GM CEO Rick Wagoner Tells Obama About the Chevy Volt and Gives Financial Assurances
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GM CEO Rick Wagoner attended a forum with Barack Obama and other automotive executives and academics today at Carnegie Mellon University.
Obama asked automakers how the next President could help them through the current crisis.
Wagoner asked for help with research funding to develop advanced batteries and vehicles.
Per the article:
Wagoner sounded a note of optimism, noting GM’s plan to introduce the plug-in hybrid Chevrolet Volt by 2010 and more advanced research on hydrogen fuel-cells. But he said the researchers developing batteries for hybrids and taking hydrogen power from the lab to the highway need federal research money. And he asked for government help to offset the high costs of newer technologies for consumers — aid that traditionally has come in the form of tax credits.
In other news, after the forum, Wagoner tried to give Reuters some reassuring words about GMs recent steep financial difficulties saying:
“As we’ve said before, we’ve got a very good, solid funding base under any scenario we see, solid through the end of this year. We have a lot of options to fund beyond that.”
Popularity: 40%
Progress on the 2-Mode and 2-Mode Plug-in Saturn VUE
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With all of GMs recent trouble coming from the crashing SUV market, they must be looking forward to the launching of their fuel efficient smaller SUVs. The Saturn VUE is on the verge of morphing into first a strong 2-mode hybrid form launching later this year, and after that a lithium-ion plug-in 2-mode hybrid version. The latter has the potential to be the first mass-produced plug-in hybrid to hit the U.S. market.
The 2-mode VUE is expected to get greater than 50% combined improved fuel efficiency . The plug-in version has the potential for 70 mpg although I have no official figure from GM. The plug-in VUE is a parallel rather than series design, and although capable of going up to 10 miles pure EV, on-board controllers will choose from the ICE, or a low speed or high speed electric motor, depending on what is best for the driving conditions of that moment.
I had the chance recently to ask GM’s director of hybrid integration, Mick Bly, some questions about these programs.
How is the 2-mode plug-in VUE program coming along?
We have developmental mules up and running on the plug-in VUE. As we announced we have joined in to two developmental contracts with two suppliers, one being JCS and the other being Cobasys/A123 and we are continuing to work with them. We have a lot of good data over the last year. Bench, lab, supplier, and vehicle data and we’re going to continue to work and decide which path we’re going to take in that particular vehicle program.
Are you pitting the two suppliers against one another with the idea that one will be chosen in the end?
No, what we’ve said is that we are going to develop with two suppliers, and we are probably going to look at others also, and we will make a selection on the best solution for the vehicle and then have one put forward into production, very similar to what were doing for the Volt.
Is that program further along than the Volt at this point?
Yes and no. Its further along in the sense that its getting all the benefits of a vehicle that exists, the VUE. Its further along because the 2-mode front wheel drive program is getting very close to production. That takes a lot of stress off my organization to really focus in on converting over to the lithium-ion plug-in system, the charger, the electronics, and the software unique to that. So yes its much farther in that sense but it still has a lot of integration activity left around the battery itself.
When is the target production for the VUE 2-mode?
The VUE 2-mode will be later this year, 2008. The plug-in as early as 2010.
Besides the fact that its not soon enough, the closest date I can get as to this year’s 2-mode VUE release is "a few months down the road" per a GM spokesperson involved in the launch.
Popularity: 41%
Exclusive: Interview with Ed Peper on Marketing the Chevy Volt
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I just had the chance to interview Ed Peper, Chevrolet brand manager, and some of his team members, John Hughes, Carolyn Normandin, and Steve Wagg about bringing the Volt to market. Unless other initials occur, the responses are from Mr. Peper.
What is your job in GM?
I’m responsible for all the marketing, advertising, promotion, relation to production development and also just had sales added to my responsibility. So just about anything having to do with the Chevy brand myself or my team is involved.
Does that involve Chevrolet internationally?
