Volt production charging ahead, despite GM woes
GM’s Rob Peterson told MarketWatch that getting the Volt launched by 2010 is still a “top-priority program” for General Motors, which is staring bankruptcy in the face and is pleading — along with Ford and Chrysler — for a multibillion-dollar bailout from Washington. This is reassuring, and of course it makes loads of sense. If GM has any chance of getting more bailout money it has to convince U.S. Congress that it’s serious about changing its ways by producing vehicles that are more efficient and will help wean the United States from foreign oil. To cut back on the Volt wouldn’t send the right message to Washington, so the Volt in many ways is the only thing that GM has going for it. There’s also the fact that most of GM’s main competitors also have plans for plug-in hybrids and electric vehicles by 2010 or shortly after, so to stay competitive it really has no choice.
Still, I can’t help but come back to the comments made to me and a group of bloggers by GM’s Bob Lutz early last month. I’m going to repeat it again:
Let us say that over the next 18 months the world goes into a major recession, car sales and fuel use drop dramatically, the steel companies produce less steel and therefore less energy, China finds its main export markets drying up, so they are into a contraction … And at the same time Canadian tar sands come onstream, and coal-to-liquids come onstream. All of a sudden there is a reduction in primary demand in petroleum plus all these additional new supply sources. Oil drops to $25 a barrel and we’re looking at gas pump prices at $1.25 a gallon. I personally don’t think that’s going to happen, but that would be a dramatic event for the Volt because everybody would say, ‘Ha!, why should I bother?
When I last posted this comment oil was at $80 a barrel. Now it’s around $50. Also, the world’s major economies weren’t yet in recession, but today everybody is using the “R” word. Car sales have plunged. People are driving less and using less fuel. There’s less steel being produced. U.S. gasoline prices are approaching $2 a gallon. Now, the only thing that isn’t happening is new oil sands and other unconventional petroleum sources aren’t coming online, but are in fact being cut back. This is a good sign, and signals that when the demand-side issues get clear up, we’ll still have major supply-side issues that are likely to push oil price back up over $100. That said, if GM does collapse then Lutz could get a job as a fortune-teller at a carnival, because his “hypothetical” scenario described early last month is coming dangerously close to reality.
Tyler Hamilton is editor-in-chief of Corporate Knights magazine and a business columnist for the Toronto Star, Canada's largest daily newspaper. In addition to this Clean Break blog, Tyler writes a weekly column of the same name that discusses trends, happenings and innovators in the clean technology and green energy market. This blog is a personal project started in April 2005. It is not an official blog of the newspaper.
November 24th, 2008 at 12:59 pm
[...] of an initially unprofitable car. The Toronto Star reporter and cleantech blogger Tyler Hamilton points out comments that GM Vice Chairman Bob Lutz made to bloggers earlier this year: All of a sudden there is a [...]