GM-VOLT : Chevy Volt Electric Car Site

GM first announced in the summer of 07 that they had chosen two supplier teams to compete against one another to build the Chevy Volt’s battery packs. From an initial field of 27 applicants, LG Chem and Compact Power Inc were one team and A123 Systems/Continental were the other.

We began hearing rumors as early as this summer that it was the LG/CPI packs that were the only ones in use in all the Volt mules, but an official announcement was not forthcoming at that time, despite it being the initial plan. Later we heard the announcement could come by year end, but the financial catastrophe delayed it

And as I sat in the press conference audience here in Detroit today, just moments ago, GM finally announced the contract had been awarded to LG chem of Korea using special large format lithium ion cells. The cells will be made in Korea, and shipped to the battery pack assembly plant in Michigan. More importantly GM will be building the packs themselves. although Compact Power will stay on as a collaborator.

Rick Wagoner noted how GM set a challenge to build the battery “that couldn’t be built”. He noted GMs confidence in the batteries has grown dramatically. He showed a model of the pack.

He announced that GM will manufacture the battery pack “right here in the United States”. He said the facility will be the first lithium-ion battery plant in the US operated by a major automaker, and will be built in Michigan. He noted the overall Volt investment has been over $1 billion so far.

He said LG Chem’s cells met has “performance, production readiness, durability and exceptional quality.”

He also noted GM is developing core-competence in automotive battery engineering that will improve their competitiveness. GM will actually create a new facility just for the manufacture of battery packs that will be distinct from the Volt assembly plant.

He said GM will also open the largest 31,000 square feet battery development laboratory in the US later this year, also in Michigan, and donate money to the U of M to develop a battery engineer training program.

Full Release:

DETROIT – The Chevrolet Volt, an extended-range electric vehicle that delivers up to 40 miles of gasoline- and emissions-free electric driving, will use battery packs manufactured in the United States by General Motors, Chairman and CEO Rick Wagoner announced at the North American International Auto Show.

GM will establish the first lithium-ion battery pack manufacturing facility operated by a major automaker in the United States to produce the Volt’s battery pack system. It consists of lithium-ion cells that are grouped into modules, along with other key battery components.

The plant will be located in Michigan, subject to negotiations with state and local government authorities. Facility preparation will begin in early 2009, with production tooling to be installed mid-year and output starting in 2010.

“The design, development and production of advanced batteries must be a core competency for GM, and we’ve been rapidly building our capability and resources to support this direction,” Wagoner said. “This is a further demonstration of our commitment to the electrification of the automobile and to the Chevrolet Volt – a commitment that now totals more than $1 billion.”

The Volt’s lithium-ion battery cells will be supplied by LG Chem. Compact Power Inc., a subsidiary of LG Chem based in Troy, Mich., will build battery packs for Volt prototype vehicles until GM’s battery facility is operational. A joint engineering contract with Compact Power and LG Chem also has been signed to further expedite the development of the Volt’s lithium-ion battery technology.

GM has been testing battery packs for the Volt, powered by cells from LG Chem, for the past 16 months. These tests – both on the road and in the lab – have provided invaluable insight into lithium-ion battery technology.

“Our selection of LG Chem was based on performance, production readiness, efficiency, durability and LG Chem’s demonstrated track record of exceptional quality,” Wagoner said. “At GM, we believe the technical strengths of LG Chem, combined with our own engineering and manufacturing expertise, will help position us as a key player in the development of electrically driven vehicles today and in the future.”

GM’s advanced battery strategy

“Our announcements are part of a comprehensive advanced battery strategy for GM that is expanding along two pathways,” Wagoner said. “First, we’re identifying core competencies – such as battery research, development and assembly – and integrating these fundamentals into our product development and manufacturing operations. We believe this will become a competitive advantage for GM, and will be critical to GM’s long-term success. Secondly, we’re building a roster of battery suppliers and academic experts from around the globe, and leveraging their specialized abilities to develop battery chemistries and cell designs, as well as future automotive battery engineers.”

