On its 100th anniversary, General Motors workers cheered as the company revealed the electric-powered car intended to make GM a vehicle technology leader. But after all the hoopla surrounding the Chevrolet Volt, executives also say a government loan package and access to credit are important parts of GM’s next century.
Chairman and CEO Rick Wagoner, speaking to reporters at Tuesday’s centennial celebration inside GM’s world headquarters, said the recent turmoil in the financial markets should not affect the loan package now before Congress.
The $25 billion in loans were approved last year as part of an energy bill and should now be funded to help the industry build next-generation automobiles and meet government fuel economy standards, Wagoner said.
“Really a relatively small fraction of the investment the industry will have to make to achieve these improvements was to be provided for by direct loans,” Wagoner said. “We’re just asking that those loans now be funded and that the rules and procedures to be able to draw against those loans be finalized promptly.”
General Motors Corp., Ford Motor Co. and Chrysler LLC have been working to get Congress to fund the loans after months of tight credit markets, tepid sales and high gasoline prices.
Fritz Henderson, GM’s chief operating officer, later told reporters the company may have to make further cuts if the loans don’t come through and the U.S. auto market doesn’t recover.
“We could have to do some more things for sure,” he said. “Do I have my game plan laid out today? No.”
GM, which has lost $57.5 billion in the past year and a half, has a liquidity plan that calls for $10 billion in internal cuts and raising another $5 billion through asset sales and borrowing over the next 15 months.
The company may have to cut more costs if the credit markets remain tight, Henderson said. While he expected GM to meet its liquidity targets, Henderson said he could not predict what will happen in the credit markets, which affect consumer as well as corporate borrowing.
At the celebration, Wagoner showed off the production version of the Volt, which will be able to go 40 miles on a single charge from a home outlet.
“General Motors’ second century starts right now,” he said as Vice Chairman Bob Lutz drove the four-passenger sedan onto a stage.
Lutz told reporters that GM will be able to develop products like the Volt even if it doesn’t get the government loans, but the company would prefer to have the financing as it faces a difficult balancing act between spending to meet government regulations and developing new products.
“Obviously it’s clear that government loans would take a lot of the stress off,” he said.
Wagoner said GM has been testing the Volt’s lithium-ion battery packs and is confident in their performance. GM said it will cost about 80 cents to fully charge the Volt at 10 cents per kilowatt-hour, which is about the national average rate. After that, the batteries will be recharged by a small gasoline engine that allows the car to travel hundreds more miles.
“It’s proof that the century-old General Motors is alive and well and that it intends to lead in reinventing the automobile,” Wagoner said.
GM hasn’t announced the Volt’s pricing, but it’s expected to cost between $30,000 and $40,000.
The Volt is due in U.S. showrooms by November 2010. The director of GM’s Adam Opel AG unit said Tuesday in Germany that Opel wants to sell a car based on Volt technology in Europe in 2011.
Lutz said in an interview that the Volt won’t be sold before late 2010 because of the complexity in building an entirely new powertrain.
“This is all-new technology, a lot of very complex software on the interaction between power electronics, piston engine and so forth,” he said.
The Volt, he said, will know a person’s normal route home, and if the driver veers from it, the car will calculate whether it needs to start the gasoline engine and how long the engine needs to run.
The Volt even converted one of GM’s biggest critics, director Chris Paine, whose 2006 documentary film “Who Killed the Electric Car?” accused GM of conspiring with the oil industry and the U.S. government to cancel its 1990s EV1 electric vehicle.
Paine, invited by GM to attend the centennial, took part in a panel discussion about the future of transportation. GM paid his expenses, he told reporters.
“My film wasn’t supposed to be a grudge match with GM,” he said. “It was about why we weren’t able to begin to transition to a new automotive generation 10 years ago when we could have.”
Paine said he still believes GM was wrong in killing the EV1, and he concedes that taking part in the centennial could give the appearance that he’s part of the GM public relations machine.
But he was intrigued by the Volt and a resurgence in electric car interest.
“The corporation isn’t always wrong. If they’re doing this and it’s more than press, then I want to be here to cover it,” said Paine, who is making a new documentary about the “revenge” of the electric car.
“The fact that they invited me says a lot,” he said. “Maybe we’re mending fences if we’re doing this now.”