GM's Fifteen Minutes of Leadership On Plug-Ins May be Up

Posted by: David Kiley on July 25, 2007

A research analyst I know said he was doing some work in California recently, and heard over and over again from consumers that they viewed General Motors and Ford as dowdy and inferior to Toyota specifically because neither company offered hybrid vehicles.

But of course, the consumers were wrong. Ford and GM both offer hybrid vehicles. In fact, Ford beat Toyota in offering a gas-electric hybrid in the SUV category when it debuted its hybrid Escape.

And so when Toyota announced today that it would begin testing a plug-in gas electric hybrid on public roads in the U.S. and Japan, I could hear the moans coming from GM from my office in Ann Arbor, MI some 40 miles from GM’s headquarters.

GM, of course, was the hit of last January’s Detroit auto show when it debuted the Chevy Volt plug in. It was the first time in recent years that GM appeared to be ahead of Toyota, or even equal, in the arena of alternative and greener vehicles.

Because Toyota’s brand equity and identification is so indelibly linked with quality and greenness, though, I predict that GM’s leadership on plug-in in the public’s mind will be very short lived if it hasn’t evaporated already since Toyota made its announcement today.

I’m not sure GM can do anything about this in the short term. And I’m not criticizing GM’s handling of promoting the Volt. This is the nature of the image beast.

For those of you who don’t know, the break-through of the plug-in will be that a driver can expect to go anywhere from 25 miles to 40 miles on pure battery power before the gas engine kicks in automatically to recharge the battery while you are driving. The battery can also be re-charged overnight by plugging into the garage outlet. This is huge. Why? Because something like 80% of driving in this country is under 15 miles round trip. That means an awful lot of driving in these cars can be done in a zero emissions state, and without burning gas.

Wide-spread adoption of plug-ins could mirror the adoption of clean running diesel cars in Europe, which represent around 45% of new car sales.

I predict that the plug-in revolution will make the current gas-electric hybrid phenomenon look like a weak prelude to a much bigger change in our driving. GM says the earliest it will have plug-ins available to consumers is 2010. If I were GM, I’d be flogging its leadership on this before its too late…unless it already is.

Reader Comments

Jon Teagan

July 26, 2007 2:44 PM

How long before the goverment add a huge tax on electricty and calls it a "Road Tax"?

A Real-Plug--up

July 26, 2007 11:59 PM

FYI, the Ford hybrid Escape uses/purchases hybrid technology from Toyota's Hybrid Highlander. The Facts: Ignoring in-house hybrid technology, Ford gambled big $$ into big trucks and lost big when gas prices high over $3/gal.
Remember the GM's EV-1? Or Toyota's all electric RAV-4? GM EV-1 never went beyond PR while Toyota's electric RAV-4 were sold to corporate fleet buyers who refuse to return them when the lease expired. For the few that remain, some are still quietly running around in the cities. When GM announced it was not building the EV-1 prototype, the oil companies had nothing to fear except whether the American public will revolt against $70/barrel crude. What's the corporate reason for not building electric vehicles? As you correctly quoted, most commutes are short. An electric vehicle is cheap to operate and cheap to produce simply because electric motors have less than a hand-full of moving parts. Compare that to the internal combustion engines. And electric motors last much longer than most common appliances. Think about your washing machine or frig. Car makers want you to replace your car once every five or less years not 15 or 20 years as would be the case with electric vehicles. If I was Big-Oil, I buy up all the new battery technolgy and then kill it. Next, I persuade some ignorant newspaper writer that electric cars are inferior and un-American.

Schmeltz

July 30, 2007 8:08 AM

Mr. Kiley:
I agree with your closing statement about the Plug-in movement will make the current gas-electric hybrids look anemic in terms of fuel economy, however I took some exceptions to some the other things mentioned.

First of all, you mentioned "something like 80% of driving in this country is under 15 miles round trip." According to GM's statistics, approx. 80% of the driving in this country is 40 miles, not 15. There's a big difference. According to your statistic, 80% of the people live 7.5 miles from their place of work. Better check your facts again.

