GM-VOLT : Chevy Volt Electric Car Site

I had the chance to interview Jim Woolsey, the former CIA Director, who has long been an active proponent of reducing US oil dependence.  He is also one of the 17 members of the Chevrolet Volt advisory board, who along with me has been living with a captured test fleet Chevrolet Volt.

What is your present occupation and activities?
I’m a venture capital partner in a venture capital fund in Silicon Valley, Vantage Point, and I look into start up companies for them in the clean-tech space which is renewable energy and energy security and water purification.

I look for startups that are particularly creative even if they don’t meet all the criteria one would look for in a sound investment, looking especially for ones with creative technology. I found Tesla for them back five six years ago when it was about eight to ten people in a garage.

I found them through a friend who is one of my co-authors, Chelsea Sexton. She and her husband met me at a speech I gave in Southern California back then and I said something about batteries not quite being ready for electric vehicles. She said ‘you’re wrong about the batteries’, and took me a month or so later to Tesla. You can’t always come up with investments through those sorts of contacts but that’s one in which the electric vehicle community actually introduces an EV company to the venture capital world. Once we looked into it Vantage Point decided to invest in it.

Are you one of the founders of the firm?
No. Vantage Point has been around for years. I am a part-time partner for about three and a half years.

But you’ve been particularly interested in this space for much longer than a few years?
Oh Yeah. Ive been interested in doing something about oil since October 1973 when I was general counsel of the Senate Armed Services Committee and I was late to run an important hearing because it was the middle of the Yom Kippur war and the Saudi’s had cut off our oil and I got stuck in a gas line at a gas station for several hours. I remember sitting there seething about it then and I’ve been interested in this space in one way or another; biofuel, electricity, efficiency of engines since then.

I understand you were the director of the CIA for several years; would you say that work opened your eyes to more concerns about energy security and energy dependence than other things you’ve done?
Well I was in the government five times and four of them Presidential appointments in the executive branch, two Republican, and two Democratic administrations and all of it related to national security. I’ve been thinking that our oil dependence is a serious security problem since 73. I wrote a piece called ‘New Petroleum’ about moving towards biofuels, to a Senator Richard Luger back in 1999 in foreign affairs. So this has been a subject that I am especially concerned about but I think it’s fair to say that beginning with the Iranian revolution in 1979 and with each terrorist attack or incident whether its hostage seizing or 9-11 or anything else that has come out of the Middle East, it just doubly underlines how important it is that we not be dependent on oil for transportation. You do not deal with this by just buying less foreign oil.

The only thing you do by drilling more domestically is you help to balance the payments, and that’s not negligible. We borrow a billion dollars a day to import oil and if we cut our imports by ten percent, through efficiency or biofuels or electricity, the Saudis and their colleagues in OPEC will just pump a million barrels of oil a day less to keep the price jacked up. They already are pumping slightly less per day than they did in the early 1970s. World demand for oil has certainly gone up but during that time they got close to 80 percent of the world’s reserves and they (OPEC) are only producing about 40 percent of the world’s oil each day, and the reason they withhold so much from the market is to keep the price up and keep control of the market.

We’re not going to change the dominance that they can create with several dollars barrel oil that they sell for eighty. By us being able to produce oil for about 50 to 60 dollars per barrel, we’re not in any terms going to halt or to interfere with their cartel operation just by making moderate reduction in the amount of oil we use. If we try to do it regionally if we buy less from the Saudis and more from Norway then somebody else will just buy less form Norway and more from the Saudis.

So an awful lot of the solutions that people come up with have almost nothing to do with the problem of oil dependence.

Cap and trade may be a reasonable way to eliminate emissions from power plants but it has virtually nothing to do with oil because a dollar a ton of CO2 price is a penny a gallon at the pump.
A lot of people get enthusiastic about nuclear power or wind and cleaning up our emissions from power plants and that’s important, those are some of the way to do it, but they don’t have anything to do with oil dependence. Since only about 1 percent of our electricity comes from oil you can switch around between coal and nuclear as much as you want and not do anything about our oil dependence.

