GM Would Rather Bite Than Switch

A proposal to increase US fuel economy standards by a mere 4 percent per year has drawn the ire of GM vice president Bob Lutz. Rather than see this as an opportunity to improve efficiency and build a better company, the near-bankrupt giant automaker has decided it would rather dig in its heels.

GM got a triple dose of bad news this year. Skyrocketing fuel prices sent sales of its road-behemoths plunging. Poor sales and a refusal to accept the need for a change in business strategy sent the company dangerously close to needing a government bailout. Now Toyota is set to pass the Detroit giant next year as the world’s #1 car manufacturer.

And still the stodgy old-guard at GM doesn’t get it. Lutz claimed “As long as [gas] is around $2 per gallon here, people will exercise their freedom to buy the vehicle they want, V8 engine and all,” he said. “Forcing us to alter the fleets to hit some theoretical average won’t change what consumers want, or what they’ll buy.”

Really Bob? The market seems to be saying the opposite.

Basing your business strategy on $2 per gallon fuel is as close to insanity as it gets. Looking at the energy picture worldwide, there is slim chance we can expect fuel prices at $2 for the foreseeable future. The U.S. imports nearly 70% of its oil. Conventional oil production is peaking or has peaked in the majority of the world, governments are moving quickly to kick out private oil companies and lock up their remaining resources. Rigs for new offshore drilling are overbooked for years, as companies are forced to drill ever-deeper and more expensive wells. Unconventional sources are gaining steam, but will barely make up for the conventional decline. Biofuels are coming on strong, but need years to scale up. Which leaves us for the moment completely dependent on the unstable Middle East.

All of this ignores the strong possibility of a carbon tax coming down the political pike. Governor Schwarzenegger has committed to addressing the carbon issue. The first salvo in this battle is a lawsuit against the EPA by several states including California to force them to regulate CO2 as a pollutant.

China is buying more automobiles than ever. Consider this fact: If Chinese consumers were to adopt the automobile as strongly as U.S. consumers, China alone would need the entire world’s output of oil to fuel their fleet!

There is a perfect storm brewing to drive up fuel prices and even potentially legislate against oversized and wasteful personal vehicles. Why is it that everyone else can see what is happening, but not the overpaid “smartest guys in the room” at GM??

A four pecent annual mandate is not even enough. GM should be planning to make vehicles which would sell well if fuel were approaching $10 per gallon, which is clearly where it’s headed within 10 years. Lutz claims there is “no technological bag of tricks that enable much better fuel economy than we have today,” he said. “Despite what the alarmists may think, we don’t have any magic 100-mpg carburetor that we’re holding back because we’re in bed with the oil companies.”

No?

Chrysler already created a concept car which got 70MPG on diesel without using any hybrid technology. Is GM already declaring failure? Thay haven’t even tried. They’re busy designing teenage wet-dream cars like the 2009 Camaro.

The Toyota Prius for 2008 is rumored to be pluggable and get nearly 100MPG. A recent study showed that there is more than enough capacity in the grid to power vehicles plugged in overnight. In fact, if each vehicle were set up as a network node, its battery capacity could even help smooth out fluctuations in the grid and make it more reliable.

Lutz and company should be held fully responsible for their lying and malfeasance. They have grown fat and complacent on U.S. taxpayer-subsidized fuel while the rest of the world has been working hard on the inevitable energy transition. Toyota is about to eat their lunch, and give consumers a choice for a change.

I feel bad about the American workers who will be displaced when GM goes belly-up (as it is almost certain to do). But it’s hard to feel any sympathy at all for morons like Lutz who have not only failed to compete, but failed at leadership as well, by stubbornly digging in their heels and resisting even the most mild encouragements (like a 4% per year mandate) for positive change.

Note: It’s painful to look back on articles like this from more than a decade ago, and recognize the damage we’ve suffered as a nation because people like Bob Lutz waited for Tesla to demonstrate the value proposition of electric vehicles. President Obama had to bail out American auto companies–again–in 2009. Now, after yet another full decade of selling monster vehicles, GM’s finally all-in on EVs under the leadership of Mary Barra. But they still can’t deliver enough EVs, soon enough. Imagine how different this year’s gas price spike would have been for Americans, if most of them were already driving electric vehicles? And that’s really the point, isn’t it? If most Americans were driving EVs right now, there wouldn’t have even been a gas price spike. –Sean Prophet, August 2022