Is General Motors Building A Dream Car Or A Bankruptcy Case?

It appears that General Motors (GM) has fallen in love.  It is committing its future to a plug-in hybrid power plant, and its new beloved does look beautiful.  It promises the dual benefit of virtually unlimited miles per gallon of gasoline if the owner drives only 40 miles before recharging plus offering a standard 300 mile range with refueling available with ordinary, universally available gasoline if so desired.  Yes, if oil prices stay high and especially if they go much higher, the public will buy that proposition.  So GM’s planned Volt, the first production model plug-in hybrid, is morphing into a whole range of vehicles that will virtually redefine General Motors, as described in the news item posted below.

The only problem is that a lot of people outside GM - including the U.S. Department of Energy - say that the lithium-ion battery on which the Volt is based cannot be produced at a cost the public would be willing to pay.  Others say that with volume production, the battery cost will soon come down.  So is GM betting the company on the unproven economics of an unproven battery?   Or is it putting forth a dream so attractive that the U.S. government will be seduced into giving GM a cheap loan to fulfill it?  Will the taxpayers own GM after the Volt - and its offspring - take over the company but fail to make a profit?

Maybe the real deal is that GM knows it has to go bankrupt to escape the uneconomical legacy costs that it cannot shed any other way.  And maybe management is simply designing the most elegant possibly way of going into bankruptcy - by producing a dream car that America will also fall in love with and want to finance, thus giving political cover to the Congress that will have to authorize the take-over of GM.

GM thinks beyond the Volt

The automaker’s electric car isn’t even out of diapers, but General Motors is already thinking about a big new family.

By Peter Valdes-Dapena, CNNMoney.com senior writer

Last Updated: September 18, 2008: 12:52 PM EDT

DETROIT (CNNMoney.com) — The applause hasn’t died down for the new Chevrolet Volt, but General Motors is already planning where the technology for this new electric car can go next.

The Volt, which made its official debut Tuesday, is based on what GM calls the “E-Flex platform.” This new type of vehicle uses high-capacity lithium-ion batteries and will be able to go up to 40 miles on a full charge. If a driver wants to go farther, the car’s small gasoline engine will generate more electricity, allowing trips of over 300 miles.

But that technology doesn’t have to stop with the Volt, according to said Tony Posawatz, vehicle line director for the E-Flex program. Different body styles - wagons or small cars, for instance - and versions styled for different brands are under consideration for a future, improved E-Flex use.

“These are some of the alternatives that are being reviewed, even as we speak, relative to the future beyond Volt,” Posawatz said in an interview with CNNMoney.com after the Volt’s official unveiling in Detroit Tuesday.

He made it clear, though, that any discussions of E-Flex’s future are preliminary. No decisions have been made, but lots of options are on the table.

It’s not too soon for GM to be thinking about this, either, said Bill Pochiluk of the auto industry consulting firm AutomotiveCompass. Transferring the technology won’t be that hard, he said.

“Some of the systems and modules will be directly transferable to other vehicles,” according to Pochiluk. Add to that a much more competitive hybrid electric car market by the time the Volt comes out, he said.

By the summer of 2009, Pochiluk sees Honda and Toyota still dominating the market. But GM will move fast, he predicted, becoming the third biggest hybrid vehicle manufacturer with no one else even close.

Flexing E-Flex

As with any other vehicle platform, different body styles could easily be built on top of the Volt’s engineering. In the same way that the Chevy Cobalt car and HHR wagon are basically the same vehicle underneath while looking completely different, GM could easily put different “top hats,” as they’re called in the industry, on the E-Flex platform.

That would be an easy first step to extending the E-Flex’s market in different directions, Posawatz said. There are already indications that there could be an appetite.

“It’s grown beyond our wildest imaginations, the degree to which people connected to the idea of the car, the spirit of the car,” Posawatz said. “That’s given us a degree of confidence that this could be a family of vehicles in the future.”

Creating the Volt meant engineers had to clear the big hurdles the first time out.

But when you build an electric car that doesn’t have to compromise on utility or performance, Posawatz noted, “it’s easier taking it in different directions.”

The E-Flex powertrain, which is the car’s engine and electric motor, works well in a mid-size sedan carrying four passengers and cargo, so it has the flexibility to accommodate more or less demand for different vehicles, Posawatz said.

“This has a little bit of bandwidth,” Posawatz said. “This can go on a little bit bigger vehicle if necessary.” And it can be scaled down to create more economical versions, he said. With a smaller battery pack, a vehicle might not go as far without needing gasoline. But it would also cost a lot less, an appealing proposition to some.

“There are a number of customers out there that maybe a 20-mile [electric-only range] vehicle would work, and they would still use little to no petroleum,” said Posawatz.

All in on electric

Forgoing the gasoline engine altogether for a shorter-range car is another possibility, Posawatz said, but it’s one that creates problems.

First of all, it just goes against the whole idea of E-Flex. GM believes there’s less of a market for a limited-use vehicle. Why wouldn’t customers want the option (even if they rarely use it) of driving a car farther than batteries alone will take them?

Pochiluk agreed that all-electric cars just aren’t as attractive from a marketing standpoint. People will always be scared of getting stranded. “I think it’s impossible to go without a range extender when you’ve only got 40 miles,” he said.

Another problem is that electric only operation is harder on a vehicle’s battery, according to Posawatz. Repeatedly draining a battery down to near zero, will mean much shorter battery lives, he said.

“We’re only cycling it to a 50% state of charge,” with the E-Flex platform, said Posawatz, “so we’re not beating the crap out of the battery.”

For an automaker with the scope of General Motors, different branding creates many opportunities for the range-extended E-Flex. There will probably be E-Flex vehicles that aren’t Chevrolets. No doubt, Cadillac, Pontiac, Saturn and other GM dealers would love to get their own plug-in vehicles to sell.

But for now, Posawatz is concentrating on just getting the ball in play. “You always have to do the first car right and well.”

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Comment by Rob

2008-12-04 16:20:54

It is a bit off topic, but in a way, anyone can build an electric car! A lot of information on how to build an electric car, including cost cutting measures and design tips, can be found on Frank Didik’s website at: http://www.didik.com/didik_ev.htm. In particular, check out the section entitled “How to Build an Electric Car”, “Didik Turtle or How to build a two person electric vehicle in 14 hours” and “Critical and accurate assessment of electric vehicles”. He is the first to truly mention the pro’s and con’s of electric cars and an excellent history directory of electric cars, starting in the 1800’s. Many years ago, Didik was the found of the Electric Car Society.

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