So the public debate insofar as it’s been focused on ‘drill baby drill’, cap and trade, and so forth has virtually nothing to do with oil dependence.

We got to go right at it, and I think electrification is an important way to go right at it. Biofuels and efficiency of internal combustion engine are important too.

Besides the financial and national security consequences of oil dependence how to you feel about the concept of peak oil, and do you think the oil supply will become very tight over the next 10 or 20 years especially with China and Indian demand growing?
You’ve got several things going on, one is increasing Indian and Chinese and other demand as a result of those countries getting more prosperous and buying more and more cars. There’s also the possibility of peak oil. The range of disagreement about that is not huge. It’s between whether it’s occurring around now or will occur within the next ten or twenty years. It will be different times in different fields but if you talk about net overall based on what we know, most people think even if we’re not in peak oil now it will be another twenty years max.

That will put pressure on the price, because it doesn’t mean you run out right away but it means that an oil field like the big one in Mexico is past its peak it means cost of production goes up and cost goes up and that looks like its happening in more than a few oil fields round the world.

Looking at the EV early adopters its seems like national security is the main interest but marketing people talk about environmental impact and global warming as motivators. What’s your feeling on that?
I think CO2 is part of the story and quite probably an important part of the story of the risk of producing anthropogenic climate changes, and there are a lot of other things going on as well, it’s a very complex subject. There are very complex models dealing with it, but I don’t think one has to believe that CO2 emissions from largely oil and coal are the entire story in order to be concerned about the amount of CO2 emissions.

Even if cigarette smoking is 50 or 55% creating the risk of lung cancer, and there are other factors, it doesn’t mean we should dash out and start smoking five packs a day.

I think climate change is part of it but I think because the administration and Congress have emphasized the cap and trade so much they’ve really gotten away from doing anything about emissions from oil. They need to focus more on that. They’ve done some positive things like the tax credit on the batteries and some aspects of R&D on biofuels, but they really need a concerted program to go after oil dependence. I think one important part of that is the so-called aromatics that replaced lead to increase the octane in our engines.

About a quarter of what is in your gasoline tank is benzene, toluene, and xylene and those are highly carcinogenic. If you emitted even tiny bits of those form a chemical plant, you would be in deep trouble with the regulatory system but that junk can come out the tailpipes of every car in substantial quantities and it is not effective regulated under US law. EPA has the authority to regulate the aromatics but they haven’t done it for the forty years of the existence of the Clean Air Act.

So there are a lot of reasons to move off oil, and cancer is one. There’s an added cost of 200 billion per year due to health consequence of the aromatics.

We see GM, Nissan and others are producing electric cars finally. Do you feel these companies’ moves and motivations are going to produce a lasting change or do you think the oil industry will try to limit this to an extent?
I think the big danger is not from the international oil companies, it’s from OPEC. The international oil and gas companies don’t really own the oil they produce and some of them including Exxon are very heavily and increasingly selling natural gas. That’s a whole separate issue. Once you get the cleanup of the hydrofracturing water from the gas shale done right I think there’s at least a reasonable opportunity that we could be relying substantially more on natural gas for electricity generation and for transportation both if you end up with open standard flexible fuel vehicles with methanol made from natural gas that you can make now for about eighty cents per gallon. And also even directly putting CNG into vehicles particularly for interstate trucking, since you don’t need a lot of natural gas pumps to do that. I’m not much of a fan of natural gas for the family car. Because you’d have to have natural gas filling stations all over. But for fleet vehicles like city buses and interstate trucking there’s potentially a lot of utility there. A lot of the big international oil and gas companies are pulling a lot of their exploratory and other interests towards gas. But for OPEC and even those countries that do produce gas going to LNG increases the cost and most of those places don’t have pipelines. And in any case they make more money on oil. They control much more of the market to jack prices up anyway they want. So I think the real folks who are solidly opposed to electrification of transportation, biofuels, and efficiency is OPEC and their national oil companies, not so much the internationals.

