GM-VOLT : Chevy Volt Electric Car Site

 

One month ago Chrysler was given until today to restructure all of its debt and merge with Fiat. This was not to be the case. President Obama announced that Chrysler will move to file for bankruptcy shortly. It is expected the process will be swift and surgical with a new Chrysler emerging within 30 to 60 days.

Some of Chrysler’s bondholders had refused to accept the government’s offer of $2 billion in cash, or an even higher $2.25 billion in exchange for $6.9 billion in debt. The union had agreed to its concessions.

As such the Auto Task Force will move Chrysler into bankruptcy court where the lenders will be forced to accept the $2 billion.

Chrysler will operate while in bankruptcy using $3.5 billion in government funds. Upon emergence Fiat will take a 20% stake that may rise as milestones are met, and the government will provide up to $4.7 billion in loans to the new Chrysler.

GMAC will operate as Chrysler’s financial arm as Chrysler Financial has been deemed unviable, and will be given additional funds to do so. The government will warranty all Chrysler purchases during this period. Chrysler will operate as usual with no job cuts. In the end, the Union will own 55% of Chrysler, Fiat will own 20%, and the government the rest.

GM has been given until June 1st to restructure all of its debt and produce other changes to achieve viability. Obivously Chrysler’s process will serve as a warning to GM’s debtholders.

Those debtholders have already balked at a proposed 10% stake in the new GM in exchange for equity. The have counterproposed getting a 58% stake in exchange for their $29 billion in outstanding bonds. The union would get 41% and shareholders 1%.

Source (Detroit Free Press)

The media continues to imply that Obama’s Auto Task Force could still be considering slashing the Volt program out of GM’s future, despite multiple assurances we have gotten here, including one from GM vice-Charmain Bob Lutz who told us before “the Volt will survive and prosper.”

Besides us here at GM-Volt.com, other outspoken electric car advocacy groups including Plug-in America and California Cars are concerned.

Felix Kramer of CalCars worries that the Boston Consulting Group (BCG) who is advising the Task Force are actually plug-in skeptics.

“BCG acknowledges a theoretical possibility that the U.S. could make a rapid transition to plug-in vehicles, with GM leading the charge,” wrote Kramer in his newsletter. “But it concludes it probably won’t happen — based, we think, on narrow and short-sighted ways of thinking.”

Jay Friedland of Plug-in America understands “any new technology like the Chevy Volt takes time to become profitable.”

I believe the economic phenomenon of price reduction over time and the importance of Volt technology is well understood by the Task Force.

It may such take the wealthy first adopters to pave the way. “Automakers are now busy making EV and range-extended EV prototypes; the industry is racing to democratize EVs,” writes Elon Musk, CEO of Tesla. “We will get there, but only with help from affluent early adopters.”

Sources familiar with GM’s government negotiations have told GM-Volt.com that the Volt “is untouchable.” This source also notes “the Task Force’s concerns were with the price and cost to GM. As with many first gen technologies, they’re expensive and you can’t pass that on dollar for dollar to the consumer.”

Finally these source said GM is “proceeding at full speed with the Volt and the Task Force knows and supports this.”

Source (New York Times)

The New York Times reports that the Obama administration has asked GM to prepare to enter bankruptcy on June 1st. We have known this would be the plan ever since Obama made his announcement last month, and is expected to occur if bondholders and the UAW did not agree to concessions exchanging money they are owed for equity.

The plan is apparently to have GM enter bankruptcy court on June 1st and then a quick surgical procedure will take place. The good assets like Chevy, Voltec, Cadillac, GMC, and Buick would immediately be sold to a new GM at a government cost of $5 to $7 billion. The bad assets including dead brands, useless factories, and healthcare obligations would sit in court potentially for years in liquidation and at a Government cost of up to $70 billion. In the process too the Government is likely to have to take a loss on its loans so far to GM, something which could only happen in the setting of bankruptcy.  Alternatively the Government could take an equity stake in the new GM in exchange for the loans, effectively nationalizing the company at least until shares could be quickly sold.

Experts agree the new GM could emerge in 2 weeks and that company operations wouldn’t miss a beat. Along for the ride will of course be the Chevy Volt and the whole Voltec program. Then, the new GM would be eligible for the $10.6 billion in advanced technology loans needed to build that Voltec program and all will be well.

There are concerns of course that the UAW and bondholders, angered about being left in the dust, might try to block the process in court, but it seems the Government is confident of winning.