No. I’m responsible for the US market. There are 4 major regions in the world for GM in a lot of big countries. I’m part of the global Chevy council that meets and talks probably once a month and we discuss all the issues that are germane to us all and how we can help each other with common practices.
That’s especially important as Chevy is the fastest growing global brand right now. Some of our brands do cross different regional boundaries.
When the Volt concept first arrived did you guys know right from the start that you wanted to make it a Chevrolet or did that come later after some initial discussion?
We knew right from the beginning it was going to be a Chevrolet. Prior to the Volt happening we really changed the direction of our brand. We want it to stand for fuel economy as well as the multiple fuel solutions that we offer. That would be great mileage on current vehicles, E85, and hybrid products and also the Volt and hydrogen fuel cell vehicles. We developed this whole campaign, our fuel solutions campaign going from gas friendly to gas free and all of us in leadership in GM felt as the volume brand for the company we had to make a huge statement, not with a smaller brand or a smaller division, we needed to make it with the biggest division. It was very intentional that Chevrolet got the Volt. The other thing is too we’ve got to find a way to really produce these in high volumes so we can really make a huge difference.
Was the first thought to move Chevy to the fuel economy car and the Volt was the second thought?
Well it was one of many. We have existing technologies already out there right now, but this was one of our gas free technologies this and the hydrogen fuel cell, and were doing that hydrogen fuel cell test now, so we have a couple of different gas free technologies we were working on at the same time.
Even though GM is being open and showing us the Volt program, there are those naysayers that say the Volt is a statement and that GM doesn’t really plan to sell Volts in high volumes. What is your comment about that?
Well I think we’re making a huge investment in this product and we don’t make investments in products that we don’t plan to sell. Eventually we may start with a little lower volume at the beginning as we get it into the marketplace and start seeding it and talking about it and obviously working with folks like you Lyle to help spread the word to other consumers. We want to make this a profitable business for us in the long term, not only the Volt business but the business in general of GM. We don’t make investments like this if were not planning to take it forward and make it work for us. That’s very very very significant.
Some people say its helping to change the image of GM but the real meat and potatoes will be to sell trucks.
For us its definitely going to make a difference as well. We believe its a game changing vehicle for us.
(SW) Its a category buster. When Toyota launched the Prius in the initial years they sold very few of them and they lost a significant amount of money. I’m not suggesting that’s the business model you will see with us, but clearly as you plan for next generations of these vehicles you intend to make it a core mainstream vehicle within your portfolio.
There are lots of electrics out there and lots of hybrid, but no other manufacturer has a vehicle like this that provide consumers with the opportunity or the function of a vehicle like this. So we have a real opportunity for a considerable period of time to be sort of alone in this arena. That’s why I call it a category buster, because your not really competing with electric and your not really competing with hybrids.
Do you have a plan on how to educate the public to understand the car since its so unique in order to make it more readily salable?
Were working on that right now. Were actually doing a lot of work right now to understand in general who the consumer is for this product. Were working with a group that’s based out of Harvard and there a company called Innosight. What their working with us on is developing a jobs-based positioning for Volt. Which means what are the jobs that Volt really needs to handle for the consumers that buy them. On an emotional level, on a social level, on a functional level, what are the jobs that this vehicle must perform and must do well. Were in the process right now. We’ve done a couple of focus groups. We have a lot of data that you and others have provided us. And its going to help us from a marketing standpoint, what things should we talk about, what things shouldn’t we talk about. And how to we best present the category buster. How do we present this in such a way that consumers who are interested will know this is the first of its kind and this will be the best of its kind and it will be the only one of its kind when it hits the market place in 2010.
With respect to volume, any new car that GM makes can only be sold through the dealerships, is that a contractual obligation?
Yes, the dealers have a legal sales of service agreement with us that’s a binding agreement. They are the only ones that can sell new vehicle through their outlet.
So GM cannot sell directly to the consumer over the Internet?
No sir, we may get people interested and they may wish to communicate with the dealer over the Internet but ultimately that sale has to take place at the dealership.