Do you think OPEC can possibly influence the growth of the EV industry?
Well they’ll do their darnedest with lobbying. Look up the registered law firms, lobbyists, and advertising agencies for the Saudis alone and those OPEC countries that do nothing but pump oil. If you have some institution directly or indirectly speaking for ARAMCO let’s say, in Washington, that’s OPEC governments at work.

Influencing policy in this country?
Oh sure. Absolutely.

Do you think the current efforts of companies like GM and Nissan as real efforts that will change the nature of our automotive fleet, or do you think this is greenwashing?
I think certainly the hydrogen highway business back at the beginning of the decade was greenwashing. But I think EVs are different because we all have access to electricity and more public charging networks will come in and things will get easier. And if you’ve got a garage you got it already.

I think the existence of the electric infrastructure and I think for the new era of EVs for a lot of people even if they very rarely use a vehicle to go more than 30 to 40 miles per day, the range anxiety is always there. That’s one reason why the plugin hybrids and vehicles like the Volt with extended range are so important because you can have confidence that you can stop by any filling station to extend the range. In a Volt three out of four days for the average drive it’s an all-electric vehicle. To be able to have the liquid fuel in the tank in case you have an emergency and you don’t want to have to worry about stopping for an hour and finding a plug, the extended range from the liquid fuel is I think a very important aspect of bringing about change.

Now in time the batteries may get good enough and cheap enough that it won’t matter, and for people who may only use EVs as a second car, or as fast chargers start appearing, this may all go away in a couple of decades, but initially being able to have the liquid fuel extend the range is a really important aspect of the whole thing.

So I guess on a personal level you had been looking forward to getting your Volt?
Absolutely. I also drive a plugin converted Prius with an A123/Hymotion batter and it’s got a bumper sticker on it that has a picture of Bin Laden and it says Bin Laden hates this car.
I have one ready to go for the Volt, and will be even more deserved for the Volt as 40 miles is certainly better than 10 or 15.

Do you have any comments on your experience so far driving the Volt?
Terrific to drive. The panels, gauges, etc. are easy to read and driver-friendly. The 25-50 mile electric range is just right to let you drive all-electric most days, not need a huge battery, and have no range anxiety (because of the liquid fuel). Really looking forward a lot to Volt ffv’s (I understand 2012-ish) so I can use virtually no petroleum products at all.

Bob Lutz, former vice chairman of General Motors retired on May 1st.  I had the pleasure of a one hour exit interview with Mr. Lutz before he left the company.  Much of what he’s said has appeared in several hopefully interesting articles over the last few weeks. Yesterday GM threw a going away party for the 47 year auto veteran.  ”If I see things going wrong, there will be the ghost of Bob Lutz,” he said told party-goers, “and it ain’t going to be friendly.”

Below are his final unpublished comments to me.  Mr. Lutz, though not working at GM anymore will continue to participate in the auto industry.  For now he is writing a book about GM, its downfall, his time there, and includes a chapter about the Volt.  He plans to complete it before the end of the year.  He will also be invited to and will appear at the Volt launch ceremony, the car he made possible.

For those that are really interested, I have included the raw 60 minute total audio conversation between us at the end of the post.

Do you think the consumers will get the benefit of an extended range electric Volt over a pure EV?
Yes.  Because the educated people like yourself and readers of your site will be among the early adopters and they will be telling all their friends.

We’re already telling them.
That’s what I figured, of course.

As the consummate gar guru for combustion cars for decades it sounds like in your heart you are really interested in getting off petroleum.
I am.  Fundamentally one of the appeals, to be totally honest, is to demonstrate General Motors’ technological capability and to reinforce that fact that people were wrong to believe that GM didn’t have advanced technology.  General Motors can do anything it wants to do and can do it better than any other car company in the world.

I truly believe that and the Volt demonstrates that.  And demonstrating that in the face of the then infatuation of America and the American media with that paragon of automotive virtue called the Toyota Motor Company, that was very important to do.  Just draw a line in the sand and say hey there’s only one technology leader in the automobile business and that’s GM.

That was important.  Secondly I fundamentally like electric cars.  As you know I have a battery background from my time at Exide.  I deeply believe in the continued progress of advanced batteries and I am the owner of five Segways and one Vectrix electric scooters. So I personally own more electric mobility devices than most people you know.

