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The bad news just keeps coming for General Motors (NYSE: GM). The beleaguered auto giant has announced that it will offer 0% financing to help get rid of its growing inventory of inefficient trucks and SUVs, even as it is forced to raise prices due to higher raw material costs. Its once proud Hummer brand is now an albatross that the company is considering unloading. And its market cap of $7.5 billion is lower than not only Toyota (NYSE: TM) but also ailing Ford (NYSE: F) -- GM has lost so much value that a writer at CNNMoney is making the argument that it should be removed from the Dow Jones Industrial Average.
One bright spot for GM has been the Chevy Volt, a hybrid car that has generated considerable excitement in the automotive press. The design of the car is groundbreaking, with a large battery that is recharged by a small gas engine. This is an advance over the popular Toyota Prius and other hybrids, which are essentially gasoline-powered vehicles that use batteries to improve mileage and emissions. With the Volt, scheduled for production for the 2010 model year, GM could claim a real technological advance for the first time in years, and maybe regain some market share.
But there's only one problem: it is highly unlikely that GM will be able to deliver the Volt as promised, according to an Atlantic piece about the car. The article is filled with fascinating details about the ongoing development of the car, especially the frantic pace and rapid innovation required to get the car into production shape. But an unnamed executive told the magazine that this is exactly the problem. The development process has been too compressed, which will force GM to either fail to meet its target date or, worse, to deliver an inferior product. As the executive put it, "They're making a huge mistake."
Ordinarily, it takes years to develop a new car, even with a rapid development schedule. And when new technologies are involved, it takes more time rather than less. For one thing, auto companies need time to test the reliability of a new vehicle. The design of the Volt's most important feature, its lithium-ion battery, is still in flux; in fact, GM is still taking bids for its production, with three manufacturers in competition. This means that if there is a Volt in 2010, it will be a bit of a mystery car, with unknown reliability as it ages.
Another problem with the Volt is its likely cost. Even is the car is a hit, it won't make GM much money. It may even cost GM money on every unit sold, since the company will probably have to subsidize the car for quite some time. Even with a subsidy, though, the car will be expensive for consumers, with a sticker price of at least $35,000, possibly more.
Optimists say that there is much to like about the Volt, even if it experiences a rough start. For one thing, GM is finally doing something to turn the company around. The Volt's development team has been working outside of GM's sluggish bureaucracy and has already made considerable progress. For another, GM is finally ahead of the pack with a new technology.
So even if the company over-promises and under-delivers, as seems likely, the Volt will have served the important purpose of waking GM from its SUV-induced slumber. Of course, that's assuming that the company survives the process.
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Reader Comments (Page 3 of 3)
6-30-2008 @ 2:21AM
Bob Wong said...
Necessity is the mother of invention! Buy American!
6-29-2008 @ 3:34AM
nora said...
they had a perfectly good electric car, and they couldn't wait to get rid of it... all you have to do is watch "who killed the electric car?", and you'll see how the powers that be don't want us to have clean and cheap energy. very frustrating.
6-29-2008 @ 3:47AM
Glenn said...
To many government regulations. If the government would have stayed out of Gen. Mtrs. this would still be the giant of the auto. As a matter, it is the giant overseas. Only North America has the problem. To much government
6-29-2008 @ 4:13AM
Rollando said...
Well... GM and Ford can always give steam technology a try. At least there will be less mechanical moving parts and can burn any flammable liquid for fuel. It does not have to be just gasoline or diesel. One can use moonshine as fuel if one desires. I'm sure they can come up with something far advanced from the old steamers like the Stanleys and Doble.
6-29-2008 @ 4:32AM
Ross said...
If GM does not come out with the volt within 12 months or less they will not be around. They have had a EV car before so what the delay now. Ther is no reason why they can not come up with a car in 6 months. See what big bucks paying CEO and board does, they are brain dead.
6-29-2008 @ 5:34AM
yellowbird84 said...
I would expect nothing less from GM. Hurried, underthought production with an inferior product. That's what they've done for years, and that's why Toyota is the top manufacturer today. By 2010 when the Volt is in production, Toyota will have re-engineered the Prius and will still have the best hybrid on the road.
6-29-2008 @ 6:45AM
Alfred Schrader said...
I have technology in my garage laboratory
worth as much as all of the GM shares.
For example square-wire technology, and
Farad condensers, Graviton, etc.
What is my advantage ? That's easy.
My dad was a German Rocket Scientist from Bavaria.
Al
6-29-2008 @ 6:53AM
ogbobbye said...
I think it will not be that hard for GM to pull this off this is not their first time making a electric car they had one in calif. in the late 90's that was very good but the program was killed for a number of reason and the cars were scrapped ford had one too I believe at the same time check out (who killed the electric car) on DVD
6-29-2008 @ 12:02PM
Fern70 said...
GM cars are #1 in my book. Toyota never mentions how many recalls they have had and you don't hear about them either, to me they are a piece of JUNK. As for the VOLT, it's time for a CHANGE, if you don't like it, don't buy it! There are plenty of people who will like the look and purchase it. Wake up people and purchase an AMERICAN-MADE car and keep your jobs.
7-01-2008 @ 11:05AM
Kugies said...
GM is still #1, Toyota has never revealed all of the recalls they have and keep pushing their products, they are a piece of junk! Buy American-made cars and keep your jobs! The Volt is a huge change for the industry and that's what we need, it will be a huge seller, if you don't like it, don't buy it.
6-29-2008 @ 9:41PM
Bill said...
It's clear the author is not familiar with the technology being used in the Volt.
He talks about batteries catching on fire, but the Volt doesn't use the same "thermal runaway"-prone lithium chemistry as do laptop batteries.
And GM is not developing the batteries - there is a competition among 3rd-party manufacturers to produce the Volt battery.
GM will sell all the Volts it makes, even at $40,000.
With gasoline rapidly approaching $5/gallon in some markets, it can cost literally 10 times more on a per mile basis to run a vehicle on gasoline instead of electricity.