General Motors’ Vice Chairman Bob Lutz might have a reputation for pushing the production of performance cars, but high fuel costs and tough new CAFE regulations have him leading GM towards a leadership position in the hybrid revolution with 100-plus-mpg cars.
I’m not one to turn down a meal at a fine restaurant, especially when it’s on the dime of a corporation trying to spin its latest message or show new products. When I received an invitation to have dinner with General Motors Vice-Chairman Bob Lutz at Seattle’s famous Edgewater Hotel, I couldn’t confirm my attendance quickly enough.
If Lutz isn’t the most powerful and important person in the auto industry, then he’s a close second. Even though he is below GM CEO Rick Wagoner on the corporate org chart, Lutz has more influence over product direction. And because of his extensive experience in the automotive industry, journalists often look his way for answers before turning to Ghosn, Mulally or Zetsche.
And let’s face it – anyone who can take credit for green-lighting cars such as the BMW 2002 Turbo, Dodge Viper and upcoming Corvette ZR1 is someone I need to meet with over dinner.
Lutz has been in the Northwest selling the media on the future of GM. In a world that has been critical of GM’s financial woes and reliance on sales of trucks and SUVs going into an era of costly fuel, it hasn’t been an easy task. Passage of the 35-mpg CAFE standard in Congress has just made his job even harder.
Joining me for the dinner discussion are five other selected journalists. Three are from Cardomain.com, while the other two are environmental bloggers from the Northwest. Also in attendance are other GM heavyweights — who even without the presence of Lutz would make for a great evening of car-related banter. On my left is Dee Allen, the good-humored Staff Director Global Product & Brand Communications Integration. Across from me is technical/engineering guru Mark Labaere. Sitting beside me on the right is Dave Barthmuss, GM’s impressive Group Manager for the Western Region, Environment & Energy Communications. Dave is best known for being painted as a villain in his role overseeing the EV1 project in “Who Killed The Electric Car”, a film that I liken to “Tucker: A Man and His Dream” in ratio of facts to creative license for the sake of storyline.
The tall, commanding Lutz walks into the room. He overhears my comment to Dee Allen about declining the opportunity to drive a 1964 Lotus Elan to the meeting for fear that the few ominous clouds would require me to spend too much time fumbling with the Erector-Set top in the middle of a sudden downpour. He comes back with a story about the miserable tops on the pre-production Viper RT/10, as well as how one blew off at 175 mph during media testing on the Autobahn. You have to love any top executive who is as at home doing car small talk as when standing at a podium.
As we sit down, Lutz dives right into the major topic of his West Coast swing: GM’s commitment to making its Chevy Volt plug-in hybrid the standard of the world. Unlike Toyota’s Prius, the Volt will have the capacity to run on battery-only mode for around 40 miles. Considering the typical commuting pattern, Lutz believes that this can translate into real-world 100 to 200 mpg fuel consumption.
Driving the decision are federal regulations. In Lutz’s opinion (as well as mine and any other sane person in the world), combining 35-mpg CAFE standards with the added weight that comes with airbags, electronics and sheet-metal required to meet federal crash and safety requirements translates to a limited future of traditional gas and diesel-powered vehicles.
Like many journalists, I was outright skeptical when the Volt concept was first unveiled. It required lithium ion battery technology that didn’t exist at the moment. It also sounded more like somewhere between a marketing gimmick and a test of concept play (ala the EV1) rather than a technology on which many GM products would soon be based. The need to hit 35-mpg CAFE standards and fuel hitting near five dollars per gallon have changed opinions.
On the important topic of battery technology, Lutz immediately exhibits his indispensible value to GM. For those who forgot what he did after leaving Chrysler, Lutz was the CEO of Exide Battery. Yes folks, this is one of the few executives in the auto world who actually understands the production of batteries cradle-to-grave, as well as the business side of storing and delivering power – such as that it takes four minutes of man-hours to make a modern battery unit.