Another fear is if consumers will balk at buying GM products because of this, but keeping the process very brief, Obama’s announcement that the Government will back all of their warranties, and GM’s new consumer confidence program all will help.

Volt still coming November 2010 – don’t miss it.

Source (New York Times)

If at this point any doubts remain, US Treasury Secretory Timothy Geithner went on CBS’ Meet the Press on Sunday and proclaimed “GM is going to be part of this country’s future.”

“We want to see a strong automotive industry emerge from this recession,” he said, also indicating the government needs to assure that GM “can emerge strong enough without having to have government help on an ongoing basis.”

Currently a quick-rinse bankruptcy is not ruled out and CEO Henderson said of the company’s required restructuring “If it can’t be done outside of a bankruptcy process, it will be done within it.”

Some pundits are reporting that all this bankruptcy talk may actually be a high-stakes game of chicken noting Obama to be an avid poker player. The idea is that bondholders and the union will wither to accept concessions in the remaining weeks rather than face the prospect of greater losses in bankruptcy court.

Meanwhile GM presses on with the preview today of a new upcoming vehicle, the 2010 GMC Terrain. The bold radically-styled new truck is based on the same platform as the upcoming Chevy Equinox. Impressively it uses a 2.4 L 4-cylinder gas engine delivering 182 horsepower and achieving a remarkable 30 mpg highway. The sister-car Equinox has already been value-priced at a $23,185. I know, no plug no sale.

The Obama administration believes CEO Fritz Henderson represents change for GM.  White House economic adviser Austan Goolsbee said GM’s new CEO Fritz Henderson was “considering all the various options to make it a viable plan going forward and to avoid an uncontrolled liquidation,” and that “it’s clear he’s embracing a change of direction and they’re trying to work on a viable plan.”

“The key thing the president is trying to do there is avoid an uncontrolled liquidation of these companies … but at the same time not turn companies into wards of the state that can’t live except for getting an allowance from the government,” the adviser said. “They’ve got to be viable enterprises.”

With at least 5 of the 60 days already gone in which GM has to convince bondholders and the UAW to accept concessions, the fate of a “quick-rinse” bankruptcy cleaving GM into a “bad” liquidated and a “good” surviving company appears increasingly likely.

Former CEO Wagoner had held out against bankruptcy all along claiming it would lead to loss of the company.  Henderson however takes a more open-minded view. He said “If we have to resort to bankruptcy then we’re going to do it fast…there are non-traditional ways to do this but it requires a fair amount of force, will and leverage and we have force, will and leverage.”

I took the liberty of emailing Mr. Henderson my and our GM-Volt.com well wishes. I wrote:

Dear Mr Henderson, Just a note of strong support for you from me and the GM-Volt.com community. We wish you well on your monumental challenge, and believe GM will emerge lean mean and green and we will finally get our Volts. Please let me know if there is anything I and my readership can do to help.

And in a move representing change to me, he responded to my email, something Mr. Wagoner had never done.  He wrote:

Lyle- thanks very much for your support! Best regards. Fritz

Somehow I have a good feeling about this.

Source  (Automotive News) and (Reuters)

Recently there has been a lot of discussion about the Auto Task Force’s evaluation of GM’s business case. A certain paragraph led many to speculate that the Chevy Volt could be in jeopardy in the case of a a likely “clean rinse” or “quick surgical bankruptcy” where GM’s bad assets were cleaved off in bankruptcy court.

Here is that paragraph again:

GM is at least one generation behind Toyota on advanced, “green” powertrain development. In an attempt to leapfrog Toyota, GM has devoted significant resources to the Chevy Volt. While the Volt holds promise, it is currently projected to be much more expensive than its gasoline-fueled peers and will likely need substantial reductions in manufacturing cost in order to become commercially viable.

You may remember I got a direct message from Bob Lutz still GM vice chairman but no longer VP of product development, who told us in a Mr. Spock-like fashion not to worry, “Volt will survive and prosper.”

I have found I couldn’t seem to get a message to Mr. Obama or members of his Auto Task Force, but fortunately Bloomberg.com could.

In a just published report the reporter wrote that the “Chevrolet Volt electric car, called “too expensive” by the Obama administration, won’t be blocked by the government as part of its demands that the automaker cut costs, according to a person familiar with the matter.”

I don’t know who that person is, but they sure are making sense. After all as Lutz said you can’t have a less expensive generation two without a more expensive generation one. Just imagine if people stopped making computers because the first models were too expensive.

The electric car revolution continues…Volts in our driveways November 2010 come hell or highwater!

Source (Bloomberg)