After government tells GM the Volt is a waste of time, GM asks for $2.6 bln to build it

A few facts about Lewis Gaines:

"Lewis Gaines was until 2003, Market Manager of Specialty Lubricant Additives at Infineum. Mr. Gaines has experience in lubricant and fuel additives, diesel and gasoline consumption trends and market issues, and lubricant marketing projects. He has extensive experience in the impacts of these topics on the specialty chemical industry. Prior, Mr. Gaines worked at Tyco Laboratories, Exxon Enterprises, and Exxon Chemical"

Infineum is also heavily invested in biodiesel production, hence Mr. Gaine's little blurb about diesel cars. There is no need to expound on Exxon. The Gaines Family Foundation is private and there is little information about them: it was started in 1998 by Jerry Gaines

 

So, you're saying that lithium batteries cost a lot less to produce that what was reported in the link?


Doing a quick calculation based on published battery prices.

A 900 mAh 3.6v rechargable lithium battery appears to cost about $4.25 (in bulk) - which works out to $4.25/3.24 watt-hrs. A 10mile range lithium battery requires about 5Kw-hr. So doing the math, a 10 mile lithium battery pack is $6000. One would assume that there's cheaper sources, but it seems reasonable that a lithium battery back for a 10 mile plug-in will cost at least a few thousand dollars (not including support electronics and temp control). So, an all electric with a 50 to 100 mile range gets expensive - real fast - and once can see why the Tesla costs so much.

 

I do not consider it rude at all to express your point of view. I'm not trying to do anything other than explore the viewpoints to a reasonable conclusion or an acknowledgement of differences in viewpoints. I was hoping you would address the points I brought up. It's the "failure" label that I'm debating. If Tesla sells every single vehicle it makes years before they can deliver them, I do not see how that is a failure. More impressively, Tesla's next planned vehicle has a very massive jump in size at about half the price (if they succeed.) Yes, the Sportster cost 100k, but this reflects the intense demand for full electric vehicles. Telsa has clearly stated that this approach is the first necessary step to being a major car manufacturer, with better and better vehicles evolving as fast as they can drive the industry transitioning from the niche to the mainstream. I would by their latest offering if it was available and meets the performance they state.

If there were highway electric vehicles that were not being sold, then the failure label is quite justifiable, but if even the 10 year old EV RAV-4s are sold for more than the original price, then I do not see the evidence justifying the label 'failure' for the original vehicles.

 

The US Fleet is around 100 million vehicles. We need a high (75+) mpg solution for almost all of them. Given the current state of battery technology - I just can't see where there's a financially viable solution. Sure, a few rich types can afford expensive all electric vehicles - but that's not we need in the very near future. I think that our argument or debate may boil down to what needs to be or can be done to advance the electrification of the transportation sector (i.e, replace oil with electricity). You obviously advocate letting the free market work it's magic - while I'm advocating some type of massive government intervention since I don't believe that the free market works in this case. Of course, given the challenges for the US Government to do pretty much anything with a positive outcome (i.e, not screwing it up and either wasting lots of taxpayer money or more than likely making the situation even worse) - the difficult question is what can be done as well is what would the US Government even be willing to do - given the risks of pissing off the voters by denying them their monster trucks running on cheap gas. Giving a couple billion dollars to GM (for the Volt) doesn't seem like it should be at the top of the list.

 

so FL, you're debating the labeling of the EV1 as a 'failure'.

Again, perhaps because you know it was technologically feasible, that it was a 'success'.

Apparently it was not marketable, even though there were people who did want to buy them at any cost. Very low demand with a very HIGH price is not marketable.

Basically if you can MAKE something that works, but it costs too much to sell in numbers great enough to even recoup the production costs, regardless of the technical merits, the product is a failure.

 

Joe, what you seem to keep dancing around is an answer to the question, 'why the failure label?'
If I may be so bold, would your answer be:
'I view full EVs as a failure because they have not taken over/filled 80% of the market for vehicles in the US at this time'?
As stated so well by FL_Prius_Driver in the post immediately prior to yours, non of the EV's currently build are sitting around unsold. Tesla is selling cars years before they are ready and their next model is taking the next step towards an affordable family sedan (which is the plan for their third model).
The Toyota RAV4 EVs are still on the road now and are occasionally found for sale for more than their original price. Companies now are starting to do conversions of cars to EVs.
I don't see anyway to call EVs a failure unless my paraphrase (with what ever percentage change you want to put in there) above is correct, or if you mean 'EVs are a failure because they don't work for 'my individual case'.

