AUTOMOTIVE
THE BIG RESTRUCTURE
CHANGING TIMES GM’s Chevy Volt will be the first plug-in hybrid on sale
THE GREEN GOVERNOR Arnold Schwarzenegger has adapted one of his hummers to run on hydrogen
in low-cost loans from the US government, which will have to be used to convert plants to build models with significantly better fuel economy; the chief executives of the Big Three – GM, Ford and Chrysler – are currently lobbying to ease restrictions on how the cash can be used. That might be all the help they get from government. Analysts like Jonas agree that while it was once impossible to imagine one of the Big Three being allowed to go under, the current climate and the example of Lehman Brothers means there’s no longer any such certainty. Keeping their vast armies of employees in work might be their best argument for more federal aid. Between them they employ 240,000 staff directly, and many more in their supply chains. Ironically, their efforts to streamline, cutting 100,000 staff in the past three years, might count against them if times turn even tougher. But radical surgery has already begun. GM has announced that the Hummer brand is up for sale, having seen sales fall by 40% so far this year. GM hopes to raise $1bn for its thinning coffers from the sale. It has also cancelled the replacement for its long-serving Northstar V8 engine and will downsize to a more economical V6 for most of its highend models. After 2010, you won’t be able to buy a Cadillac saloon with a V8 engine. Ford and Chrysler are following suit. Ford’s Explorer America concept unveiled at this year’s Detroit motor show hints that its replacement for its best-selling, full-size SUV will have a lighter monocoque body and optional front wheel-drive for improved economy, and – shock horror – no V8 engine. And the European carmakers, though
hit less hard, are also rethinking. BMW recently canned its X7, seven-seat off-roader: it planned to build 20,000 each year, but gauged that demand has now fallen too low. But while the carmakers are axing their thirstier models, they’re also responding positively to buyers’ demands for smaller, greener cars. Ford is putting the European-engineered Fiesta hatchback on sale in America. It is tiny by US standards, but in August sales of the Focus hatchback leapt by 23%, while Ford as a whole declined by 26.5% – a smaller
THE PETROL ENGINE WILL BECOME OPTIONAL. IN 30 YEARS CARS WILL BE BATTERYPOWERED, PERIOD MARTIN EBERHARD
car might see even bigger results. Daimler has gone a step further and put the tiny Smart two-seat city car on sale in the US to the benefit of its European factory and suppliers. But General Motors has made arguably the most impressive leap. Its new Chevy Volt has been rushed into production and will be the first plug-in hybrid on sale when it is offered in the US in 2010 and Europe in 2012. It will drive at least 40 miles on electric power alone, after which a small and highly efficient petrol motor kicks in to charge the battery and extend the driving range to over 600 miles. GM’s research shows that the electric range is enough for the daily needs of nearly 80% of drivers, meaning you may never need to start the petrol engine in your Volt. Virtually all the major carmakers are working on plug-in hybrids – Toyota is likely to be
next to market, and most are also working on affordable, all-electric city cars powered by lithium ion batteries and with a range of around 100 miles. “One of the reasons this shift is going to be lasting is that these alternative means of propulsion either exist now or will very soon be feasible,” says Jonas. “That wasn’t the case in the 70s.” “What I hope will happen is that we’ll see more vehicles like the Chevy Volt,” agrees Eberhard, “and as electric range increases and the battery pack price decreases, over time the petrol engine will become optional, and in 20 or 30 years cars will be battery-powered, period.” The situation is even more pressing in Europe, where the parliament has gone ahead with a scheme to cap CO2 emissions at 130g/ km, averaged across a carmakers’ fleet. The current EU average is 158g. However, lowcarbon technology is better established here than in the US. Indeed, analysts agree that the mainstream European carmakers might actually profit from the turmoil in the market, as global demand for smaller cars increases. “Volkswagen is looking at building USspecific vehicles from its existing platforms,” says Nagley, “and Ford of Europe could emerge from this very strongly, if Ford of America doesn’t go bust first.” “This plays to the advantages of the German, French and Italian makers and the design of their cars,” agrees Jonas. “And they’ll see a return on their investment in fuelsaving technology like direct injection and turbo-charging.” So the car industry is far from dead. But expect it to emerge from its current crisis looking very different.
44 CNBC EUROPEAN BUSINESS I NOVEMBER 2008
40-42 Death Suv.indd 42
9/10/08 09:29:21