GM Would Rather Bite Than Switch

A proposal to increase US fuel economy standards by a mere 4 percent per year has drawn the ire of GM vice president Bob Lutz. Rather than see this as an opportunity to improve efficiency and build a better company, the near-bankrupt giant automaker has decided it would rather dig in its heels.

GM got a triple dose of bad news this year. Skyrocketing fuel prices sent sales of its road-behemoths plunging. Poor sales and a refusal to accept the need for a change in business strategy sent the company dangerously close to needing a government bailout. Now Toyota is set to pass the Detroit giant next year as the world’s #1 car manufacturer.

And still the stodgy old-guard at GM doesn’t get it. Lutz claimed "As long as [gas] is around $2 per gallon here, people will exercise
their freedom to buy the vehicle they want, V8 engine and all," he
said. "Forcing us to alter the fleets to hit some theoretical average
won’t change what consumers want, or what they’ll buy." Really Bob? The market seems to be saying the opposite.

Basing your business strategy on $2 per gallon fuel is as close to insanity as it gets. Looking at the energy picture worldwide, there is slim chance we can expect fuel prices at $2 for the forseeable future. The U.S. imports nearly 70% of its oil. Conventional oil production is peaking or has peaked in the majority of the world, governments are moving quickly to kick out private oil companies and lock up their remaining resources. Rigs for new offshore drilling are overbooked for years, as companies are forced to drill ever-deeper and more expensive wells. Unconventional sources are gaining steam, but will barely make up for the conventional decline. Biofuels are coming on strong, but need years to scale up. Which leaves us for the moment completely dependent on the unstable Middle East.

All of this ignores the strong possibility of a carbon tax coming down the political pike. Governor Schwarzenegger has committed to addressing the carbon issue. The first salvo in this battle is a lawsuit against the EPA by several states including California to force them to regulate CO2 as a pollutant.

China is buying more automobiles than ever. Consider this fact: If Chinese consumers were to adopt the automobile as strongly as U.S. consumers, China alone would need the entire world’s output of oil to fuel their fleet!

There is a perfect storm brewing to drive up fuel prices and even potentially legislate against oversized and wasteful personal vehicles. Why is it that everyone else can see what is happening, but not the overpaid "smartest guys in the room" at GM??

A four pecent annual mandate is not even enough. GM should be planning to make vehicles which would sell well if fuel were approaching $10 per gallon, which is clearly where it’s headed within 10 years. Lutz claims there is "no technological bag of tricks that enable much better fuel economy
than we have today," he said. "Despite what the alarmists may think, we
don’t have any magic 100-mpg carburetor that we’re holding back because
we’re in bed with the oil companies."


Chrysler already created a concept car which got 70MPG on diesel
without using any hybrid technology. Is GM already declaring failure?
Thay haven’t even tried. They’re busy designing teenage wet-dream cars
like the 2009 Camaro.

The Toyota Prius for 2008 is rumored to be pluggable and get nearly 100MPG. A recent study showed that there is more than enough capacity in the grid to power vehicles plugged in overnight. In fact, if each vehicle were set up as a network node, its battery capacity could even help smooth out fluctuations in the grid and make it more reliable.

Lutz and company should be held fully responsible for their lying and malfeasance. They have grown fat and complacent on U.S. taxpayer-subsidized fuel while the rest of the world has been working hard on the inevitable energy transition. Toyota is about to eat their lunch, and give consumers a choice for a change.

I feel bad about the American workers who will be displaced when GM goes belly-up (as it is almost certain to do). But it’s hard to feel any sympathy at all for morons like Lutz who have not only failed to compete, but failed at leadership as well, by stubbornly digging in their heels and resisting even the most mild encouragements (like a 4% per year mandate) for positive change.

Comments (4 comments)

chery / December 26th, 2006, 2:51 pm / #1

chery is best

Chinese Cars – Chery Geely, Great Wall Motor, Brilliance China, Nanjing MG

Topher / December 28th, 2006, 11:13 am / #2

Lutz is doing what he wants because he feels that, in the end, his advertising agencies will bail him out by pushing the concept of, “the Hummer makes you fashionable and shows you mean business.”

What it really means is that the environment takes a hit and oil companies rake in huge profits off of the Hummer class. I don’t care what Lutz says about, “not being in bed with the oil companies.” He is full of shit. My only fear is that as GM starts to go under in the free market will they turn to the feds for a bailout? I sure hope not, it is the last thing I want my taxes to go to is Hummer Nation.

Adron / December 28th, 2006, 10:26 pm / #3

The cool thing in all this is how the market will (unless the stupid ass Guv’ment bails it out) destroy GM. Toyota will become king of the heap with Honda, Nissan, and a few others not far behind. BMW & Mercedes will simply raise prices and offer some new technological piece.

GM will die. We’ll all be better for it.

Ford might survive at this rate.

Either way, a little pressure here, and little mess there, and a whole shit ton of market pressure that the oblivious Lutz doesn’t seem to get and WHAMMO, we’ll get better cars with better technology that have less environmental impact.

…the real issue in the next 30-40 years though won’t be if they’re clean or not, but where in the hell we’ll put them all. It’s not feasible to build to the demand of cars when there is not inherent cost to road usage (I mean, they’re all “freeways” right!?)

Eventually the costs are really gonna come back to haunt us as we start moving the tried and true mechanisms and real costs of travel must start being born by the actual user and not siphoned off from the top 10% of society as it is in the wealthy nations. Eventually the top 10% won’t really be able to cover it for everyone else as we have for so damn long.

Adron / December 28th, 2006, 10:33 pm / #4

Oh yeah, Topher… btw

Hummer isn’t making any money right now. They’re trying to sell of stock and sell off the cheaper ones matter of fact. It’s one of the primary reasons (along with all the other HUGE vehicles) that have seen demand drop over 80% in the last 2-3 years that is killing of GM.

Also Saturn is losing them shit tons, it has never made money one day of its existence.

… :) gotta love that GM quality. Hopefully America’s standard of living isn’t short behind GM. Socialism sure is creeping in fast. :o

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