 

Doesn't this describe the entire line of mid to small size GM vehicles?

Is the Prius a failure? Toyota lost money on each one for a number of years. I would be willing to be that most new models, especially with brand new technology fail to make money the first number of years.

 

There is not an easy solution to 75+ mpg vehicles. There is an expensive solution.....one that can be greatly improved by at least starting with more choices than essentially zero. A successful transition starting with capable vehicles using NiMh battery technology has already been done, then cancelled. This was labeled a failure, and it was if you look at as the government's failure to maintain the Zero pollution mandate initially established. But when the battery technology is blamed, that is where the facts are few, the opinions are many, and the GM propaganda rather successful. Ignoring the WKTEC movie, my firsthand conversations with EV-1 drivers had them insisting that it was a very mature and viable car for widespread daily commuter use. If the drivers are eager to spend the money, then where did the idea that the EV-1 was rejected by the consumer originate? (It sure as heck was not any EV-1 users I have talked to.) This then leaves the economic argument that it was not economically viable. Compared to the ICE infrastructure in place today, it will never be until gas goes ballistic in price, whether the battery technology is NiMh or LiIon.....so government motivation is essential before that cliff arrives.

You really need to revisit my posts. I never stated that the free market would work it's magic. The thing I did state very clearly was that direct government development of the technology has yielded little of value, whereas government tax incentives and well crafted regulation have definitely yielded big advances.

We are on the same page overall. Big, big improvements needed. Government has a critical role. EV's are part of the answer. PHEV's are part of the answer.

 

It was a roaring success. We have a former EV-1 driver on this forum that can attest to this firsthand.

I understand economics 101. I also understand propaganda 101. Which applies to the EV-1? Where do you get your information? Where do you think I am getting my information? (PS. It's not the movie.)

 

I think Darell had one, I'm sure he would like to know how the perfectly good car he had to give back to GM with a tear in his eye was a failure. He would also like to know how his much loved RAV4-EV is a failure too. Toyota sold or leased with no marketing budget at all, every RAV4-EV they made.

 

How old is Rolls Royce now? Ferrari? Lamborghini?
When cars first hit the road in gas form or even electric they were expensive and the play thing of the wealthy, look how successful they are now. EV manufacturers are using the same tactic to build a base for a mass marketable product. The Tesla is a high price high profit percentage pilot product, it's a sports car. No company can start from scratch and build cars for the masses. No company can just pop up with facilities to make 100,000 units plus a year. All fledgling auto companies whether they make gas, electric or perpetual motion vehicles will start with a high price high mark up low volume product to build a name then move into a mass market product.
GM could have done this but they chose to crush the pilot vehicles and sell the battery technology to an oil company, good for them!!

 

Mr. Gaines *very* conveniently overlooks a few "facts" in his "factual" reporting. I'm pretty sure I already covered certain patent restrictions that artificially limit the size of NiMH batteries used in automotive applications.

With mass production, the current cost of NiMH or various lithium technologies would plummet. Consider that when the Prius second generation was first introduced, battery packs were priced several times higher than they currently are, all for the same capacity

Are electric cars the holy grail? Probably not, I personally believe that efficient mass transit should be the goal. But for the vast majority of commuters, electric cars are a clean and reliable choice

 

The Prius uses ~0.25 kwh to move 1 mile at 70 mph, which I think most of would consider a "reasonable" speed.

As shown above you can take the estimate of battery cost you are relying on and throw it out the window--or simply cut it in half for consistency.

While I believe the best market of the EV vehicles at present is purpose built commuter cars, they do appear viable. However, they are an underserved niche at present. Compare $7,500 for a battery pack to overserved niches of Hummers and oversized SUV's that add $30-40,000 in cost. In doing so the argument you are making appears silly. When it comes to market it is a matter of where the CUSTOMER perceives value. And with the EV-1, GM clearly didn't recognize a niche of well-to-do customers that would pay for such a product.

You have extrapolated incorrectly. GM chose not to market and sell them and instead retrieved the cars at the end of the test leases, but they never really tested the market to see what people would pay. Instead, they worked hard to kill what they had created (see Saturn for another example.)

