Can The Volt Save The General?

By Dino P Delellis

Amongst GM employees, aside from the fear of getting a pink paper next week ( or the week after ) speculation is high as to whether the concept vehicle, being called the Volt, is going to be as revolutionary as the hype suggests.

GM, Ford and Chrysler arrayed a huge number of lawyers and much cherished Washington lobbyists to go after California after it decided to introduce a zero emissions rule on part of all car fleets. While GM was fighting California, it was also building an electric car, 10 years ago called the EV1. The state lost, GM breathed a sigh of relief and promptly destroyed all EV1's and sold the patents.

Yep, sold the patents to a MIT. Just kidding. If the patents had been sold to MIT, the car would have been rebuilt and the Toyota Prius hybrid would never have been created. Whoever bought the patents wasn't interested in building an electric car. There is enough anecdotal evidence to suggest the battery patents were purchased by Texaco who has done tremendous work with them since ( NOT ).

Balancing the books, one might claim. Lots of Research and Development costs, nothing to show for it, so sell the technology. It wasn't an objective decision. After an acrimonious battle with the state of California, GM management couldn't get rid of the technology fast enough. A billion dollars later, GM executives didn't stop to think that perhaps core elements could play a critical roll in future transportation technology. They had to wait for the Japanese to prove that similar technology could and would be a huge element in the future of transportation.

So much for the history lesson, this week, we are back at square one watching a video interview with GM's Chief Designer as he discusses the new GM Chevy Volt.

GM has almost entirely "bet the boat" on the new technologies going to market in the electric Chevy Volt. We are sure that GM Detroit Management exactly didn't plan it this way, but their European operations must have seen the writing on the wall many years ago as gas hit 3+ dollars per gallon in europe and continued on through the equivalent $4 dollar mark. With the global credit crunch, increased gas prices and declining sales of the big cash SUV's GM is feeling the pinch like never before. The Volt must become iconic.

GM's response to public outcry shortly after co-jointly winning the lawsuit against California on the grounds that only the federal government had the right to determine zero emission, was to go on a publicity campaign extolling the virtues of their own version of Zero emissions - Hydrogen gas by 2010. Which probably prompted BMW to wake up and create a wonderful Hydrogen Gas vehicle which is already 4-5 years old and in its fourth or fifth refinement. So zip forward to 2008 and GM has backtracked on its Hydrogen promises and is now attempting to leap frog the Toyota Prius with technology that will get a commuter 40 miles of gas free driving on a nightly electrical charge.

According to GM research, many drivers will not need to switch to the gas engine because simply recharging the vehicle via a regular outlet at home overnight will satisfy most of their driving needs. When I first heard this, I thought - What a useless car. Who wants a car that does only 40 miles per charge, but in truth, the car simply switches to the small gas engine at that point and continues its merry way.

On the surface, unless you have significant shareholder shares in an oil company, we all want a Volt. The dream of being able to cross Europe or United States basically on plain cheap electricity without having to pay between 3 and 5 dollars a gallon for gas is a like a dream come true.

So will or can the dream car Volt save the General?

To answer that question, perhaps we should ask - Does GM need saving?

BusinessWeek estimated GM's Liquidity position to be 45 Billion in May of 2005 with a burn rate this year of over a Billion a month here in 2008 ( Boston Herald ). Estimated reserves now stand at about 25 Billion and analysts say that even with the 10 Billion in future cost cutting, GM may need another 10-12 Billion in cash to see their way through to 2010.

Detroit News writes in an article on Oct 14th 2008

GM had access to about $21 billion cash, $5 billion in available credit lines and is raising $5 billion through asset sales and borrowing.

Those cost-cutting moves intensified Monday when GM announced it was closing plants in Grand Rapids and Janesville, Wis. The moves affect about 2,500 hourly workers at plants that produce sport-utility vehicles and parts for pickups and SUVs.

So, since 2005 to 2008, GM and it's fat cat, top heavy management burned thru 25 Billion in cash and part of that was during 2 years of strong sales. The rumour is, that GM is eyeing the cash reserves of Chrysler ( estimated 11 Billion ) to help it through to 2010 when the Chevy Volt and Cruz are expected to help effect a rescue

In an interview given to Business week in the last week of Oct 2008, GM says its expecting to sell about 10,000 Chevy Volts at between 30-40,000 USD each in 2010. So, that's about 3-4 Billion dollars in gross sales with a net of about a 800 Million dollars annually at an estimated 20% profit per vehicle ( my own estimate not theirs )

So, is this innovative car of the 2010 year - Volt just a little, just too late?

I leave that answer up to you, but if I had to make a serious bet with odds, I know which way I would be betting. - 23218

About the Author:

Dino Delellis writes on a number of interesting topics. To see more of the Dino personal journals hop on over to musings of Dino P. Delellis and catch his odd views on the globe at large.