Key elements of GM’s advanced battery strategy include:

* Opening the largest automotive battery lab in the United States (31,000 square feet / 3,251 square meters) that will be capable of testing new energy storage system technologies, as well as lithium-ion and nickel-metal hydride batteries, to accelerate the domestic development of advanced battery technology and lead GM’s network of existing labs in Honeoye Falls, N.Y.; Warren, Mich.; Torrance, Calif.; and Mainz-Kastel, Germany. This new battery lab will be located in Michigan, subject to final negotiations with state and local authorities
* Continuing to ramp-up “in-house” battery-development capability by increasing the staff of GM’s global hybrid, electric vehicle and advanced battery organization to several hundred engineers in 2009, including more than 200 currently dedicated to advanced battery technologies
* Joining with the University of Michigan to create a new automotive advanced battery lab in Ann Arbor, Mich., and a specialized curriculum within U of M’s College of Engineering to develop automotive battery engineers
* Continuing to grow and establish a robust lineup of battery suppliers for cell development and manufacturing and battery integration expertise, with companies such as LG Chem, A123Systems, Hitachi Ltd., Compact Power and Cobasys
* Collaborating with government organizations and industry consortia, such as the U.S. Department of Energy; United States Council for Automotive Research; the United States Advanced Battery Consortium LLC; and Electric Power Research Institute to advance the development of hybrids, plug-ins and electric vehicles, and related electric infrastructure to support those vehicles

Energy alternatives and advanced technologies that reduce dependency on petroleum, improve fuel economy and reduce emissions are the keys to developing sustainable transportation. GM is pursuing several options to best meet the varied needs of customers around the world – from advanced gasoline, diesel and biofuel technology to electrically assisted vehicles such as hybrids, plug-in hybrids and – ultimately -electrically driven extended-range electric vehicles and hydrogen fuel cell vehicles. GM believes that electrically driven vehicles, based on battery and hydrogen fuel cell technology, offer the best long-term solution for providing sustainable personal transportation.

In June 2008, the GM Board of Directors approved the Chevrolet Volt program and Voltec™ propulsion system for production starting in late 2010. For trips of up to 40 miles, the Volt is powered by electricity from the grid and stored in its lithium-ion battery pack. Beyond 40 miles, a small engine-generator creates additional electricity to extend the range of the Volt several hundred additional miles. The development of the Volt’s 16 kWh T-shaped lithium-ion battery, which is roughly 6 feet long (1.8 meters) and weighs nearly 400 pounds (181 kg), is key to the Volt’s success. The production-intent design was revealed in September 2008.

General Motors Corp. (NYSE: GM), the world’s largest automaker, has been the annual global industry sales leader for 77 years. Founded in 1908, GM today employs about 252,000 people around the world. With global headquarters in Detroit, GM manufactures its cars and trucks in 34 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM’s OnStar subsidiary is the industry leader in vehicle safety, security and information services. More information on GM can be found at www.gm.com.

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Today is truly a historic one for the US automotive industry, and for the dream of petroleum independence and the Chevy Volt.

After weeks of intense political wrangling and nail-biting financial drama, US President George Bush has agreed to grant low interest loans to GM and Chrysler.

As he just announced those loans will be sufficient to allow GM and Chrysler to operate until March 31 2009. GM will receive its first $4 billion on December 29th, and an additional $5.4 billion on January 16th 2009. It could get another $4 billion on February 17th if the second half of the TARP is released.

Bush said normally he wouldn’t have intervened and would have allowed the companies to fail, but cited the current finical crisis as being extenuating circumstances. He determined allowing the automaker to collapse would be devastating to the economy. Bush also agreed with the automakers that a disorderly bankruptcy would cause them to fail and liquidate as consumers wouldn’t buy their cars.

The automakers will be given until March 31, 2009 to prove they can restructure and obtain net positive value, but not necessarily profitability. They must obtain meaningful compensation from labor and debtholders. If they fail to meet those goals, the loans will come due and they will have to file for an orderly chapter 11 bankruptcy.

Government would take non-voting stock in the companies, and there would be limits to executive compensation. The Treasury would oversee the restructuring.

