LA 2009: Bob Lutz keynote: "The automobile industry simply can no longer rely on oil"
The news from Bob Lutz's opening keynote address for the LA Auto Show was that GM would be working with some California utilities to test a fleet of 100 Volts. But there was a lot more delivered in that speech and, in the best Lutz-ian tradition, the message was clear and simple: the Volt is GM's most important product. Oh, and he would not be addressing the abrupt resignation of GM CEO Fritz Henderson.
At times, Lutz sounded like a regular ABG reader, name dropping Fisker and Coda and saying he was thankful to Tesla Motors for "furnishing the proof that was needed by those of us who championed the Volt in the corporation that other people believed in lithium-ion technology as well." Now that pretty much every automaker has at least a small li-ion project, he feels vindicated for his early support of the Volt, even though he apparently took some heat for it back then. How confident is he? He said that he predicted that the market for plug-in vehicles would be about 250,00-300,000 in five years, with maybe half of those being GM vehicles. Read on after the jump to find out more about what Maximum Bob had to say.
A key part of GM's strategy to bring cleaner vehicles to market is variety. Lutz said:
He highlighted recent progress GM has made on this front around the world: a deal with Reva to build EVs and to work with the Indian government to develop a recharing infrastructure; a new China Science Lab in partnership with SAIC, and a new Brazilian technology lab for further ethanol work. In the U.S., GM helped get the new national CAFE standard passed in D.C. "The new standards are hard to meet, and they are very tough, and they are very fair, and they are going to raise the average price of the vehicles, but we at GM are committed to meeting or exceeding them or all future requirements in this area," Lutz said. He added that GM will meet these standards by further refining the ICE, working on cellulosic ethanol (see: Coskata and Mascoma) and, of course, by working on hydrogen vehicles. The technology that gets the most attention around the world, though, is the plug-in vehicle. "Movie titles to the contrary, the electric car is far from dead at GM," Lutz said.At GM, we deeply believe that, in an energy-constrained world marked by dramatic growth in developing markets, it is critical that the global automotive industry – as a business necessity and as an obligation to society – develop alternative sources of propulsion based on diverse sources of energy. ... Going forward, the automobile industry simply can no longer rely on oil to supply 98 percent of the world's automotive energy requirements.
Three years ago, when the Volt was announced, there were many critics (especially the Japanese competitors, he said) who said that li-ion would never work in an automobile. Now, three calendar years and countless testing years later, Lutz said that GM is confident that the 16 kWh pack in the Volt will be more than up to the task of powering the Volt. The batteries are being designed to perform as advertised for ten years, but if the battery fails in the 11th year, the customer would need to bring it in and have it replaced, which will likely cost about as much as an engine overhaul on a traditional gasoline-powered car, Lutz said. "I don't see why it should cost more than that."
The Volt has been designed to comply with all major safety regulations around the world, and once production has been ramped up, and he expects that they'll be able to sell all the Volts that they can make, about 50,000-60,000 a year starting in 2012.
Lutz was preceded by Dave McCurdy, president and CEO of the Auto Aliance, who said that, "No U.S. industry is doing more to reduce CO2 emissions than the auto industry." He said that, for model year 2010, the EPA has rated nearly 200 models at over 30 mpg on the highway, a 47 percent increase over 2009 model year vehicles. The U.S. can't do it alone, though, and McCurdy said that Europe is a partner in reducing fuel use, and he said he "welcomed" the recent announcement of U.S.-China partnership to work on energy issues (like this one). You can listen to both speeches below.
Lutz (download 19 MB, 39 min):
McCurdy (download 4 MB, 9 min):
Our travel and lodging for this media event were paid for by the Auto Alliance.
Reader Comments (Page 1 of 3)
BlackbirdHighway 12:19PM (12/03/2009)
If I ran an auto company, I would be paying some very smart people to develop sophisticated models to predict the price of gasoline over the next five years.
Assuming that GM is doing just that, it seems that they are seeing significantly higher prices. I think it would be north of $5 to sell 300,000 plug in cars.
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polo 1:55PM (12/03/2009)
They'll be over a 100K plugins by 2012. That number will easily top 300K before 2015. If gas is $5 the numbers will most likely be triple that.
Dan Frederiksen 1:24AM (12/04/2009)
here's working video of his speech: http://www.youtube.com/watch?v=Y2lYibWkSnU
Daryl Cobranchi 12:55PM (12/03/2009)
Lutz is hoping that the feds will step in and raise gas taxes a dollar or two per gallon.
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EVsuperhero 3:43PM (12/03/2009)
Wonder how much of out national debt could be paid off by just putting a .20 cent tax per gallon on gas and diesel? Not biodiesel.