About how may Chevy dealers are out there?
Around 3800.
How might you distribute these vehicles to those dealers initially?
I think there is going to be specialized service training. Many times what we do for example with certain brands like Corvette, not every Chevrolet dealer sells Corvettes because there’s an enormous amount of training that has to be done to service those vehicles. This could very much be like that. If someone’s not trained and they’re not able to fix the potential problems or issue with VOLT they probably wont be getting any.
(SH) That’s one of the benefits of having this branded a Chevrolet is the vast distribution channel that exists and the service support that exists within that channel. But as Ed mentioned there will be prerequisite for the dealers prior to them being able to sell the new Chevy Volt. That will be of course service training and sales training. We want to make sure they are able to understand how the car operates completely and totally. But also if there are any issues technically they know how to address them swiftly. There may also be some required tools and such. The whole idea is to make sure that our entire sales and service organization is at a high level of readiness for this prior to the arrival of the product. That part of the whole experience to make sure that when the product gets here the support system is in place.
(CN) There’s a very very strong history of that. For example the hybrids that are out there now have a special battery. So before a dealer could get a hybrid that dealer would have to have his or her service people go through the training and that is one of the prerequisites.
And it goes beyond our dealer to the first responders and law enforcement and fire department areas as well to make sure that when these vehicles are on the marketplace they’re familiar with then just as they become familiar with our hybrids and our hybrid systems. As well as the Equinox fuel cell and the hydrogen storage that is on that vehicle. We have a very comprehensive plan so that when we go to market not only our dealers are ready but the municipalities are ready as well.
So even though the cars have to be sold at dealers then, GM can still regulate what the dealer has to do to get the car?
There would be certain criteria that we would uniformly apply across all our dealers in an equitable manner. In terms of the requirements, we are going to have to develop them. The dealer has a choice though, they can either do them or not do them. If they don’t do them then they wont get the product.
Are you going to roll the car out gradually considering the huge public demand in light of recent gas prices, though wouldn’t it be great to get a strong initial foothold?
There a lot of considerations that we have to take into play. First off this is new innovation and first off and foremost we want to make sure that the product and the safety and all the key components and elements of the product itself are one hundred percent before we come to market. But also when we do come to market because its new unlike anything we’ve ever done there becomes the requirement for us to train and have service support before we distribute the product there. In some cases the system has a limitation. Its difficult to train 4000 dealers or 8000 technicians over a period of a month or two. So there potentially could be the need to have a regional rollout and go across the country in a somewhat systematic manner. But there’s a number of considerations we have to look at along the way.
Lyle what is your sense in talking with your many many people that they think this vehicle is going to be priced at?
(ME) When it was initially stated that the car would be less than $30,000 you could sense people’s happiness with that. But then as the latest sentiment has moved closer to $40,000 as per Bob Lutz, you can detect some degree of discontent. Certainly I think that at $40,000 there would be a lot less people who would be able to afford it.
All of us would really want to see this car take over the roads, that’s my dream, and obviously the price is going to have to play a role in that somehow. I think people now expect its probably going to be around $35,000.
Do you think that the fact its a four seater could be a hindrance to widespread acceptance of the car?
I think just to start with this is going to be a very nice sedan. I think its good sized to start with. I will tell you that were obviously going to look for other applications for this technology in other products. It could be bigger products. Were still on the drawing board on some of that stuff right now.
Are you thinking about other brands and other sizes of vehicles?
(SH) Yes. And also when you take a look for example at a Civic hybrid. While it does have a bench in the back, that’s not a place where you and I would want to spend a lot of time. So in the scheme of things we don’t see that as a major issue. The idea is that when we take a look at what the vehicle is we keep falling back on the benefits. The gas free range, and no anxiety with the ability to drive it as a regular vehicle. Its not convenient to charge but you still have the ability not to use gas ever. That’s something that’s unique and I think trumps any issue about a three place versus two place second row.
Are you targeting certain markets in the rollout?