You’ve driven the Volt a lot and had it home, Iv’e read.  How do you actually like driving that car?
I love it.  I just absolutely love it.  I think it’s a great car to drive. I’m personally going to get myself on the list for one, no question about it.  No question that I think its the greatest achievement of my career.

How do you see the future of GM?
I think the future looks brilliant.  The company is very streamlined now, it does far less business with itself.

We have a much cleaner balance sheet, we’ve just repaid the government loans.  Im not allowed to say anything about future profitability but we certainly have a justified hope of making some money this year.  We also have a justified hope of doing an IPO in the reasonable future to start replacing government ownership with private ownership again.

But the most important thing is that this company now is 100 percent dedicated to product excellence.  You can see that in all the recent things that we have launched which are all selling extremely well.

That ethic of only the best is good enough because were General Motors and we know how to do the best cars and trucks in the world we just didn’t always have the will or the focus to do it.  We’ve always had the technical means.  Now we’re back at it, I think we’re approaching the top of our game again and Im very very proud of what the guys are putting out and what’s planned for the next few years.

Do you feel Mr. Whitacre is doing good, I know at first he said he knew nothing about the car business?
I feel very good about it because Ed likes to delegate and he’s very quickly figured out who he can delegate to and who not.  Ed is not going to interfere in or meddle with the vehicle development process.  He has delegated that to Tom Stephens, Jon Lauckner, and Ed Wellburn.

Its not that he doesn’t want to know but he asks ‘what is the value in my approving this stuff?’  We say ‘well you’re the CEO.’  He says ‘YeahI know but I’m not a specialist in this stuff, how do I know if this vehicle is going to be great or not?’  We say ‘you don’t but we’ll tell you all about it.’  He says ’you guys know what to do, you know what the rules are. We have to do the world’s best vehicle in each category and we have to make money on it.  I assume since you know it’s the goal you guys are not going to propose a bunch of stuff that’s not the world’s best and wont make money.’  We all said ‘you’re right. ‘ He says, ‘then why do I need to see it?’

Well that’s the way he manages it and I’ll tell you its very very refreshing and I think its going to be very effective for the company, because the creative people are back in charge of product development and that hasn’t been the case around here since the late 60s.

After your retirement to you plan to stay involved in the electrification of the automobile in some manner?
I’d like to.  It depends on what kind of board memberships are offered to me.  I’m certainly not going to start an electric car company.
AUDIO INTERVIEW

As we heard yesterday with its Hawaii utility partnership announcement, GM continues to move forward with its plan to commercialize hydrogen fuel cell vehicles.  The company has spent $1.5 billion and decades of effort in attempting to bring the technology to the mainstream.  GM hopes to make fuel cell vehicles commercially available by 2015.

Just prior to his retirement on May 1st, I had the chance to ask former GM vice chairman Bob Lutz for his thoughts about the technology.  Lutz had previously noted that hydrogen fuel cell backers within GM produced a lot of push back against the Volt in the early days after the concept was first shown.

“There was some resentment from the fuel-cell backers inside the company,”  he said.  ”Because I think they thought they would be the ones to transform the planet and get us off fossil fuels.”

What’s your thoughts on hydrogen fuel cells?
I like the technology. Once again General Motors has demonstrated that it mastered the technology better than anybody else. Our stack is the most efficient our stack of all the fuel cells vehicles that are out there is the most reliable and has the longest life.

We’re getting very close to solving the cost equation to where one could start thinking about mass producing hydrogen fuel cell vehicles at a semi reasonable price. Way more than lithium ion batteries Im sorry to say . But coming down from astronomical figures to merely very high figures.

General Motors will solve this problem faster and better than anybody else.