While Lutz believes that cellulosic ethanol provides a great potential for being a part of energy independence in the future, there’s no doubt that Chevy – and soon GM as a whole will be relying on the Volt’s next-gen hybrid technology. When I ask if and when the technology might make it into a Cadillac (to fight the Lexus hybrids and BMW 7-Series hydrogen cell vehicle), Lutz is quick not to say “no” or “yes”. Instead, like a good salesman, Lutz questions if I think a hybrid Cadillac should be in the works. I respond that as a former marketing guy, I’d want to see the segment research statistics.
“If you’re a marketing guy, you should know that you should make decisions with your gut, not statistics.” Lutz replies.
“With all due respect, even the best guts can lead them towards a bad decision” I say with a smile, eluding to a few of Lutz’s past plays that didn’t work out as planned – such as the recent Holden/Pontiac GTO disappointment.
Lutz comes back with a zinger — asking me how many baseball Hall of Famers have 1.000 batting averages…and then again asks what my gut tells me.
Obviously, I think it’s “a no-brainer”. Applying the Volt technology to an upscale, luxurious Cadillac (or Buick, for that matter) would have minimal cost, yet pay huge dividends in expanding into a segment where additional people would be willing to spend money for both the value and image of owning a green car. Being green is fashionable, and those with money are willing to spend more on fashion. From Lutz’s facial expression to my answer, I would guess that GM is already hard at work preparing to produce hybrid front-wheel-drive Caddies.
Lutz is a realist, though, and knows that the transition to electrical cars will not be without challenges. When I question about the trouble Chevy has traditionally shown servicing Corvettes (especially since the gizmo-laden 1984 model) in relation to the more high-tech Volt, Lutz admits that training and reducing the role of traditional dealer service for the non-standard technology are hurdles.
There is absolutely no doubt that the whole GM contingent strongly opposes the 35-mpg CAFE standard, which is the driving force to the Volt. (They cite the $6,000 of extra cost it will apply to cars – similar to the figures when the federal government has mandated safety and emissions requirements in the past.) GM and the other auto manufacturers have a history of predicting doom and gloom with each large federal and state regulatory step – and historically these regulations have actually helped, not hurt GM. The list of foreign manufacturers that left the market in 1968, 1975 and other years of tightening emissions and safety standards is long.
This increased 35-mpg standard has forced their hands to taking what looks like GM’s first leadership position in years. When the Volt comes out in 2010 — Lutz projects cars will start hitting dealerships in November, it will certainly have beaten all of the other next-gen hybrids to market. In other words — what is seen by everyone in the auto industry as a great pain might actually be a true gift to GM.
Lutz talks about his decades-long support of increasing the federal gas tax as the fairest way of reducing gas consumption. He feels this can funds the renewal of dilapidated interstates and state highways, (as well as possibly helping to cover better national health insurance, another large cost on GM’s shoulders). Yet while a gas tax is better policy, substituting a large tax for the 35-mpg CAFE legislation could have never forced the hands of the major automakers to produce discontinuous innovations.
The question comes up if the American automotive manufacturers are currently selling gas guzzlers, because that is what makes the most money. Lutz is quick to point out that GM has been selling what customers have wanted.
“All the marketing and advertising in the world won’t make someone buy something they don’t want. People have wanted big SUVs and trucks.”
With high gas prices this has all changed. Thanks to Congress, even if people want big rigs in America, no manufacturer will be able to sell them in great numbers without offsetting it with the sale of ultra-efficient cars. The GM crew is obviously not happy about this part!
Maybe Lutz should see the federal regulations like I do: a vote of confidence that when pushed into a corner, that the brilliant engineering minds working for the automotive manufacturers can create a solution.
And if what Lutz says is true, the future of GM and auto consumers worldwide is quite sunny. By as early as 2010, cars will be available that will deliver 200-mpg averages, will be serviceable at any local dealership, and carry the quality and style of GM brands. Even better, these front-wheel-drive cars will enable small-volume rear-wheel-drive performance cars like the Corvette and Sky to continue.
So for the first time in a long time – GM seems to be taking the lemons of high gas prices, slumping sales and stringent regulation and using very strong and bold leadership to make some pretty sweet lemonade for auto consumers around the globe.