We’re still in the planning process. A lot is going to happen here when we meet with Innosight next week . We’re going to go through a lot of this data. Customer clinics and what they perceive to be this jobs based positioning. And then we will roll from there to get a really good marketing positioning for the vehicle. And the we will start developing tactics for the launch of the vehicle. And so it all comes in sequence and we should have a really good plan I’d say in a couple to three months.
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Has GM Increased the Size of the Chevy Volt’s ICE from 1.0 L to 1.4 L, and Cylinders From 3 to 4?
The initial Volt concept showed a 1.0 L three cylinder gasoline engine as the on-board generator. The role of that engine is to keep the battery at a 30% state of charge once 40 EV miles or so had been driven.
More recent discussions with the Volt engineers suggested that the actual engine to be used was not yet finalized. Frank Weber indicated to me that GM would use a "family zero’ engine line but he wouldn’t commit to size or number of cylinders.
A new report cites "rumors" that GM has decided upon a 1.4 L non-turbo 4 cylinder engine for the Volt. The report goes on to indicate that a turbocharged version will be used to power the new Cobalt replacement car.
The engines will be built in Flint to be used on the Volts when they begin to run off the Hamtramck assembly line in late 2010.
Source (MotorTrend )
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GM Requests $7000 Tax Credit to Chevy Volt buyers, McCain Offers GM $5000
GM VP of global program management Jon Lauckner met with a congressional caucus last week and indicated his hopes for government help in getting people to adopt the Volt.
He said:
“What we favor is actually a sliding scale depending on how much battery you have on board. When I talk about $6,000 to $7,000, we’re talking about a battery that’s at least two times the size of a typical conversion plug-in or even a plug-in hybrid that we would offer.”
He argued that early adopters will have to “pay a price premium” for Volts when they first arrive, and so these tax credits will be necessary.
Source (Automotive News, subscription required)
In almost simultaneous news, presidential candidate John McCain, in a speech today, promised an advanced automotive battery prize.
He said the $300 million prize would go to the maker for “the development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars”, and “should deliver a power source at 30 percent of the current costs.”
He also proposed a $5000 tax credit to automakers for each zero-emission vehicle they sell, saying, “for every automaker who can sell a zero-emissions car, we will commit a 5,000 dollar tax credit for each and every customer who buys that car.”
Source (AFP)
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Video: The Latest With Bob Lutz on the Chevy Volt - Photovoltaic Roof After All?
GM vice-chairman Bob Lutz sat down with some bloggers recently and as readers on this blog have pointed out, the videos are on You Tube. This 10 minute segment below had some interesting details about the Volt
Some key points:
1. Lutz alluded that there may be photovoltaic roofs on the Volt after all. A very striking new fact as that has been one item people have requested more than anything else since the concept was first unveiled. I guess GM couldn’t resist the public demand.
2. He confirmed 10,000 Volts on calendar year 2011, a few will slowly ramp out in late 2010. 60,000 Volts in 2012, and the sky is the limits after that
3. He said the Volt will be priced at "just under" $40,000
4. He talked about dealers servicing abilities and said people might have to come in every 3 months to clean out the fuel tank.
Popularity: 47%
Plug-in Cars May Substitute Dependence on Foreign Oil With Dependance on Foreign Batteries
One of the most compelling and important advantages of switching our fleet to plug-in electric cars like the Chevy Volt is being able to break this countries dependence on foreign oil. As oil supplies become tighter and demand increases the detrimental effects on economy and quality of life become clear, as the current oil price crisis reminds us.
However, as a new article point out, the Chevy Volt depends on batteries that are produced and assembled in Asian countries and are purchased from Asian countries. Depending on which pack maker GM chooses for the Volt, its batteries will be made either in Korea or China.
When lithium-ion batteries were first developed, the Japanese firm Sony licensed the technology, as well Asian governments have considered building advanced batteries a national priority and have greatly funded the development of a vast production infrastructure.