The big concern is the one I’ve had from the beginning I the lack of distributed infrastructure. Where to you go to fill up your vehicle? With electricity that’s somewhat of a problem in urban areas in that I frequently hear from people living in large cities who say that’s it fine for you to say that you plug in at ahome because you lkive in a private residence but what about us poor guys who live in the cities and have the vehicle in a parking deck?
My answer to that is yes, that is a momentary problem. Parking garages will install metered outlets. Expanding the existing electric distribution network it relatively easy, it is quick and it involves low investment. But getting high pressure hydrogen everywhere is a different story. That involves hundreds of millions of dollars and given the state the country is in right now I don’t see that happening anytime soon.

I still accept I readily accept at some future point the hydrogen fuel cell could be a very viable electric vehicle alternative in that it would generate its own electricity on board, and could at some point compete with battery powered vehicles. But as we sit here right now and for the next five or ten years, the winning concept is going to be the lithium-ion powered electric vehicles with range extension enabled by a small gasoline engine.

That’s my prediction.

The Chevrolet Volt is a 4-seat compact car.  Almost since the day the Volt concept was first unveiled, enthusiasts have dreamed about and suggested GM also move the technology into other types of vehicles.

Indeed over the years GM has illustrated several concepts including the sporty Cadillac Converj, the large form Opel Flextreme GT, and the most recent Volt MPV5.  Yet despite all the enthusiasm and multiple concepts, GM has yet to publicly commit to building another Voltec-powered vehicle besides the Volt.

As part of a recent exit interview, I had the chance to ask former GM vice chairman Bob Lutz why.

What are your feelings about spreading Voltec into other vehicle types? Are you looking at other cars and have there been other models that have been scrapped like the Converj?
I just can’t get into that at this point, but its clear that the whole Voltec architecture is compatible with our whole global compact car architecture. So basically any vehicle in that size class, whether an SUV or a van or an MPV or whatever, could basically pretty easily adopt the Voltec technology.

It could also be scaled up to larger cars like Malibus and Buick Regals and stuff like that. There are no current plans to do any of that. I think what we all want to do is to let us see how this works. Lets start with the Volt. The reason it’s so good to start with the Volt is that Chevrolet is our global brand. So we can sell it around the world as a Chevrolet . Let’s get experience with the technology, let’s see how customers react, let’s see how price competitive it is in the marketplace in terms of the value that customers see in the market.

And finally lets see what happens to fuel prices. If fuel gradually goes to five dollars a gallon I think well see a lot more interest in the Voltec concept.

My point is, Lyle, it could very easily be expanded to other GM vehicles and architecture.

So you need initial feedback on all those levels to make that determination?
Yeah and we can go an awful long way with the Chevrolet Volt before we have to introduce something else.

The first step would be..and I’m dreaming now OK? Let’s say we had to constantly constantly increase capacity. Let’s say we had to put a Volt plant into China and a Volt plant into Europe and we were finally building half a million Volts per year. I think that would be wonderful and if we’re at that level I guess my successors at GM would say ‘hey maybe its time to expand this concept to other vehicles.’

Bob Lutz may have retired on May 1, but my exit interview with him lives on (for a little while anyway).

What factors go into pricing the Volt, and why have you’ve said the car won’t turn a profit?
We have to find that sweet spot between trying to make money and having it at a price where nobody will buy it. We could very easily do that. And coming up with a price where we could break even or not lose too much per unit in the first generation.

Now we obviously have very solid plans on how to get down the cost of the second version and the third version, and these are all being worked on.

How do we get the cost down without in any way diminishing the value of the car in the eyes of the customer? By just doing some more elegant engineering than we did the first time around where we inadvertently did some belt and suspenders stuff because we wanted to move fast. Now as we look back at the car we say ‘gee I wish we’d done his different,’ …’ gee I wish we’d done that different’ because this is a very expensive solution and we could have done that for a lot less money.

Gen two will have all these intelligent cost saving things built in. Ultimately there’s no question that we will make some money on the Volt.

On pricing, its going to be higher than people would normally expect to pay for a car of that size, but on the other hand there’s a federal credit of $7500. Many states are now talking about credits, some cities are talking about credits, and some employers are offering credits, like Google.

So that at the end of the day if somebody has a federal credit, a California credit or whatever state, a major urban credit, and she works for Google, she’ll wind up writing a five thousand dollar check and getting a Volt.

