The Volt may be the wave of the future. A link to a New York Times story about GM reducing SUV and truck production by 140,000 units and employee layoffs.

http://www.nytimes.com/2008/04/29/business/29auto.html?_r=1&th&emc=th&oref=slogin

I guess it's true what they say - the fastest way to change is through the change purse. Ok, I think I just made that up. Sorry. ;)

I guess it's true what they say - the fastest way to change is through the change purse. Ok, I think I just made that up. Sorry. ;)

... so you are finally coming out of the closet - good for you! Did you buy shoes to match your purse?

... so you are finally coming out of the closet - good for you! Did you buy shoes to match your purse?

*crickets*

Yesterday, I was talking with the owner of the local GM dealership. His full-sized truck and SUV inventory is huge and also absolutely dead. Zero sales at any price. Our town, filled with hunters, fishermen, snow skiers, and boaters, is prime pickup/SUV territory. No one even wants to take one for a test drive, much less make an offer. He and his fellow dealers are all absolutely screaming at GM to get innovative ultra-high-mileage products like the Volt on the showroom ASAP. Now those are voices GM really listens to.

If GM misses their late 2010 target, our grumbling will pale with that of their dealers.

GM just posted a $3.3 billion loss in the first quarter.

I know there were a lot of reasons why (just read the news) but that's a lot of bread to be loosing. Do you see a quick turn-around? People feeling better and deciding to buy a truck or SUV? I don't.

I can imagine the board members sitting around the table looking at their feet and asking, "What are we going to do?" Obviously they are not in a good situation. In the US the cars are huge and they have to absorb about $1000 of extra labor costs per vehicle compared to their competition, etc. The rest of the world does not look too bad because they have smaller, newer models out and they are doing quite good actually.

However, If someone at the table were to ask, "Any ideas?" I would also probably sit there looking at my feet but since I'm here and it doesn't matter...


I have two major observations:

1) The petroleum car is dead end market. In 50 years you will only be selling them to motor heads and to the rich for ego boosting. Shall we face that reality? Gas and diesel burning cars and trucks are just too dirty, inefficient and the use of this dirty fuel will soon be even more unpredictable and undesirable (kind of like pulling out a cigar at a family a restaurant in the US). Governments will probably be taxing the heck out of gas and diesel in order to make their pollution reduction targets. Speaking of smoking in the US, did anyone notice just how fast that went out of style? If you told me before that the US would turn around so quickly I would have never believed it. I'm afraid (for GM) that this might be a similar situation. I know for one that I will never buy a normal ICE car again.

2) In the past, transportation (cars and trucks) and electrical power generation (the grid) were two separate entities that had no relationship at all. Soon, they will be intimately connected. Some say they will have only a small relationship (dumb plug only) but I see a complete smart grid interconnection where charging stations are an integral part of the national grid. Whatever the relationship, there will be a relationship. Even if the world decides to go to hydrogen. Grid electricity will always be more than 3 times cheaper so plugging in (even if it’s completely automated) will be the norm, not the exception.


If you accept those two concepts there seems to be only one prudent path for GM to take. Make sure it uses it's massive resources (getting smaller every day so it might be a good idea to start soon) to get there first and grab as much market share as they can. They are perfectly positioned to do so. Massive troubles, enormous power and influence and a 1 to 2 year technology advantage with the Volt platform. They better Google or get out. Do you really want the Silicon Valley to take over? Tesla-like companies? Maybe even Ford? If there were a time for massive change, this would be it. How to move forward?

1) Announce a complete reorganization. Declaring bankruptcy might not even be an option. Basically shut the doors, tear down the walls, rebuild and open back up.

2) Declare that GM will lead the electrification movement. The new GM will not only work on cars but also on the smart grid. Almost like a GE Structure. By the way GE is also well positioned from the grid side. If they got together with... GM they could form a consortium that would probably control the world's new energy markets for the next 100 years. GE’s massive electrical experience paired with GMs massive transportation experience. Wow. Of course they would not be allowed to merge as a company because they would be too powerful but a consortium would be just as or more so effective. New smart grid standards, charging standards, software standards, costing, pricing, huge infrastructure build-outs. This is an enormous job. Think it's impossible? How fast did GE switch to become a military equipment company after Pearl Harbor (see fascinating excerpt below)? Exactly. Folks, we are at war. No, not that insignificant one in the Middle East (I mean in a energy perspective not for the unfortunate people involved - very significant) This global energy war is going to be far more disastrous even if a shot is never fired. This is hitting our shores now and it's going to get a lot worse. Perhaps Bush should declare war on oil and get it over with. Remember the war on Drugs? Many were addicted (oil addiction anyone?). He could also steal the thunder from the next President!


