Would a $40,00 Volt save The General
Amongst GM employees, aside from the fear of getting a pink paper next week ( or the week after ) speculation is high as to whether the concept vehicle, being called the Volt, is going to be as revolutionary as the hype suggests.
GM, Ford and Chrysler arrayed a huge number of lawyers and much cherished Washington lobbyists to go after California after it decided to introduce a zero emissions rule on part of all car fleets. While GM was fighting California, it was also building an electric car, 10 years ago called the EV1. The state lost, GM breathed a sigh of relief and promptly destroyed all EV1's and sold the patents.
Yep, sold the patents to a MIT. Just kidding. If the patents had been sold to MIT, the car would have been rebuilt and the Toyota Prius hybrid would never have been created. Whoever bought the patents wasn't interested in building an electric car. There is enough anecdotal evidence to suggest the battery patents were purchased by Texaco who has done tremendous work with them since ( NOT ).
Balancing the books, one might claim. Lots of Research and Development costs, nothing to show for it, so sell the technology. It wasn't an objective decision. After an acrimonious battle with the state of California, GM management couldn't get rid of the technology fast enough. A billion dollars later, GM executives didn't stop to think that perhaps core elements could play a critical roll in future transportation technology. They had to wait for the Japanese to prove that similar technology could and would be a huge element in the future of transportation.
So much for the history lesson, this week, we are back at square one watching a video interview with GM's Chief Designer as he discusses the new GM Chevy Volt.
GM has almost entirely "bet the boat" on the new technologies going to market in the electric Chevy Volt. We are sure that GM Detroit Management exactly didn't plan it this way, but their European operations must have seen the writing on the wall many years ago as gas hit 3+ dollars per gallon in europe and continued on through the equivalent $4 dollar mark. With the global credit crunch, increased gas prices and declining sales of the big cash SUV's GM is feeling the pinch like never before. The Volt must become iconic.
The car is also GM's gambit to outpace foreign competitors like Toyota (TM) and Honda (HMC). Unlike conventional hybrids-including the best-selling Prius-the Volt is essentially a plug-in electric car with an onboard gas-burning engine that can recharge the vehicle's batteries. This enables the Volt to travel some 40 miles before the driver turns on the gas.
According to GM research, many drivers will not need to switch to the gas engine because simply recharging the vehicle via a regular outlet at home overnight will satisfy most of their driving needs. When I first heard this, I thought - What a useless car. Who wants a car that does only 40 miles per charge, but in truth, the car simply switches to the small gas engine at that point and continues its merry way.
Despite the GM bashing that many of us might engage in, on occasion, we all truly want a Volt or something like it. Traveling and seeing new places isn't just a wish for the elite. But with gas prices threatening to go higher and the slightest threat of war poised to carry them beyond even the previous high of $147 per barrel, having a vehicle with the potential of the Volt is simply everyone's dream.
So back to the question can the Volt save GM?
I suppose it might be presumptuous but perhaps we should first ask - Does the General really need saving?
In May 2005, Business week estimated GM's Cash Reserves to be 45 Billion. However, for the first 6 months of 2008 the BostonHerald estimates that both Ford and GM burned through an average of a Billion dollars a month each, with accelerating burn rates towards the end of the year as sales in highly profitable vehicles like SUVs were down an improbable 18%.
Detroit News writes in an article on Oct 14th 2008
GM had access to about $21 billion cash and $5 billion in available credit at the end of June and is in the midst of cutting $10 billion in costs by the end of 2009 and raising $5 billion through asset sales and borrowing.
Those cost-cutting moves intensified Monday when GM announced it was closing plants in Grand Rapids and Janesville, Wis. The moves affect about 2,500 hourly workers at plants that produce sport-utility vehicles and parts for pickups and SUVs.
So, since 2005 to 2008, GM and it's fat cat, top heavy management burned thru 25 Billion in cash and part of that was during 2 years of strong sales. The rumour is, that GM is eyeing the cash reserves of Chrysler ( estimated 11 Billion ) to help it through to 2010 when the Chevy Volt and Cruz are expected to help effect a rescue
So, what are our expectations for the Volt? GM says its expecting to sell about 10,000 Chevy Volts at between 30-40,000 USD each in 2010. So, that's about 3-4 Billion dollars in gross sales with a net of about a 800 Million dollars annually at an estimated 20% profit per car.
Without being redundant, back to my original question. Can the Volt Save GM?