Although some of the engineering and component assembly for the Volts battery packs will occur in the U.S., both Compact Power and A123 are U.S. firms, there is only one U.S. company that both designs and assembles lithium-ion battery packs here and that’s Indiana-based EnerDel.
EnerDel has a contract to make packs for Norwegian automaker Th!nk and has recently demonstrated a functional 26kWh pack in a vehicle.
It is estimated that the Volts battery pack will "likely will cost more than $10,000 per vehicle," and this concerns US automakers who are forced to shop for the most expense part of their new technology cars from Asian manufacturers. Toyota has their own joint battery venture Matsushita Electric to produce advanced batteries.
There are also some experts who believe the world’s lithium supply might be insufficient for widespread automotive use, but that assertion remains controversial.
So although we may narrowly be able to escape the impending doom of dependence on Middle East oil, will we be simply substituting for a similar problem of dependence on Asian batteries?
Source (Detroit Press )
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GM Pauses on Future Truck Development as it Faces Unprecedented Economic Challenges
In following the Volt enthusiastically, one cannot help being struck by the significance of GM’s current financial challenges.
The company had been in the midst of a turnaround effort when VOLT was first introduced. Since then many significant economic hurdles have been presented. Not the least of which is the rapidly slumping sale of trucks and SUVs taking place across the USA in response to $4 gasoline. Trucks have long been GM’s dominant product accounting for a significant share of their North American revenue.
On June 3rd GM announced they were closing 4 truck and SUV plants, and considering the sale of Hummer. Now we find out they have put future product development for trucks and SUVs on hold. The carmaker has shifted significant engineering and development forces from truck building to car building in the hopes of better serving the rapidly shifting consumer marketplace. They are also developing plans on how to expand the E-flex portfolio for which the VOLT is only the beginning.
GM’s stock has reached its lowest level since 1982 as the company faces the prospects of needing to borrow as much as $10 billion at a time that its credit rating has also just been dropped. Further economic losses are also being induced by the fact that trucks being returned from leases suddenly have significant lower residual values. This while no profit has been made since 2004, and cash is being burned to the tune of $1 billion per month. GM started this quarter with about $24 billion in reserve but needs from $10 - $15 billion to operate.
There is talk of shedding brands and selling assets. GMs’ market value is nearly that Chrysler had reached when it was bought by Cerberus.
The time has come my fellow Americans, support GM now in these tough days, and help them bring the VOLT to market.
Source (WSJ ), (Detroit Press ), and (CNN )
Popularity: 41%
Lutz: GM to Build 10,000 Volts in First Year and 60,000 in Second Year
Besides price, another question that we often debate is how many Chevy Volts does GM actually plan to build.
Since the concept was first announced in January 2007, three numbers that come up in the press most often are 10,000, 60,000, and 100,000.
Two of them have come up again.
In discussions I have had with Mr. Lutz and Thomas Stephens, GM VP of powertrain, a lot of discussion has gone into deciding on the number for the initial production run. Clearly there must be a balance between the desire to satiate public demand and the risk management of pouring out too many cars using revolutionary drivetrain technology.
It seems like since Volt production intention was announced, GM has settled on some figures.
GM vice-chair Bob Lutz had a blogger dinner and members of the CarDomain Blog were in attendance.
Not going into too much detail they write:
“They (GM) are expecting to build and sell 10,000 (Chevy Volts) in 2011 and 60,000 in 2012.”
I was able to confirm and clarify this statement with Dee Allen who was also in attendance and is GM director of marketing communications.
Dee told me “Bob said the first 12 months of production (beginning in 2010) would be around 10k, but in second year 60k would be more like it.”
So there you have it. Now, who will be those lucky first 10,000 ?
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Lutz: $40,000 is Breakeven Price for the Chevy Volt and First Generation Will Not Make Money For GM
A new interview with Bob Lutz taking place yesterday has been published in the Seattle Times. The article outlines GMs plans for the Chevy Volt as well as electric cars in general and contains some interesting comments from GMs vice-chairman and product czar.