Ernie 3:52PM (12/03/2009)
Or maybe he can already read the writing on the wall that says this:
Last year, the price of gas was over $4 a gallon.
The only thing that stopped it going higher was a dramatic decline in consumption due only to A HUGE ECONOMIC COLLAPSE.
What happens when the economy recovers? $5 a gallon gas. Then $6 a gallon gas when (not if, *when* - and it's certainly going to happen one way or the other in my lifetime and more than likely within 3-5 years) the world supply of oil starts to tank. Then after that there will be shortages.
That's stupendously bad news for an auto industry entirely dependent on oil, isn't it?
Daryl Cobranchi 4:47PM (12/03/2009)
Or maybe he's hoping for a gas tax hike. And who here believes that GM is NOT advocating a gas tax hike?
From CNN yesterday:
Government help at the local and national levels will be needed to make a car like the Volt a commercial success, said Lutz in a question-and-answer session following his speech.
First, federal gasoline taxes would need to be higher to push the price of fuel up to the point that paying the extra cost of a battery-powered car would be worthwhile.
“We’re not advocating that,” he said, “but if we don’t do that it’s going to get very difficult to sell these vehicles.”
Luke 6:29PM (12/03/2009)
This sort of thing does happen. It's really interesting to hear the CEO of Excelon (an electric utility in the Midwest that mostly operates nuclear and natural gas plants) say, in so many words, "we favor cap and trade because it will screw our competitors more than it will screw us". And so Excelon is out there lobbying for cap & trade.
I don't hesitate to believe for a second that, if GM thought a gas tax or a carbon tax would screw their competitors, they would be lobbying for it. The question, though, is: are they still dependent on their big vehicles, or are the Cruze, the Volt, and their small/midsized offerings really going to be their money-making products, rather than CAFE-loss-leaders? Time will tell, I guess.
paulwesterberg 12:58PM (12/03/2009)
If a buyer expects to own a car for 10 years they need to guess what the price of gas will be in 10 years. It is very hard for buyers to know for sure that gas will continue to be affordable when all of the worlds major oil fields are in decline, world oil production has been stagnant since 2005, and demand in India and China has increased significantly.
I expect that in the next 5 years the price of gas will more than double(inflation adjusted). Perhaps that is why hydrogen backers say that it be viable in 2015.
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polo 2:04PM (12/03/2009)
Even $20 gas doesn't make hydrogen cars viable. Its not the cost to refuel them that is holding them back, its the cost to actually produce the fuel cell cars. People aren't going to suddenly be willing to spend $200K (a breakthrough price for FCs) just because gas is more expensive. If gas prices doubled to $6 then you could kiss GM and Chrysler goodbye along with the hydrogen hoax. At that point the remaining automakers would need to begin immediate crash production programs for VIABLE alternate-fuel cars, and hydrogen cars - even with mass production - would be nowhere near affordable...you'd see a huge swing toward EVs.
letstakeawalk 2:27PM (12/03/2009)
Its the automakers themselves that are saying FCVs will be viable by 2015. Toyota, GM, and Mercedes have all made tremendous progress in bringing down fuel cell costs, and now they simply need to begin tooling up for mass production. Predicted costs for FCVs range from luxury-car-ish ($80,000) by 2015 to high-school-kid-friendly ($20,000) by 2020.
The rising price of gas benefits every alternative fuel technology, as consumers look for, erm, alternatives.
We've waited more than a century for viable BEVs, after all.
Patrick 2:57PM (12/03/2009)
Well said @letstakeawalk. I've heard similar cost figures as well. @polo's "$200k" didn't come from any of the auto companies.
Early vehicles powered by batteries or hydrogen or both will be comparable to the cost of many gasoline vehicles, but a little higher--which is why so much attention is being put on incentives so that the first buys come in large numbers.
Most of the major auto manufacturers have battery programs and most of them have hydrogen programs too. The reason for that is that they're complementary technologies which both show promise. It's too early for any smart company or person to decide which will win in the marketplace with the general public--neither are there yet and both still need to make some progress on the vehicle and infrastructure sides.
Reality Hurts 2:58PM (12/03/2009)
"all of the worlds major oil fields are in decline"
LOL... no. Over the past two years, OPEC has decreased production twice (due to the crash of oil prices), previous, production was increasing slowing since 2005. Both the IEA and OPEC (the ONLY two sources who have enough information to declare if oil was indeed on the decline) have repeadedly said that oil production could increase for another 10-15 years EASILY, and this was BEFORE the two production cuts. It does not take a genious to reason that these two cuts in production could be replaced plus the increase OPEC and the IEA claim there is still potential for. This is also not taking into consideration oil fields that are HUGE but have yet to be tapped, Brazil has an Oil field which many believe is the 3rd largest oil field ever discoverd, and they haven't even brought a drop to full production yet.