Looking at these numbers alone, I would wager, most emphatically no. - 23196
GM, Ford and Chrysler arrayed a huge number of lawyers and much cherished Washington lobbyists to go after California after it decided to introduce a zero emissions rule on part of all car fleets. While GM was fighting California, it was also building an electric car, 10 years ago called the EV1. The state lost, GM breathed a sigh of relief and promptly destroyed all EV1's and sold the patents.
Yep, sold the patents to a MIT. Just kidding. If the patents had been sold to MIT, the car would have been rebuilt and the Toyota Prius hybrid would never have been created. Whoever bought the patents wasn't interested in building an electric car. There is enough anecdotal evidence to suggest the battery patents were purchased by Texaco who has done tremendous work with them since ( NOT ).
Balancing the books, one might claim. Lots of Research and Development costs, nothing to show for it, so sell the technology. It wasn't an objective decision. After an acrimonious battle with the state of California, GM management couldn't get rid of the technology fast enough. A billion dollars later, GM executives didn't stop to think that perhaps core elements could play a critical roll in future transportation technology. They had to wait for the Japanese to prove that similar technology could and would be a huge element in the future of transportation.
So much for the history lesson, this week, we are back at square one watching a video interview with GM's Chief Designer as he discusses the new GM Chevy Volt.
GM has almost entirely "bet the boat" on the new technologies going to market in the electric Chevy Volt. We are sure that GM Detroit Management exactly didn't plan it this way, but their European operations must have seen the writing on the wall many years ago as gas hit 3+ dollars per gallon in europe and continued on through the equivalent $4 dollar mark. With the global credit crunch, increased gas prices and declining sales of the big cash SUV's GM is feeling the pinch like never before. The Volt must become iconic.
The car is also GM's gambit to outpace foreign competitors like Toyota (TM) and Honda (HMC). Unlike conventional hybrids-including the best-selling Prius-the Volt is essentially a plug-in electric car with an onboard gas-burning engine that can recharge the vehicle's batteries. This enables the Volt to travel some 40 miles before the driver turns on the gas.
According to GM research, many drivers will not need to switch to the gas engine because simply recharging the vehicle via a regular outlet at home overnight will satisfy most of their driving needs. When I first heard this, I thought - What a useless car. Who wants a car that does only 40 miles per charge, but in truth, the car simply switches to the small gas engine at that point and continues its merry way.
Despite the GM bashing that many of us might engage in, on occasion, we all truly want a Volt or something like it. Traveling and seeing new places isn't just a wish for the elite. But with gas prices threatening to go higher and the slightest threat of war poised to carry them beyond even the previous high of $147 per barrel, having a vehicle with the potential of the Volt is simply everyone's dream.
So back to the question can the Volt save GM?
I suppose it might be presumptuous but perhaps we should first ask - Does the General really need saving?
In May 2005, Business week estimated GM's Cash Reserves to be 45 Billion. However, for the first 6 months of 2008 the BostonHerald estimates that both Ford and GM burned through an average of a Billion dollars a month each, with accelerating burn rates towards the end of the year as sales in highly profitable vehicles like SUVs were down an improbable 18%.
Detroit News writes in an article on Oct 14th 2008
GM had access to about $21 billion cash and $5 billion in available credit at the end of June and is in the midst of cutting $10 billion in costs by the end of 2009 and raising $5 billion through asset sales and borrowing.
Those cost-cutting moves intensified Monday when GM announced it was closing plants in Grand Rapids and Janesville, Wis. The moves affect about 2,500 hourly workers at plants that produce sport-utility vehicles and parts for pickups and SUVs.
So, since 2005 to 2008, GM and it's fat cat, top heavy management burned thru 25 Billion in cash and part of that was during 2 years of strong sales. The rumour is, that GM is eyeing the cash reserves of Chrysler ( estimated 11 Billion ) to help it through to 2010 when the Chevy Volt and Cruz are expected to help effect a rescue
So, what are our expectations for the Volt? GM says its expecting to sell about 10,000 Chevy Volts at between 30-40,000 USD each in 2010. So, that's about 3-4 Billion dollars in gross sales with a net of about a 800 Million dollars annually at an estimated 20% profit per car.
Without being redundant, back to my original question. Can the Volt Save GM?
Looking at these numbers alone, I would wager, most emphatically no. - 23196
About the Author:
Dino Delellis writes on a number of interesting topics. To see more of the Dino personal journals hop on over to Dino P. Delellis and catch his strange views on the globe in a nutshell.
posted by X - Men @ 3:42 PM
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