Lutz indicated his enthusiasm for electric cars saying “we believe profoundly in the electrification of the automobile,” and he voted for his favorite source of energy to charge those cars saying, “the only real option is nuclear energy.”
He took his customary jab at the Japanese automakers vowing “for the first time, our well-thought-of Asian competitors will be left in the dust.”
Finally he let the cat out of the bag. We have been wondering and speculating about what the Volt might cost. Although GM hasn’t made the expected MRSP public Lutz seemed to acknowledge what GM’s breakeven price for it will be.
Although he is not directly quoted, the source article contains the following quote:
“Lutz said the first-generation Volt will retail for about $40,000 and generate no profit for GM. The company hopes to make money as it rolls out later versions of the vehicle and other plug-in models.”
Source (Seattle Times)
Popularity: 58%
Who Will Buy a Chevy Volt?
Now that GM has approved production of the Chevy Volt, they can begin to focus on what to us may seem obvious. Who will buy the Chevy Volt?
Clearly, I, and the nearly 30,000 people on our waitlist already hope to do so, assuming it is within our means. But since around 15 million new cars are sold per year in the U.S., aside from the quantity actually produced, how many could they sell?
Price point is important, but should we really expect GM to lose money on them especially when times are as hard as they are?
In a recent statement, GM North America president Troy Clarke admitted GM is placing a substantial corporate bet on the Chevrolet Volt.
He said “We think the Volt is a very well-targeted vehicle — right segment, right technology, right time frame. Full speed ahead.”
In other comments at the PHEV conference Clarke also said:
“We want the Chevy Volt to be a commercial success … a volume product. Yes, we want to make an environmental technology statement. But, we also want a car that sells and that people aspire to own.”
He also went on to say this:
“We’re doing research now on who our Volt customers are likely to be, and what their expectations are for an extended range electric vehicle. And, we’re taking those needs into account as we develop the vehicle. For example, most consumers wouldn’t sacrifice a radio for more electric range… so neither will we. We’re actually working with our supplier to find ways to lower the amount of electricity the Volt’s radio will use. We’re creating a vehicle and a business model that will work … and we want to make as few sacrifices as possible, because in the long run, we believe it will lead to even more enthusiasm for the Volt.
Then, we need to build on our positive electric vehicle momentum so that the excitement and pride around the Volt transcends the vehicle, to impact the Chevrolet brand … and eventually impacts the entire company. We want consumers to see the Volt as the game changer it is not only for our business, but for the way the world drives. Once they do, we can build on that success with other creative E-Flex models – but one step at a time.”
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Lutz: Almost No Reasonable Doubt Chevy Volt Will Work as Planned
Reuters just published a report outlining an interview with Bob Lutz today on the Chevy Volt.
GM vice-chairman Bob Lutz continued to exude confidence that the Chevy Volt engineering should work out as planned, with a battery supplier to be named shortly.
Lutz said “I would say there’s almost no reasonable doubt in our minds anymore that this is going to work.”
He also confirmed the early Volt prototypes were achieving the electric range GM had hoped for, stating “they’ve routinely had it to the high 30s, low 40s and they go up hills with it and everything”
Lutz also talked more about his test drives of the prototype, continuing to expand of the silent theme of electric drive noting “it never shifts and you just scream along in total silence.”
Further he admitted that GM has yet to fully work out the transition from pure-EV to combustion- powered range extension, “it all works real well, it’s just that the transition from battery power to the internal combustion. They said it’s still noisy and it’s a little rough. But heck, we’ve got a little more than a year and a half to work on that.”
Finally he took a shot at Toyota’s apparent recent turnaround in attitude toward lithium-ion batteries declaring “they (Toyota) told the world that GM was taking a huge risk, that lithium ion batteries were prone to explode and that we were putting our customers at risk and that they would stay with the tried and true. When it comes to Toyota, let me tell you, the press has a short memory.”
Source (Reuters)
Popularity: 58%
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