Some oil fields (such as Canada's Tar Sands project) have not even reached 60% production potential yet.
We need to get off of oil NOW for the environment. There is still enough oil in this sphere to power and distroy this planet over the next 10-20 years.
I just think it is outrageously hilarious that people still buy this Peak Oil nonsense...
Ignore indepent researches that come up with results based on prices and guesses, oil has not peaked and will not peak in the next five years.... PERIOD.
Mike!!ekiM 3:52PM (12/03/2009)
1) Oil and Coal Executives should have been investing 50 Percent of their Profit in Battery and Electric car tech for the last 20 years.
2) Peak Oil has already been reached by 60 Percent of the countries that pump oil. What makes you think the other 40 Percent will be immune to the same effect?
3) China and India, with the stupid help of WalMart and WallStreet are giving away US factories. The 20% drop in employment has been transferred to China, the "Velocity of Money" magic is now giving them the Recovery We Should Have Had.
4) Saudia Arabia has yet to increase production, and new exploration has come up Dry.
No, we won't RUN OUT of oil tomorrow, it will just get More Expensive and More Volatile[ Higher Price Swings during Panics ].
Aside from what the US can do, you should be insulating yourself from the coming effects of Peak Oil by cutting your consumption as part of your budget each year, because the Chinese aren't buying 1 cylinder TaTa's they're buying Bug US Suv's as these are the Factories that have been Exported to their country.
We Now consume 85 million barrels of oil a day. What will it be in 2 years?
Joeviocoe 7:06AM (12/04/2009)
@letstakeawalk
"We've waited more than a century for viable BEVs, after all"
But energy dense Li-Ion batteries have only been in the market for about 15 years. Before that, nothing could compare to cheap, energy dense, plentiful petroleum. Now things are VERY different.
And even when (yes, I agree) fuel cell vehicles are made in high volume and the cost comes down to ICE levels, that doesn't solve the cost of operation problem. In 2020, if a BEV and FCV both costs $20k. And both a H2 fueling infrastructure and a fast charging infrastructure are in place.
It would ALWAYS be cheaper, and more efficient to drive the pure electric rather than going through more expensive and energy intensive conversions to and from hydrogen.
And BEVs (as expensive as they are now) STILL have the lead on being cheaper than FCVs. And without the NEED for expensive infrastructure, they will keep that lead.
Joeviocoe 7:19AM (12/04/2009)
@Reality Hurts
Folks who don't understand what "peak oil" really means, also don't understand the difference between "tar sands", "oil shale" and conventional crude oil fields.
http://en.wikipedia.org/wiki/Petroleum#Crude_oil
Sure there are plenty of sources that are more costly, take longer, and require more energy to extract. But that doesn't really push back or prevent "peak oil". Drilling in tar sands or shale means we certainly won't run out. But "peak oil" doesn't say "run out", but only means that production will decrease each year.
People think oil field and assume it is the liquid crude oil spewing up like a geyser when they strike. Nope! Not anymore. These "new discoveries" are mostly the petroleum embedded into rock or sand. Much more difficult and expensive to process into a barrel of crude.
Tim 1:30PM (12/03/2009)
Well, Bob was right... Man made global warming IS a CROCK.
Bob is ALSO right in that man can no longer rely on oil as the automobiles only power. Not because of CO2 Climate BS, but because of Energy Independance, National Security and Peak Oil.
If we are going to get off oil, let's do it for the TRUTH instead of a bunch of Al Gore, Global Social-Fascist Gov't, Regressive Redistribution BS!
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sean lawrence 1:37PM (12/03/2009)
Tim for President!
polo 2:06PM (12/03/2009)
Of course global warmings not man-made. Even the concept of it threaten billions in profits from some very powerful energy and manufacturing corporations. So idiots like Tim are played for fools thanks to some expensive PR.
Tim 2:18PM (12/03/2009)
What is Pollock talking about?
I've been against ANY redistribution of ANY kind for ANY reason.
Why, Because theft is WRONG even if you give some of that stolen property to others. Ignoring the Rule of Law INCLUDING the 9th and 10th Amendments which came AFTER and AMENDED the "Commerce Clause" and the wording of "Necessary and Proper" is ALSO wrong. Then again, so is Regressive Social-Fascist Keynesian Central Planning.