Wild About Writing

Watching General Motors president Fritz Henderson announce the company has gone into bankruptcy protection left me with the feeling that we are truly at the end of an era.

The Canadian, Ontario and U.S. governments now own 72 per cent of the company after committing to bail-out packages totaling $59.5 billion.

I’m reminded that when the Big 3 presidents went to Washington last fall to ask for the bail-out, they flew there on private jets and didn’t have a clue as to what they would do with government assistance. Just give us the money, they pleaded.

Since then, President Obama has bounced the head of GM and it and Chrysler have come up with restructuring plans. The humiliation of the auto giants is complete with this week’s GM bankruptcy.

The rationale for bailing out the auto industry has been that whatever its cost, rescue would be less than the cost to the economy of letting these companies go down the drain.

This might be true, but it’s something that has to be taken on faith. There’s no way of proving the theory right or wrong without testing an alternative to bail-out. The politicians aren’t going to do that.

Now we’re being told that despite all the mistakes of the past — sticking with gas guzzlers, building too many units — GM has come up with a new vision for its future.

That vision rests largely on the Chevy Volt, the new all-electric car into which GM is pouring a billion dollars.

An important fact, hastily glossed over in GM’s publicity hand-outs, is that the Volt represents at best on emerging technology that may or may not prove practical.

• The Volt, due out in the fall of 2010, will cost $40,000 in the U.S. and about $50,000 in Canada — twice the cost of the hybrid Toyota Prius. Even with government rebates (another plus to the bail-out cost) it’ll still be far pricier than its proven hybrid competitors.
• The Volt’s reliance on giant lithium-ion battery technology remains to be proven in real operating conditions. It may run into problems in extremely hot or cold temperatures.
• The Volt’s battery will need recharging after 64k. This will be done via a back-up 1.4 litre cylinder engine, followed by an overnight plug-in to a household electrical outlet. Savings on gas will be offset by higher electrical costs.

Even if GM can overcome these technical and economic issues, it’s up in the air as to whether it will be able to make money manufacturing Volts.

There’s no doubt a market for the 11,000 Volts that GM plans to produce next year. They hope to roll that up to 60,000 annually within five years. Even so, its contribution to GM profits will be little or nothing.

The Volt will give GM an up to date, enviro-friendly image. It may even burnish the company’s reputation for having killed an earlier all-electric car, the EV1.

General Motors made eight hundred of those two-seaters for leasing to customers in California and Arizona. They cost $80,000 to make. When the company finally realzed there was no way the EV1 could ever become a viable production car, GM knocked it in the head. It’s been suffering PR bruises ever since.

The EV1 itself was primarily a ploy to gain approval of the California authorities, who were demanding that 10 per cent of new cars meet zero-emission standards. So much for that rule.

It was the same thing with SUVs. The Big 3 made them as a way to get around tougher gas consumption rules. Congress exempted vehicles built on truck bodies, which would be used for essential work, not pleasure. So the industry came up with SUVs, passenger cars riding on truck frames. Another rule subverted.

With the new era of government control, one can hope for more faithful adherence to the rules in the future, I think we can be forgiven a little skepticism.

Recently, The New Yorker devoted an exceptionally long article to GM’s past and future. The conclusion: It’s chances are  not good. Even the company’s own Larry  Burns admitted that companies facing the kind of transformation GM is looking at “usually don’t come out of it the winner.” There’s an abstract of the article here.

Anticipating the GM bankrupcty announcement, the Globe and Mail ran a long piece Saturday, Can the Volt Recharge GM? It’s here. 

The question I have is why is GM focusing on a doubtful all-electric car instead of proven hybrid technology?

The Chevy Volt will likely turn out to be just another false hope unless GM comes up with a way to extend its driving distance. As the engineers used to say, “Batteries are for toys.”

Trying to prove differently puts GM on a high-risk path. There’s no evidence yet that the Volt will save GM.

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My new book, Scott Joplin and the Age of Ragtime, explores the life of Joplin and other musicians, writers and artists whose works brought such profound changes to modern culture in the Ragtime Era, the period between the 1890s and the First World War. Check it out here.