GM treated the project as a commercial failure, but that doesn't mean it really was. Companies unfortunately have a knack of drawing the wrong conclusions about their own markets and from their own projects at times...see the last decade in U.S. business, any sector will do. When GM started working on the Volt it effectively conceded it had screwed the pooch with the EV-1.

 

GM deserves to die because of its mismanagement that chased gas-guzzlers, reduced quality and wasted money on the idea of fuel cells, but I still support the workers, who had little to do with any of that.

Fundamentally, I think the US needs to lead in technology to put ourselves in good, long-term economic shape. As it is now, we're increasingly becoming consumers of innovation developed in foreign countries because of problems with short-sighted executives, offshoring making engineering jobs unattractive, and manufacturing moving overseas.

By letting GM die, instead of sponsoring their rebirth in innovation (so long as they focus on cars like the Volt), I think we're giving up on the future of our country.

I like the innovation of the Aptera, but doubt it will make it into the mainstream the way some of the big boys' PHEV's can. I'd probably never buy one just because I have three kids to worry about (I need a large back seat), I value safety features and I want a large trunk.

The Volt and a Plug-In Prius have a better shot at catching on and making a real difference.

 

A couple of different topics are mixed, so I will try to seperate the different points.

1) We both agree on the essential need to lead the technology. The harder question is how does the government support developing this lead. Looking at history, it's when the government gives real rewards for real end use improvements that the big jumps take place. The best example is what resulted from California's (short lived) zero pollution mandate. If it had been a CA funding frenzy for battery technology corporations, then nothing would have ever reached the highway.

2) How does one save GM from itself? So far the one thing that has worked better than anything else is properly executed bankruptcy. These rules have evolved over the years to maximize the success of recovery, if it is possible. It allows terminating the contracts and destructive obligations sinking the company, yet allows the formulation of a path back to viability. In the case of the auto manufacturers, there still needs to be help to sustain the cash flow needed to keep operating. By avoiding the fundamental restructuring only available via bankruptcy, yet provide operating cash, the government has made the situation worse for all involved.

 

So if an EV doesn't fit your "needs", then it's a failure? Why is this viewpoint so rampant? There are others around you that would LOVE an EV to do their driving/commuting/errand running.

Choice.

Get it out there, advertise the EV benefits (and there are plenty!) and sell to that market.

The rest of the non-EV-believers will still have a fossil fuel vehicle available. Unfortunately gas will be around for awhile, probably 'till we kill ourselves using it or acquiring it.

I just want a choice...to choose an EV.

 

You're comparing niche market companies (Rolls, Ferrari, Lamborghini) with mass market companies.

Do you think the Tesla Roadster would sell at $100k if it only went 60 miles on a charge and needed new batteries in a couple years?

GM made a decision, one that seemed very poor, and was not good when it came to PR, but they made it and they stuck with it.

Good or bad, they are having to reap whatever came of it.

I still stand by the opinion that the EV1 was simply not mass marketable. It would have been a money loser for GM and no one has the right to dictate a company to produce and sell products that do not make them a profit. They have no obligation to anyone save their shareholders.

 

I think the posters who talk about resistance to hybrids by the status quo interests are absolutely right. And I would include members of the automotive media who have a financial stake in the status quo.

We are talking about a paradigm change in cars which has already started. For this to happen, the government has to show leadership. That means Obama has to walk the walk about real change, not just talk the talk. It means real government incentives to unload your gas guzzler and buy a hybrid. It also means putting global warming on the front burner as a national security issue (not just environmental), as it is in Europe. And it means the American media should stop politicizing the issue as a right vs left thing--which it is not. Nature doesn't know the difference.

 

I don't recall anyone dictating to GM to build stuff they couldn't profitably sell and apparantly the shareholders were satisfied with their corporation's performance.

Anyone who wants 75mpg performance needs to find a used Intrigue. That car can get 75-120mpg when properly driven.

Lots of Americans buy lots of stuff they can't afford. If people only bought cars they could afford there wouldn't be 5 year auto loans.

 

Well stated. I guess I'm undecided as to the best way to move forward (I'd have to learn more about the details and ramifications), but fundamentally I'm simply against GM withering away into nothing or being snapped up by foreign automakers.

How exactly they survive is something I'm open to.