Check this out - GM during WW II

“Sloan set his legacy in the first years he was in power. Soon thereafter, the Great Depression hit, and few cars were sold. Then came World War II, during which GM ceased consumer automobile production and manufacturing. And Sloan gave up the company presidency in 1946.
With his financial reforms, for example, he gave the company access to much more cash, which then reduced its need to borrow money or sell equity. He also established a forecasting ability which prevented the firm from being swamped with inventory during economic downturns. The proof of this came during the Great Depression; GM had almost gone bankrupt during a small economic downturn in 1921. However, with Sloan's changes in place, it got through the Great Depression without ever going into the red. If Sloan could teach only one lesson with his book, it would be that every effort by a company must be measured by its return on capital. Prior to his reforms, most activities by GM could not even be measured in this way. However, after he took charge, the company could pare underperforming units and bulk up those divisions that multiplied their investments.”

http://everything2.com/index.pl?node_id=1454388

I think that some of the things that have been mentioned by Texas in the last post are put together pretty well.

I think that one of the major stumbling blocks that exists which is holding back major changes is the controlling demographic. The major demographic that has the power in the US/North America are the baby boomers. These folks have made there money and are now enjoying life for the most part. These people, for the most part, don't want to adapt to major changes. Too many major companies are run by this demographic and they hold too much political power. The younger generations are ready for major changes and are willing to embrace them (for the most part.) It's time that the younger generations started to influence society more as opposed to the older generations.

This is where we need to start. When a dog gets too old there comes a time to put them down.

calgaryvote,

Amen brother, babyboomers had NO vision and just marked their time in most companies, more worried about looking politically correct and propping up affirmative action candidates.

Much of what GM needs to do has already been done. By renegotiating with the unions, and passing long-term liabilities to the unions, the $1,000 cost premium on the big 3's vehicles is gone. Bob Lutz has already reorganized GM's engineering groups, creating a worldwide electric drivetrain division, and putting all focus on developing the E-Flex platform. As I have not heard what Ford and Chrysler are doing, I suspect that GM is well positioned for the future, while the other two aren't.

As a boomer - my two-cents. There a a mini-divide within the baby-boomer generation. Those who graduated high school after 1970 have a different view on cars, energy, etc. than those before. Two reasons -

First, the 1969-and-earlier graduates reached adulthood prior to the Earth Day 1970. If they hit adulthood when cars were still cool, they are more likely to have carried that attitude clear to the present. I see it at the big classic car show here in Redding. Almost all of the enthusiasts graduated in the 1960's.

Cars were suddenly not cool after Earth Day. That's when the first cycling boom suddenly started and all the "cool" kids rode bikes.

Second, the later baby boomers never really had do deal directly with Vietnam - the draft, losing classmates to the war, etc. This left them a little more open to getting beyond the 60's. Those time-specific events really shaped the opinions young adults of that era for life.

When I first saw the Volt concept in renewable energy world's website a month ago, I thought, "Eureka!" Not just that GM was working on a new vehicle, but that they were making an unprecedented bold and aggressive statement of urgency. It was the very "Apollo project" type of attitude that the authors of the recent best-seller Breakthrough (http://www.thebreakthrough.org/breakthroughbook.shtml) said was required in 21st century environmental movement to actually make a difference in the new world. And it isn't because of CAFE standards or EPA mandates. It's Adam Smith's "gentle hand" of the free market giving GM a huge slap in the face that really woke them up.

And the open design process they have adopted is 180 degrees from the 20th century car makers. This is either an incredible act of vision or desparation - (probably both). I mean, do you see any Ford Hyseries forum web sites debating the details of Ford's new plans? Certain factions at GM have realized they have to throw out the rule book on this one. And top management is so desparate, they're actually going for it.

I can't find the link right now, but I recently read how the public utilities are quietly meeting with all the major plug-in hybrid players to begin planning how to make this electric transportation model work. I'm guessing their most frequent call is to the GM team.

FYI, 2010 will be the 100th anniversary of the debut of the Model T. Hopefully, in 2010, we'll be able to proclaim, "The T is dead. Long live the V".

hvacman, nice post.

hvacman,

The only point in your post with which I disagree is your statement that GM yielded to any kind of political or economic pressure to build the Volt. While battery and fuel cell techs have been steadily reducing costs and increasing performance, neither had reached the point at which GM could produce a purely EV or purely fuel cell vehicle.

The tipping point came when the concept of a plug-in serial hybrid with gas/diesel/ethanol range extender was reached. All the political and economic pressure that had been around for decades finally had a path of low resistance. This allowed for plug-in battery packs of 10 to 40 mile range to be acceptable to the marketplace, because the standard gas/diesel/ethanol engines could be used when the batteries ran down. Fortunately for all of us, even when the range extender is running, the regenerative braking system gives the vehicle much greater mileage and performance than the same ICE in a standard vehicle - that miracle alone makes these vehicles a total win.

Without this configuration, we would all be in the same boat as the last few years, eeking out just a little more from our gas/diesel/ethanol vehicles.

Henry made 14,161 model T’s in 1908-09 I am sure GM can do ten times better than that now. Why not 140,000 thousand Volts in the first year? Why they made 220,906 Camaro’s in 1967. Considering the Model T was revolutionary, its production skyrocketed. Using the same curve how many volts would be produced in the following years. http://web.bryant.edu/~ehu/h364proj/fall_98/coppola/prochart.htm

Red HHR