GM shifts in alternative-fuel push
At last year’s North American International Auto Show, General Motors Corp. introduced the Chevy Volt, a futuristic concept car that ran largely on battery power and boldly promised to fundamentally change the way we tank up.
On Sunday at the start of this year’s show, GM took center stage to unveil two concept cars -- and neither came with lithium-ion batteries.
The alternative fuel that the Hummer HX and the Saab 9-4X can run on is ethanol, an old- fashioned alternative with which GM has long experience. In fact, GM already produces more ethanol-capable vehicles than any other automaker.
When Chief Executive Rick Wagoner introduced the fantasy Hummer and Saab, he vowed that the company would create ethanol versions of all GM vehicles. And he announced that GM had made an investment in Coskata, an Illinois-based start-up whose claim to fame is that it can make ethanol on the cheap, for less than $2 a gallon at the pump.
Why the switch in focus from big-buzz batteries to ho-hum ethanol?
It’s the Volt glitch, something even GM has begun to acknowledge exists.
“For the Volt, there are some tremendous challenges,” said Rebecca Lindland, director of automotive research for Global Insight. Producing a marketable Volt will require a quantum leap in battery technology, she noted, whereas ethanol is a proven and available power source.
Wagoner stressed that the Volt -- which the company has heavily promoted -- was still a priority. This week there will be a Saturn plug-in hybrid concept car on display in Detroit.
“The Volt has created more excitement than anything I’ve seen,” Wagoner said. “But it’s also clear that we must simultaneously work on” plant-based ethanol powered cars.
GM has been increasingly fuzzy about when the Volt might appear in dealer showrooms. After initially aiming for a 2009 release date, the company now is using a late-2010 figure. And last week at the Consumer Electronics Show in Las Vegas, Wagoner called the Volt’s battery technology a “stretch.”
Competitors, of course, are eating it up.
“If I was preparing to produce this car by 2010, I’d be picking out the wood grain on the dashboard by now, not still working on the battery,” said Bill Reinert, national manager of Toyota Motor Corp.’s advanced technology group.
Toyota is testing a plug-in version of its popular Prius and it is closer to commercialization, Reinert said, because it will have a battery with about an eight-mile range.
The Volt, GM has said, will be able to go 40 miles on a single charge from a regular electrical outlet, far beyond the capabilities of currently available batteries. It would carry a large battery and a small gasoline engine that would charge the battery when it ran low; all power to the wheels would come from an electric motor. GM is working with several battery makers, including Massachusetts-based A123.
One reason GM may be pushing ethanol, analysts said, is that the recently passed federal mileage standard of 35 miles per gallon has a loophole -- giving increased credit to vehicles that run on ethanol. GM and other automakers whose fleets are crammed with large trucks and sport utility vehicles have increasingly looked to those ethanol credits to keep their average fuel economy on track with regulation.
“They’re definitely looking at EPA standards here,” said Jack Nerad, market analyst for Kelley Blue Book. “They have to find all the ways they can to meet those standards.”
One downside of ethanol is that it is less energy-rich than gasoline, and thus provides fewer mpg. GM said it would put larger fuel tanks on future generations of ethanol vehicles.
Considering how hard GM has worked to tout the Volt, placing high-profile television, radio, print and billboard ads around the country, delays could be costly -- and annoying to would-be buyers.
“It can be frustrating,” Nerad said. “There’s a real groundswell of enthusiasm” for the Volt.
Asked what he would tell people unhappy that they can’t get their hands on a Volt, GM Vice Chairman Bob Lutz said: “That’s too bad. They’ll have to visit a Chevy dealership and buy a Cobalt or a Malibu.”
GM’s recently released Malibu hybrid is among its most fuel-efficient vehicles, with an Environmental Protection Agency-rated fuel economy of 27 mpg. Toyota’s Prius and Honda Motor Co.’s Civic hybrid both get better than 40 mpg.
As for the investment in Coskata, GM said it spent a year talking to more than a dozen ethanol producers before deciding to put what Wagoner said was a small amount of money into the vehicle.
Coskata, which has attracted Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers as an investor, uses bacteria-based technology to create a non-corn based version of the fuel. Ethanol can be used to replace 85% of the gasoline used by so-called flex-fuel vehicles.
In something of a star appearance, at least in the world of investing, Kleiner Perkins principal Vinod Khosla, known for his commitment to ethanol, accompanied Wagoner in his announcement Sunday.
“This is a historic event,” Khosla said. “I’m encouraged to see GM taking a lasting role in lessening our dependence on petroleum.”
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