General Motors EV1

Most people are not familiar with the Saturn EV1 now called the GM EV1. which was the first modern production electric vehicle from a major automaker. It was also the most recent fully electric car produced by General Motors in the United States.

Introduced in 1996, The EV1 electric cars were available in California and Arizona with a 3 year/30,000 mile lease only agreement. This was because the EV1 and its leasees were to be participants in a "real-world" engineering evaluation created by GM's Advanced Technology Vehicles group. GM was doing a market analysis and feasibility study as to the feasibility of producing and marketing a electric car in the U.S.

The EV1 was directly based on a prototype vehicle created by AeroVironment called the GM Impact. The Impact in turn had been based on design ideas first tested out in a record-breaking race car called the Sunraycer, a solar-electric vehicle the company created in 1987 specifically to win the World Solar Challenge, a trans-Australia race open to solar powered cars only.

All this effort was a result of the ZEV Mandate which required by 1998, 2% of all new cars sold by the seven major auto manufacturers in the state of California were to meet 'zero emission' standards as defined by the California Air Resources Board and 10% by 2003. The California ZEB mandate was subsequently cancelled.

The EV1 was discontinued after 1999, with all examples subsequently removed from the roads in 2003 by General Motors and crushed, except for a select few kept for educational purposes or as museum pieces. The car's discontinuation remains controversial.

In late 2003, GM officially canceled the EV1 program. GM stated that it could not sell enough of the cars to make the EV1 profitable. GM alleges that the EV1 cost GM $1 billion dollars. This, combined with the fact that their parts and service infrastructure costs required to maintain the existing EV1's for the state legislated minimum of 15 years, would mean the existing leases would not be renewed and all the cars would have to be returned to GM's possession.

According to GM Chairman and CEO Rick Wagoner, his worst decision of his tenure at GM was "axing the EV1 electric-car program and not putting the right resources into hybrids. It didn’t affect profitability, but it did affect image." Wagoner repeated his assertion after the December 2008 Senate hearings on the U.S. auto industry bailout request.

According to the March 13, 2007, issue of Newsweek, "GM R&D chief Larry Burns . . . now wishes GM hadn't killed the plug-in hybrid EV1 prototype his engineers had on the road a decade ago: 'If we could turn back the hands of time,' says Burns, 'we could have had the Chevy Volt 10 years earlier.'"

A documentary film debuted entitled Who Killed the Electric Car?, which outlines the debate. Also, people who had leases on EV1's were refusing to turn their cars in after the lease ended, that should have indicated something to the GM brass.

My take is that the EV1 was a decade ahead of its time. GM basically looked at the numbers and figured that it had cost enough money $1 billion dollars. The problem is GM did not have the vision to fully develop the project. The battery was the limiting factor at the time, the EV1 did not have the driving range necessary to be a commuter for many people. If GM had the vision to complete this project, GM would still be the largest car company in the world with the profits to match.

White House Shreds Auto Restructing Plans

President Obama today announced that they have turned down the restructuring plans submitted by General Motors and Chrysler. GM apparently did not meet certain promises made in exchange for the $13.4 billion in government loans. Obama cited a failure in leadership in Detroit and Washington. My February 16th post GM Time To Pay the Piper outlines GM's misfortunes.

Apparently, the automotive task force was not convinced that the revised plans were viable, therefore the auto companies should not receive additional bailout money.

There have been over 400,000 jobs lost in the automobile sector in the last year. That includes manufacturers, dealers, and suppliers. Currently, Michigan which has the most automobile employees has over 10% unemployment.

“We cannot, we must not, and we will not let our auto industry simply vanish,” the president indicated in his speech. Obama will give GM 60 days to submit a new viability plan meanwhile providing operating money to GM. The automobile task force will find new management for GM, CEO Rick Wagoner was asked to resign yesterday. Fritz Henderson, GM's President and Chief Operating Officer will be the new CEO. New directors will now make up the majority of the GM Board of Directors If the new restructuring plan is approved permanent loans will follow.

Chrysler has less time than GM, they must reach a deal with Fiat SpA within thirty days. Fiat will be allowed to buy up to 35% of the struggling automaker. The Fiat deal would give Chrysler some small car designs with good fuel economy. Fiat would get stock for transferring the technology. If Chrysler is successful $6 billion in permanent loans would follow.

It is possible that if one or both companies do not put together a successful business plan, the auto task force will sponsor a structured bankruptcy. This would allow the companies to operate, reduce debt and restructure without fear of creditors.

This is a sad day for the auto industry! There will probably be many more people laid off due to this severe downturn. I am of the opinion that a government sponsored bankruptcy is the only way to get either of the companies turned around. GM will probably survive in a much smaller reorganization, Chrysler may not survive!

GM CEO Rick Wagoner

Rick Wagoner, Jr. Chairman and Chief Executive Officer of General Motors has resigned today as Chairman and CEO at General Motors at the request of the White House. The U.S. government will announce plans for restructuring of GM and Chrysler tomorrow. During Wagoner's unsuccessful tenure as CEO of General Motors, the market capitalization of GM has gone down by more than 90%.

In 1992, he was named GM's chief financial officer, in 1994 he became executive vice president and/or president of North American Operations, and in 1998 he was named president and chief operating officer. He became president and chief executive officer in June 2000 and was elected chairman on May 1, 2003. During his reign, GM shares have plummeted from around $60 in June 2000 to as low as $1.27 in March 2009, a loss of approximately 98%, and GM's share of North American cars sales went from 28.3% to 18.3%.

In an interview, Wagoner stated that the worst decision of his tenure at GM was "axing the Saturn EV1 electric-car program and not putting the right resources into hybrids. GM was at the forefront of electric automobiles with the EV1. It didn’t affect profitability, but it did affect image." The effect on the image was that the perception of GM changed from viewed as a technology innovator, into a perception of the company as having little interest in innovation. Meanwhile, serious competitors like Toyota were outperforming GM in nearly every measure. GM basically became a company that provided unexceptional cars in a market with a number of substantial competitors. GM, under Wagoner's leadership, failed to see clearly obvious trends.

My take is that Rick Wagoner should have been gone years ago! The fact that GM was mismanaged from the worlds largest car company from dominance in the auto world to begging for government bailouts is unthinkable. I find it hard to believe the that GM Board of Directors or the shareholders had not terminated him and selected someone else!