Bloomberg News

Volt Delay Shows ‘Unnatural’ Obama-GM Ties, Republicans Say

February 01, 2012

(Updates with Akerson comment starting in 10th paragraph.)

Jan. 25 (Bloomberg) -- The “unnatural relationship” between President Barack Obama’s administration and automakers that received U.S. bailouts may explain the delay in disclosing a potential safety defect in General Motors Co. Chevrolet Volts, Republican lawmakers said in a report.

The House Oversight and Government Reform Committee report, released before a hearing today at which GM Chief Executive Officer Dan Akerson testified, questions whether the government’s 32 percent ownership of the automaker led it to delay publicizing a June 6 fire in a Volt lithium-ion battery that happened three weeks after a crash test.

“This unnatural relationship has blurred the lines between the public and private sector as President Obama touts the survival of General Motors as one of the top accomplishments of his administration,” according to the report by the committee headed by Representative Darrell Issa, a California Republican. “On a policy level, this relationship raises serious questions about whether or not the administration is too heavily invested in the success of GM to be an effective regulator.”

Today’s hearing stems from the Volt fire and followup testing by GM, based in Detroit, and the U.S. National Highway Traffic Safety Administration that found battery coolant can leak and catch fire in a simulated rollover crash that punctures the battery compartment.

Delay Defended

NHTSA Administrator David Strickland and Akerson defended the five-month delay in notifying the public about a possible Volt defect after the fire at a NHTSA test facility, saying it took time to determine the cause and what risk it might pose to Volt drivers.

“Not only would I drive it, I would drive my wife, my mother and my baby sister,” Strickland said today when asked by Representative Dennis Kucinich, an Ohio Democrat, whether the Volt is safe.

GM and NHTSA didn’t disclose the fire until Bloomberg News reported it in November. The agency opened a formal investigation later that month and closed it last week, saying electric cars posed no more of a fire risk than gasoline-powered models, after GM announced a fix for current and future Volts, avoiding a formal recall.

GM defended the Volt today in a full-page ad in media including the New York Times and the Wall Street Journal with an open letter from Akerson calling the car a “technological moon shot” and safe.

“Yes, the world is learning from Detroit again,” he wrote. “And we couldn’t be prouder.”

‘Disproportionate’ Scrutiny

Akerson, who said he just bought a Volt, and Strickland appeared before a congressional panel overseen by Issa, who has criticized the Obama administration’s electric-vehicle goals and the U.S. bailouts of GM and Chrysler Group LLC.

GM denied that the administration is involved in its business.

“The administration’s been true to their word from the start and has not interfered in our business,” Greg Martin, a GM spokesman, said by telephone yesterday. “As our actions with the Volt have demonstrated, we’ve always put our customers’ safety and peace of mind first, above all else.”

Kucinich said he met with Akerson yesterday. He said at the hearing that he hopes the attention to the Volt doesn’t derail the promise of electric cars.

“It would be very bad for our economy to do anything that would demolish the potential for electric vehicles,” said Kucinich, the top Democrat on the subcommittee.

Akerson, in his testimony, said politics have caused the Volt to become “a political punching bag.”

‘Surrogate’ for Critics

The fire three weeks after the crash test didn’t pose an imminent danger to drivers, he said.

“As one of our customers put it: if they couldn’t cut him out of the vehicle in two or three weeks, he had bigger problems to worry about,” Akerson said.

The Volt has become “a surrogate for some to offer broader commentary” on GM and on Obama’s administration, Akerson said.

The hearing follows Obama’s annual State of the Union speech last night, which came as candidates prepare for the U.S. presidential election in November.

“The Volt’s entry into the market came soon after GM’s emergence from its government rescue and restructuring -- and during this political season,” Akerson said in his written testimony. “As such, the Volt seems, perhaps unfairly, to have become a surrogate for some to offer broader commentary on General Motors’ business prospects and Administration policy.”

Imminent Risk

Obama, in the speech, took credit for taking the U.S. auto industry from the “verge of collapse.”

“Today, General Motors is back on top as the world’s number-one automaker,” Obama said to applause. “Chrysler has grown faster in the U.S. than any major car company. Ford is investing billions in U.S. plants and factories. And together, the entire industry added nearly 160,000 jobs.”

Issa has questioned the delays by GM and the regulator in notifying the public about a safety defect. He asked NHTSA’s Strickland in December whether his agency “deliberately suppressed” disclosure.

Strickland, in his testimony, said his agency took the “uncommon step” of opening the Volt investigation without any fires reported outside crash tests to “ensure the safety of the driving public with the emerging electric vehicle technology.”

Had there been “an imminent safety risk,” the agency “would have ensured the public knew about that risk immediately,” he told the panel.

‘Technical Showcase’

GM began selling the Volt, which Akerson called “a technical showcase for GM,” after a 2009 U.S. government bailout. It was introduced as a concept car at the 2007 North American International Auto Show in Detroit.

Obama has set a goal of having 1 million electric vehicles on U.S. roads by 2015. The Volt, a plug-in hybrid, and the Nissan Leaf, a fully electric model, were the only two mass- produced electric vehicles in the U.S. market last year.

--With assistance from Tim Higgins in Detroit. Editors: Bernard Kohn, Steve Geimann

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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