Secondly, there is absolutely no mention that this Plug-in Prius has only an 8 mile all-electric range, (Yes, you read that correctly--8 miles) and uses the same Nickle Metal Hybrid batteries of the current Prius. Compare that to the Volt GM is working on, that is hoping to achieve a 40 mile range using lithium ion batteries. After reading your blog, people would think the Hybrid war is over, Toyota has won again, and that all the automakers should just give-up and retreat. The Plug-in Prius is a good baby step forward, but it doesn't appear to be the game changer the world is looking for. I hope for the world's sake that the Automakers, any Automaker for that matter, comes out with a game changer. If/when that happens, I don't think they will be able to make enough of them.

Jim LeTap

July 30, 2007 2:22 PM

I agree with your assessment of the Plug-in Hybrid revolution. Even the J.D. Power and Associates report came to the conclusion on the power of large scale adoption of plug-in hybrids, the equivalent of removing 80 million gasoline cars off the road.

econguy

July 30, 2007 5:17 PM

You hit the nail on the head with this one David. Although GM is not out of the ball game yet even if it were a year behind Toyota on plug in or Volt technology roll out, it could sure use a kick in the pants for not moving faster. There is still a heavy dose of monopolistic thinking in Detroit that needs to be humbled some more. I think the long knives of lenders and investors needs to be flashed in front of their faces. The UAW also needs needs a swift kick in the rear and take their membership down by another 50 percent.

naif

July 30, 2007 6:53 PM

i would like to make a prediction also on plug-ins. i predict that in 2010 GM will still be looking for something to attach the plug to.

John Coffey

July 31, 2007 7:51 AM

I do not understand why Kiley is so anti-GM, even seems caty, THE facts are that Toyota has the same issues with these new batteries:

"The July 25 announcement means Toyota is the first Japanese automaker to win approval to test plug-in hybrids in Japan. Takimoto declined to say, though, how long it will take Toyota to get its plug-in Prius from the test stage to commercialization. He admitted that, like GM with the Volt, Toyota faces an obstacle in battery technology. The problem is that automakers need more powerful, lighter lithium-ion cells—variations of the kind used in cell phones and laptops—but to date no one seems to have found a way to mass-produce the cells for use in cars.

Speaking in February, Toyota chief Katsuaki Watanabe told BusinessWeek that the next-generation Prius, expected in late 2008 or early 2009, would use li-ions (see BusinessWeek.com, 3/5/07, "Toyota's Bid for a Better Battery"). But in recent months, Toyota appears to be having difficulties meeting that timeline.

Reports in Japan have noted that Toyota executives are concerned about safety, and that the next model upgrade of the Prius will use nickel metal hydride cells, at least initially. Executives, meanwhile, are reluctant to discuss the progress of li-ions. "This is a problem for Toyota. They still need more time to develop lithium-ion batteries," says Hirofumi Yokoi, an auto analyst at CSM Worldwide in Tokyo. "I don't know if GM will beat Toyota, but I'd guess it's pretty even right now."

Lloyd Hack

August 1, 2007 11:53 AM

You need to put aside your personal bias against G.M. In your comment in the recent issue of Business Week August 6/07 and I quote "Just months after Toyota passed General Motors as the world's No.1 carmaker"-- Granted Toyota did exceed G.M. in the first quarter by a small amount in overall sales. BUT I understand that G.M. beat Toyota in the second quarter in units sold world wide. Is this not correct? How about the turnaround in the second quarter by G.M. in profits even with the Delphi situation. Let's not be such a crape hanger in your comments regarding G.M. It's the media reporting like yours that influences the consumer to buy and support foreign manufacturers.

Jim Fletcher

August 1, 2007 1:30 PM

Boy do I agree with David Kiley on GM's plug-in hybrids.

After Toyota's plug-in hybrid announcement in Japan I could not help but recall the almost constant touting of the Chevy Volt and its plug-in design while Toyota basically says nothing and then all of the sudden they are announcing that they are putting a small number of plug-in hybrids on the street in Japan to be followed in Europe and the US.

And, let us not forget that Ford had already announced that they would place some plug-in Escapes that take a similar approach to Toyota's new plug-in test vehicles.

GM needs to pull out every possible stop and get the Volt refined and engineered beyond reproach and then get it to marked ahead of Toyota. Gm has the opportunity to make the competition and politicians "eat their words" if they just stop talking and do it. Bob Lutz should have them working around the clock on the Volt and offer huge bonuses to an engineer or supplier that can break through bottlenecks.

GM can literally rewrite the rules and make electrification a reality. The thought of it has to make the oil fiefdoms and oil companies quiver over the long run. It could be the beginning of the end for them and the start of a whole new book for GM.

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