You had once said the cost of the car would include a second battery, because of the warranty, baked into the car. Is that still the case?
We were adopting a very conservative approach at the time. We now think, from our experience with the battery during the life of the car, it is going to be way better than what we initially assumed.
So that very very large provision for battery warranty I think that’s going to give us some daylight for potentially lowering the price a little bit, or potentially making a little money on the car, or how about all of the above.

That’s good news.
Yes it is good news, because our experience with battery aging and thousands of cycle on the battery is actually considerably better than what we had planned.

Achieving a ten year 150,000 mile goal is something it sounds like you’re very confident in now.
Without committing to it being ten year or 150,000 warranty basically we are very very confident in the capability and the life of this battery in all but the hottest climates.

So it could be that in certain very hot climates where people leave this thing in a baking supermarket parking lot all day, these lithium ion batteries, if they get much over 95 or 100 degrees Fahrenheit, they quickly start losing life. So we may have to adjust warrantees, but we really haven’t decided how to do that yet.

Volt Redesign Unveiling September 2008

In this segment I discuss with outgoing GM vice chairman Bob Lutz the topic of Chevy Volt production volumes and expected consumer demand.

You said the volume in the first year of the Volt will be 8000 and many of us fans want to get the country off the oil, and Nissan says they’re going to build 100,000 Leafs. What makes you choose that modest volume?
Its just a ramp up and getting comfortable with the lithium ion battery pack that we’re producing, getting comfortable with the production process and taking it slow to guarantee absolutely perfect quality.

The first model year which will be sort of roughly from December though July or August will be four to five thousand and then again that many in the second half of ’11. And then starting in ’12 that’s when we’ll really crank it up.

My guess is the initial demand for the vehicle will be so high that we will decide to expand capacity as fast as we can and as much as we can. The studies for this are starting, but we have to actually wait until the vehicle is on sale to see what the true world-wide demand is. But right now our production is being laid out for fifty to sixty thousand a year once we’re in full swing which will be the calendar year 2012.

I believe that’s at least fifty percent too low. I believe the true word-wide demand is more like one hundred to one hundred twenty thousand and that may not be enough.

It certainly seems that way to me too but what do I know?
Well but you and I are both doing the same thing, we’re reacting to our gut whereas the official volume estimators look at the size of the car and then they look at the relatively high price for a car that size and they say not many people are going to be willing to pay that much for a car that small just to save a little gasoline.

I say if you look at it that way, you’re right. But we don’t buy cars for rational reasons alone. If we bought cars for just rational reasons there would be no Porsche Motor Company.  We wouldn’t sell a single Corvette, and the Chevrolet Camaro would be a non starter because they’re both stupid cars because you can’t put a lot of people in them.

And its the same thing with something like the Volt. The Volt will be bought partly for rational reasons but at $2.80 gasoline you’ll probably never really get your money back from the fuel savings but that’s not why people buy it. People are going to buy this car because it’s the coolest technology on the planet.

Frankly to me its way sexier than a pure electric.

Do you see the early adopters more that they are interested in the technology? How large do you think the early adopter crowd will be and how many types of people do you think they are?
I think it’s going to be larger than we think.

I think every politician in the country and in most other countries is going to want one, and don’t forget, this is destined to be a global car. The Volt is designed to meet the regulatory requirements of every major nation in the world. It will be available in left hand drive and right hand drive and in terms of lighting and exterior protrusions, pedestrian protection, all of that. It meets every known regulation in every country. The way it is built in Hamtramck, it can be shipped anywhere. So you’re looking at not only at US demand but you’re potentially looking at the global demand including now the world’s largest and the world’s richest automobile market called China.

Its going to be exported to China and it will be available in Australia as a Holden, in Europe as the Opel Ampera. So when you put this worldwide demand together, it’s going to be a lot of cars. As I say everybody who is in show business is going to want one. It s going to completely displace the Toyota Prius as the vehicle of choice in Hollywood. I think every state governor is going to want one too.

There’s just an enourmous latent demand for vehicles of this type.