GM's $15.5 Billion Loss Pushes Volt, Electric Vehicles To Front Burner
The financial news from GM (NYSE: GM) Friday is much worse than expected. The $15 billion second-quarter loss could send the automaker into a crippling skid -- unless GM rededicates itself to getting its plug-in hybrid cars to market -- fast.
GM Vice Chairman Bob Lutz tried to soften the financial blow on July 15, writing coyly in his blog, "Our business results aren't yet what we want them to be." He pointed his finger at oil prices as the culprit:
Now, it's easy for everyone to say about oil prices, "They should have seen it coming." My answer to that is nobody saw it coming. Not the economists, not the governments, not the oil companies, not the smartest pundits in the world -- no one saw it coming, not this kind of rise.In truth, plenty of economists and analysts and other car companies saw this oil fiasco barreling down the pike. Toyota (NYSE: TM) certainly saw it coming -- it didn't magically pull the Prius out of its hat. Toyota has sold more than 1 million of the hybrid cars and is preparing to add solar panels to next year's models.
Tesla Motors -- with backing from Googlers Sergey Brin and Larry Page -- also anticipated the public's desire for an electric roadster that was more than a glorified golf cart. Production roadsters started shipping in July, and the company has announced that a second model, a sedan, will be manufactured in California.
For further proof that the oil squeeze was expected, a quick search of Amazon (NSDQ: AMZN) for "oil crisis" turns up 10,796 titles dating as far back as 1963.
Let's be clear: GM and its peers wasted decades on pumping out land-barges when gas was cheap, and didn't sufficiently prepare for this day.
Now GM needs to stop playing the blame game and redouble its effort on the Volt, and on its other plug-in hybrid, the Saturn Vue.
Larry Nitz, executive director of Hybrid Powertrain Engineering told an audience at the Plug-in 2008 Conference in San Jose, Calif., last month: "We currently are testing 11 Saturn Vue plug-in hybrid-electric vehicles (PHEV) at the GM proving grounds in Michigan and Arizona."
Unfortunately, the Vue isn't expected to arrive for "a couple of years." Neither is the celebrated Volt.
At $40,000 -- $10,000 more than previous estimates -- the Volt is at least two years away, and it's going to spill even more red ink on GM's books, according to Lutz.
Two years may be too late for GM. They'd better step on it.
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