The following specifics have been published by Politico.com:

Binding Terms and Conditions: The binding terms and conditions established by the Treasury will mirror those that were voted favorably by a majority of both Houses of Congress, including:
—Firms must provide warrants for non-voting stock.
—Firms must accept limits on executive compensation and eliminate perks such as corporate jets.
—Debt owed to the government would be senior to other debts, to the extent permitted by law.
—Firms must allow the government to examine their books and records.
—Firms must report and the government has the power to block any large transactions (> $100 M).
—Firms must comply with applicable Federal fuel efficiency and emissions requirements.
—Firms must not issue new dividends while they owe government debt.

Targets: The terms and conditions established by Treasury will include additional targets that were the subject of Congressional negotiations but did not come to a vote, including:

—Reduce debts by 2/3 via a debt for equity exchange.
—Make one-half of VEBA payments in the form of stock.
—Eliminate the jobs bank.
—Work rules that are competitive with transplant auto manufacturers by 12/31/09.
—Wages that are competitive with those of transplant auto manufacturers by 12/31/09.

The drama of the end game seems to be picking up steam. Despite early reports that the Bush administration would announce loan plans to GM by Wednesday, still no word. Most recently, White House press secretary Dana Perino said “there’s nothing new on the auto front.”

President Bush discussed the topic on Wednesday on a Fox News interview and said the following:
“I’m thinking through, you know, it needs to get done relatively soon. I’m looking at all options. Two principles by which I’m making this decision is … a disorganized failure, disorganized bankruptcy or disorderly bankruptcy would cause, could cause great harm to the economy — beyond that which we’re now witnessing, and that concerns me. And the other point is that … I’m not interested in, in really putting good money after bad, so it’s … an issue that I’m thinking through.” (Reuters)

Chrysler announced it will be shutting down all vehicle production at all of its 30 plants beginning this Friday for a period ending no sooner than January 19th. As we’ve heard GM has had to shut down construction of the Volt engine plant.

However, a senior GM executive stated that GM will continue efforts to build the Volt even if the government loans don’t come through. This person said “although we are temporarily absolutely stopping all work on everything, the Volt will be out as originally scheduled.”

Reportedly there are plans in place such that even if GM goes into bankruptcy it will still have funds set aside to carry the Volt to production. It was noted that even if the Flint factory doesn’t get built in time, the 1.4 L engine generator could be sourced from overseas. (CNN)

Sources familiar with the White House discussions advise me though that the bailout negotiations are progressing and because there is “no playbook for this” it takes time. Those sources reassure us that a conclusion will be coming soon.

Furthermore new reports indicate that Chrysler is attempting to revive merger discussions with GM again in an effort to prove to the government they are serious about restructuring. GM has denied this.

The devil continues to be in the details of the democrat-written bill that will use government funds to allow GM and Chrysler to survive until next March. A draft was presented by the top Democrats to the White House on Monday night.

The bill will be called the Auto Industry Financing and Restructuring Act, and a draft copy has leaked into the press.

One thing that appears to be final is the amount, $15 billion, which will go to the automakers out of the retooling fund already appropriated.

It calls for the creation of a single individual to be appointed by Bush and so-called the car czar. That person will oversee and help negotiate the restructuring effort and be able to review any expenditure of greater than $25 million.

The bill also calls for the government to receive stock in the automakers worth 20% of the loans, and limits executive compensation. There’s even a clause requiring a study as to whether the automakers could build transit vehicles.

Nancy Pelosi when speaking about the bill late Monday said “We call this a barbershop. Everyone is getting haircuts, in terms of the conditions,” referring to the shaving of dollars owed to them by creditors as well as contract guarantees from the autoworkers.

The White House has expressed concern that the bill inst tough enough on the automakers. There are fears that it may not offer taxpayers enough protection and may allow companies that cannot demonstrate long-term viability to still get loans. Since loans could be given up until March 31 it might not be possible for GM to show that it has achieved sufficient restructuring by that date. Think about how long it might realistically take to sell Saab or shut down Saturn for example.

Outspoken Senate Finance Committee member Bob Corker noted that the bill “lacked teeth” and should accomplish the same thing as bankruptcy would only without the detrimental stigma. As it stands, he said he wouldn’t support the bill.

Negotiations on the draft are to continue with the hope that a vote could be taken as early as Wednesday, but whether it can avoid a Senate filibuster is still far from clear. It still remains possible that the auto companies will not get government loans.

