[Blogpinion] GM Volt Enthusiast Asks the Government to Turn the Bailout up to Eleven

November 14 2008 / by joelg
Category: Transportation   Year: 2008   Rating: 10 Hot

by Joel Greenberg

What Happened?
Dr. Lyle J. Dennis today asked readers of his GM-Volt.com enthusiast site to sign a petition asking the Bush Administration to bail out GM. As a public advocate of the electrification of the automobile, Dennis believes without a bailout, GM will die and so will the Volt, not to mention Project Driveway, GM’s fuel cell initiative.

GM has announced the Chevy Volt will ship in 2010 with a price somewhere in the $30,000 dollar range. The big question is whether or not GM will survive long enough to see 2010 and the release of the Volt.

Why This Is Important to the Future of Energy
The first successfully mass marketed electric vehicle will tip the market away from oil and to electricity.

Here at The Energy Roadmap we’ve been talking over Skype about the Volt’s future given the economy. Garry Golden told me, “At the end of the day, they’re likely to tank Chrysler before they tank General Motors if they see it as a much more functional and valuable company.’”

Says Golden, “GM is in the best position to make this leap to electric vehicles,” because of their R&D commitment to these vehicles.

If there’s time.

What to Watch For

Here are a few scenarios. They’re all speculative:

Scenario 1: Bush Administration Bails out GM

Dr. Dennis addresses the current administration rather than waiting until January 22nd for the new administration, most likely due to the urgency of the situation. If Treasury Secretary Paulson does provide bailout money, it most certainly will not be tied to requirements that could help the Volt, or increase fuel efficiencies in general. A Bush bailout will mean the GM will have freer reign on how to spend the bailout money.

Realistically GM could spend the money and still be in a similar position a year from now. In other words, a bailout today does not guarantee the Volt reaches the market. Indeed, if gas remains around $2/gallon throughout the winter and buyer’s short memories lull them into wanting gas vehicles, a bailout could actually hurt the Volt if GM puts the money back into exclusively marketing their gas vehicles. Making money in the present will outweigh planning for the future, even if that future is only 18 months away, leaving the Volt hanging in the balance.

Scenario 2: Bush Administration Doesn’t Bail out GM, But Obama’s Does

Obama bailing out the auto industry is better for the Volt than a Bush bailout because Obama will most certainly have requirements on how the money will be spent; those requirements will most likely favor higher fleet gas mileage, to which the Volt will contribute. It’s not totally out of the realm of possibility that the Volt could be the highlight of the bailout, in effect the government saying, “We’re giving you this money so that you can make the electric are a reality.”

GM can survive through January, so Dennis may be better off addressing the Obama administratin, except of course if the auto industry lobbyists beat him to the punch before Christmas.

Scenario 3: No GM Bailout

If there’s no GM bailout, then worse case scenario is GM goes bankrupt and sells off the Chevy Volt, which could play out for better or worse. Imagine if India’s Tata Motors bought the volt and redesigned it to bring the price down to below $20,000; it could be the vehicle for the entry into the US market.

The fact is, the Volt is valuable. Even in bankruptcy, the Volt could help GM payoff debts by being sold. But a darker scenario would be a competitor buying the Volt and dragging their feet to market. Or, Imagine Chevron buying the Volt and teaming it up with Cobasys for release in 2012. Then 2014. Then….

Any delay in the Volt provides an opening for Toyota or Honda to take the lead in electric vehicles, or a dark horse manufacturer from China or India. The stakes are high. Hopefully, they’re high enough for GM to do everything they can to bring the Volt to market as planned despite the challenges.

Comment Thread (1 Response)

  1. Nice capture of possibilities Joel…

    Particularly interested in #3—GM selling off Volt – or entering global partnership with India’s TATA (or Chinese company) - Fantastic exploration!!! And very plausible…

    If GM can’t get the electric car done in the US- it might indeed jump abroad. So what happens to the US mfg base? massive consolidation and mfg partnerships among Big 3 or Big 2?

    How do you think American’s would respond to buying electric cars from India or China—when part of the move has been based on a desire for ‘energy independence’?!

    Looking forward to seeing where this all ends up… !!! Thanks!

    Posted by: Garry Golden   November 15, 2008
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