DETROIT – While many are predicting an auto industry sales slide this year due to the effects of dismal economic conditions in North America, Robert Lutz, GM’s “car guy” Vice Chairman, sees a rosy future for GM predicated on the introduction of new technologies and growth in emerging world markets.
What troubled Lutz was that a perceived dearth of exciting new product introductions at the recent North American International Auto Show (NAIAS) was a signal that the automakers had scaled back and reduced their commitment to pushing ahead while they waited out a looming financial crisis.
Speaking at the recent Automotive News World Congress, a conference of automotive executives, analysts, media members and others, Lutz asked, “how can you possibly not find any buzz at an auto show that includes so many examples of the world’s most advanced propulsion technology?” He said, referring to the many electrified or lithium ion battery hybrid concept or near production vehicles that were displayed.
He pointed out that the recent auto show held in Detroit featured the new 600 horsepower Chevrolet Corvette ZR-1, a 550 hp Cadillac, and two significant full-size pickup debuts, which were the 2009 Ford F-150 and 2009 Dodge Ram, both offering superior features and better fuel economy on the road. Not mentioned by Lutz were also Hyundai’s debut of its first luxury car, in the $30,000 price range, the new Volkswagen Passat, the 2009 Honda Pilot prototype, and Toyota’s Venza crossover model.
In reference to how the new Dodge Ram pickup was unveiled, driving out of a herd of more than 100 Texas long horn cattle, Lutz said that the “lack of buzz” comments were an example of the media displaying “a heard mentality.”
“Some of (the reporters) complained that in these troubled times of this over dependence on foreign oil and increasing fuel economy standards, dumb old Detroit is still showing nothing but new pickups and gobs of horsepower. How woefully behind the times. Well, that’s not what I see,” Lutz said.
Instead, he said, the auto show demonstrated that the automakers were working hard to field advanced technologies for the near future, while still providing customers with vehicles, including pickup trucks that they need.
“There is plenty of room in the global automotive market for green and mean. The Cadillac CTS V and the Corvette ZR-1, in fact, both captured major awards for best in show and I don’t think we will find much trouble finding people who want to buy them,” Lutz added.
Others still question how General Motors could be taken seriously about advanced technology vehicles, including developing plug-in hybrids, when it showcases vehicles such as the Corvette and the CTS V.
To their credit, changing the habits of the car buying public is a real challenge. The masses are not suddenly going to shift to an alternative means of propulsion.
“Consumer behavior is difficult to change. When it does change, it takes time and a darn good reason,” he said.
One long term factor for change are the new U.S. CAFE standards, passed by Congress in December 2007, that will require automakers to sell a vehicle fleet that averages 35 miles per gallon by 2020. This means that the auto companies will need to convince a lot of consumers to purchase vehicles that achieve well over the target mark to offset bigger vehicles that don’t make the average. Of course, rising fuel costs may do that long before the dreaded CAFE standards kick in.
The proponents of the CAFE laws discount the doom and gloom scenario painted by automakers whose representatives claim that this will be an impossible task. CAFÉ advocates point to Europe where most carmakers line up of cars already achieve 35 mpg or better. Lutz countered that, “the European fleet is dictated by the price of gasoline in Europe, which at current exchange rates, happens to be about $8 a gallon.”
Many believe that the most effective way to change consumer behavior in the U.S. to more reflect European views is to raise the gasoline tax to the European rates. Then, as consumers started to pay more and more for fuel, they would naturally transition to smaller, more efficient vehicles.
While acknowledging that this would work, Lutz was careful to distance himself from any suggestion that the U.S. raise taxes on gasoline. “I am not advocating tax hikes or calling for higher fuel prices. I’m just explaining the difference between the European fleet and our own,” Lutz said.
Ironically, this could also mean a profit windfall for the American automakers. Its European customers are willing to pay premium prices for fuel saving, smaller cars. In Germany, GM sells an Opel Astra sedan, fully loaded, for more than $30,000. Yet, in North America, a comparable, Chevrolet Cobalt is considered an entry-level vehicle with a sticker price of about $13,000. GM has problems selling the Cobalt while the Astra is one of Europe’s best selling vehicles in its class.
“America is the land of the big truck, the big horse… and very often, the big American,” Lutz joked.
He ignored the one technology that the majority of European car buyers have chosen to reduce fuel consumption, diesel. These new diesel engines return over 30% better mileage than a comparable gasoline engine. Even though popular, diesel-powered European versions of GM cars are brisk sellers, Lutz embraces the corporate party line that says, the best route to reducing petroleum use in the near term is increasing the availability and usage of E85 – a fuel that is 85 percent ethanol and 15 percent gasoline. While the direct costs and social costs of so-called biofuels are being reevaluated in Europe, GM and others, are touting ethanol as an immediate panacea. Of course, it’s not really available to consumers in any meaningful way, even though millions of cars are capable of burning ethanol.
“We already have millions of flexible fuel vehicles on the road right now – more than 6 million in the U.S. alone,” Lutz said. “These vehicles could be running on ethanol if more were readily available.
“In fact, if all the flex fuel vehicles that GM, Ford and Chrysler have committed to have on the road by 2020, if they were all to run on ethanol, we could displace 29 billion gallons of gasoline annually, or 18 percent of the projected petroleum usage at that time. If all manufacturers in the U.S. made that same commitment, we could save 53 billion gallons of gasoline annually, or 32 percent of our projected usage, and get us out of imported oil.”
Whether the U.S. joins Brazil and embraces ethanol remains to be seen. In the meantime, GM is pushing other advanced fuel saving, or petroleum replacing technologies, such as electrically driven vehicles powered by lithium ion batteries. To Lutz, these represent the long-term future of the automobile industry.
“A year ago, everybody was saying, what’s GM doing with this car (the Chevrolet Volt prototype) that allegedly will run on lithium ion batteries, which we all know won’t work as an energy battery on a car,” Lutz said. “Fast forward to this year, we saw no fewer than five automobile companies at the show with concepts that are purported to either run on lithium ion batteries or a lithium ion propulsion system that’s just around the corner.”
Not all lithium ion battery technology is the same, Lutz noted. Some versions of the technology have thermal problems. Like the laptop batteries that are now banned on airplanes because they might start fires. But, scientists at Stanford University recently announced that they were able to use nano-silicon wires in a lithium ion battery and had increased the energy storage capacity by 10 times.
“The point is, this and other advancements may be years away in reality, but we’re going to be ready because we are developing the vehicles, the drive systems, the electronic control technology today,” Lutz said. “We are going to be more ready than where anyone else is when the battery technology is beyond what it is right now."
Is this one more technology of the future, that will always be – the technology of the future? It’s impossible to tell. One thing is clear, change is coming and the automakers that are able to harness this change will ride this wave into the future. “Then you are going to see, gradually, but emphatically, the auto industry enter a new age,” said Lutz.
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