Source (Wall Street Journal)

In the next round of the fight for their lives, the Detroit 3 automakers will be submitting plans for their viability to the US government today. The plans are expected to be delivered at the close of the stock market. There will reportedly be a short version for public consumption and a long version for Congress, but some lawmakers are expressing concerns that proprietary competitive information might be at risk of being leaked.

Hearings with the 3 CEOs to review those plans are scheduled for Thursday before the Senate Banking Committee and Friday before the House Financial Services Committee.

Congress could then convene for one last lame duck session next Monday December 8th for debate and voting whether or not to immediately approval the $25 billion loans for any or all of the 3 companies.

Key components speculated about the GM plan are a reduction in debt burden by exchanging debt for equity with lenders, a reduction in brand number with Saturn, Pontiac, Saab, and Hummer at risk, and concessions from the UAW to end pay for terminated workers and reductions in retiree healthcare benefit. Of particular interest to us will be more details on how GM intends to roll out advanced technology fuel efficient vehicles like the Chevy Volt.

If Congress decides not to loan GM the money, then Chapter 11 bankruptcy might have to take place, at which point CEO Rick Wagoner would be replaced potentially with CFO Fritz Henderson.

Furthermore, November auto sales, projected to be 25% less than last year are also due out today.

It was just reported that Mr. Wagoner will be traveling to Capitol Hill, not by jet, but by driving a Hybrid Chevy Malibu.

Still no word on whether the Volt will be there. I asked a GM spokesperson who said he would keep us posted and that “it was a good idea.”

The end game is upon us.

Source (Automotive News) and (Wall Street Journal)

[UPDATE: Post changed to indicate GMs CEO will be going to Capital Hill in a Hybrid Malibu]

On December 2nd, GM will submit its plan for viability to the US government, which if accepted will result in a bridge loan for the automaker.

Congress also requires that in addition to demonstrating profitability, the plan describe how the loan will enable GM to “expand production of advanced technology fuel efficient vehicles.”

Certainly the Chevy Volt represents GM’s most important effort in that regard. However, due to the cost of the lithium ion battery of about $10,000 – $15,000 per car , GM has stated it wont be able to make a profit at a cost of $40,000 per car.

How can these two opposing attributes be reconciled?

An idea first put forth by Phil Toney (aka Nasaman) here on GM-Volt.com was by leveraging governmental fleet sales.

Phil, a semi-retired NASA engineer, noted that the US government’s way out of the Great Depression and World War II was through enlisting US automakers to build war machinery. He proposed that an organization known as the GSA which is responsible for procuring government vehicles, be immediately legislated to buy massive quantities of Chevy Volts to replace the current government fleet.

I support this proposition with the following additions.

These Chevy Volts should be sold to the government at premium and without a battery warranty. Each vehicle should be sold at a profit. And in so doing, and assuming sufficient battery pack quantities can be produced, they could be released earlier than the November 2010 deadline.

As well, supportive governments of the G8, and US utility companies should also be permitted to purchase these fleet Volts under the same constraints.

The result of this action could lead to contracts resulting in the sale of more than 100,000 Chevy Volts. Indeed, the current US government vehicle fleet amounts to greater than 600,000 cars.

Not only will this effort help ensure GM’s viability but it will help vigorously propel the US towards petroleum independence.

It will act as a stimulus for the eventual electrification of the entire US automotive fleet, will enable large scale public exposure to these US-made vehicles, and permit extensive field testing. Furthermore it well expedite economy of scale cost-reduction for large format lithium ion batteries, and make these cars more affordable for the public.

As Phil writes, “it worked in the 30’s & 40’s ….in fact, the US rose from a desperate, financially-anemic economy in the 30’s to the world’s strongest economy after WWII!!! ….due primarily, I believe, to the multi-billion dollar government contracts placed with the big 3 for the machinery of war! We know it works. So let’s do it again!!!”

Since the government is already spending billions on bad assets, how about a few billion on good assets!

I have emailed this proposition and post to the highest-ranking GM executives I have access to, and have phoned my Representative and Senator.  If you too support this idea, cut, paste, and fax this post to your Senators and Representatives. The hour is getting late.