFE standard.

That leads me to ask, what does BMW know that GM doesn't?

I just looked at a BMW website where one can compare the cost of different versions of their cars. Here's what I found for a BMW Model 120i ( a gasoline engine with fuel injection) and a BMW Model 118d, the same car with a diesel.

They will sell the 120i for $38,770, while the 118d will cost $37,780. They will actually charge less for the diesel.

Here's the website: BMW car cost comparator (You have to select 118d for the second model.)

Respectfully,

Gary Dikkers

Joe D,

Maybe CAFE is a joke. But I don't think the reality of fuel prices have really hit. When the price of fuel gets high enough you will want a smaller car. And if you don't, then it probably means you don't mind paying a few hundred dollars to fuel up. And thats OK too, but the reality is the price of energy is increasing. You can waste your energy as you wish, but just make sure you are willing to pay the prices.

The problem is you aren't alone. We ALL want 300 HP+ cars, and that means CAFE is tough to meet. But reality is we won't ALL be able to afford them and if we can at some point we will be responsible for our energy consumption. I think thats a key word... responsible energy consumption. Do the math and get back to us. What;s the least amount of energy it will take you to accelerate that Camaro to 60 if it weights 2000 and 3000 lbs.

Nate,

If I was interested in a Camaro that got to 60 mph with the least amount of power possible, I'd be interrested in a 1982 Camaro Berlinetta with the 4 cylinder iron duke. See, that was in the thick of the engergy crunch back then, and GM thought to build an "economical" Camaro. Guess what? Sales were abominable. Even with the focus on saving fuel 30 years ago, V8 powered Camaro Z/28s outsold the Berlinetta about 3-1..... and that was back when V8s really WERE gas hogs (today's V8 can get 30 mpg on the highway, just ask any Corvette or 4th gen Camaro/Firebird owner).

Gary, I think you have missed something very important—at $37,780 for a compact they are already charging much more for the diesel (some $10K more than a larger lower-midsize premium car in the US—are you really prepared for that kind of sticker shock). Also in the UK the price quoted is "On The Road", including taxes, insurance and registration, additional costs which favor a high-mileage/low CO2 diesel in the UK. It these additional costs (plus fuel taxes subsidizing diesel, and congestion charges restricting access to all except the highest-mileage cars), weighted in favor of diesels and other high-mileage powertrains, which drive demand for diesels in most of Europe. Even in Europe however, a diesel with comparable power is almost always several thousand Euros more expensive than a gasoline engine in the same model. Take that 118d you mention—a 5-door 118d (122 PS) costs €25,300 in Germany (including tax), while a 118i (129 PS) is just €23,550. For somthing closer to home, a Chevy Optra (sold as the Suzuki Forenza in the US) is €17,590 for a 122 PS 1.8 L, but the 120 PS diesel is €18,640. An Astra (as sold in the US by Saturn) costs €19,295 in Germany, but a similar diesel is €23,385 (at the high end of the market, but comparable to rivals from Honda, Citroen etc.). €19,295 won't even get you the cheapest, 90 PS, 1.25 L Astra diesel (a 90 PS gasoline-engined Astra is only €16,925). A particulate filter and NOx reduction system is usually a substantial premium over those prices as well.

I often wonder why they can put a v8 in the H3, but not the colorado. Its of the same platform, so why hasnt it been done. I realize the colorado is due for a makeover soon, and would expect it to appear then, but drop the I5, its really a joke. Fuel economy is so-so, power is lacking. Maybe its just the shift points, anyway, if you can knock down 22 mpg in a silverado, you should be able to knock down 24-26 mpg in the colorado. Its a thousands pounds lighter, less suface area drag, and no doubt alot funner with 300 hp..wait screw the hp, it needs the bump in torque. Add that all together and you should have a truck capable of towing 6500+ pounds, knock down 25 mpg, and run mid 14's. (a CC, 2wd runs low 16's, high 15's if I just got out of the bathroom)

Bob,

Here is what I think. I think the price of gas will fall back to $1 per gallon and everyone will forget about most of this talk. As Lee Iacocca said in his book, no one ever could have predicted the fall in gas prices after the 70's gas crunch. I think we are just going thru another gas crunch.
Once demand levels out, the price should level back out. I think we are seeing higher demand from China and India because the car market is growing there.

With that said, there is nothing wrong with lowering our dependance on foriegn oil, and raising fuel economy. I think the regenerative hybrids are the way to go. When I step on the brake, the energy goes into charging the batteries. I think that is great.

I tend to agree with most of the things “You Think”. However, I’m having a hard time understanding how E85 benefits me, or any other fuel consumer in America. I have noticed that any time you, Rick, or your counterparts speak about E85 the only benefit I hear is “reduced dependence on foreign oil”. How does that benefit me? I’m not really concerned about our dependence on foreign oil. I’m concerned about my dependence on my wallet! E85 doesn’t make sense to the end consumer. If you go to chevy.com and look up the fuel economy ratings for a Chevy Suburban LS 5.3L 2wd that runs on gasoline; and one that runs on E85, the Suburban on gasoline gets 14/20 city/highway. The Suburban on E85 gets 11/15. I’m just going to average those out to 17mpg for the gasoline, and 13mpg for E85. Today, when I passed by a gas station that sells E85 I noted the prices: gas was $2.88, and E85 was $ 2.60. If you drove 10,000 miles per year @ 17 mpg, you would use 588 gal. At $2.88/gal that would cost you $1694.00. With E85 @ 13 mpg in 10,000 miles you would use 769 gal. At $2.60/gal., it would cost you $1999.40. That is a difference of $305.40. How does E85 benefit me? The E85 propaganda that is being pushed on the American public seems to have more of a political message than an economic message. That’s what I think.

I like the new Chevy Traverse. I like the Acadia. Both models would be ideal for my family- style, size, comfort, fuel economy, options. Also, I'm excited that your interior designers are finally putting in "family friendly" carpet colors! However, I can't afford the Acadia. Even with my employee discount, trade in allowance, and a 7 year loan, the monthly payments are more than I can afford. Hopefully, the Chevrolet model will be priced better so I can upgrade from my '02 Montana which by the way is not stylish, has terrible ventilation for heat and A/C, and gets mediocre gas mileage. And, did I mention that the carpet is pale gray (very family friendly- NOT)? Well, it used to be that it.

Mr. Lutz,

I was dismayed to say the least to learn (today) that the G8 Sportwagon has been cancelled for the US market. As a 2005 GTO owner with an aging Honda Odyssey also in the household, the G8 SW was at the top of the list to replace the minivan... I realize the AUS$/US$ exchange rate is not optimal for importing them if sales volume is low, but I find it hard to believe there is not a justifiable business case (albeit a minimal one) for some sort of configuration for import. There are those of us that even though are value conscious will ultimately pay whatever is necessary if the cost/benefit makes sense. That is the perfect deal for a seller... having a buyer pay the most for something they are willing to. There has to be a sweet spot for the G8 SW in this regard. Guess I'll be headed to the local BMW dealer to lease a 535xi SW.

Mr Lutz,

Word has been leaking out recently that Pontiac may not be GM's "Performance division" in the future and that the plan to shift the division to RWD cars is in jeopardy due to the recent CAFE rules. So tell us this: when do you plan on killing Pontiac? Is it going to be a slow agonizing death or will you make it quick, so the divison's loyal following will not have to suffer long and watch the car company they love go down the drain?