Will a New Day Dawn in Detroit

Will Detroit find a way to win over China and save oil in the United States at the same time? It has a chance. The first signs appeared at the Los Angeles Auto Show in 2006.

We've all heard that old dogs can't learn new tricks, but old corporations quite possibly can. That thought must have crossed the minds of the assembled crowd in Los Angeles on November 29, 2006, when CEO Rick Wagoner boldly announced that GM was going to produce hybrid cars, including some that would actually plug in. "We intend to bring our substantial global resources to bear on this issue starting yesterday," he said. "It is highly unlikely that oil alone is going to supply all of the world's rapidly growing automotive energy requirements"24

If GM is serious, the world could change. GM's goal is to run its Volt plug-in hybrid on batteries alone for the first forty miles. That would make it even more efficient than the CalCar. The question is whether, given its track record, GM is serious about commercializing the car. Wagoner did not go so far as announcing a production date but said, "I can tell you that this is a top-priority program for GM, given the huge potential it offers for fuel-economy improvement."25

Is this dog truly learning a new trick—in fact, a new bag of tricks? There are some reasons to believe it is the former. First, Wagoner and other GM executives have publicly recognized that they misunderstood the impact of Toyota's launch of the hybrid Prius in 1999. Moreover, Wagoner's announcement about plug-in hybrids was accompanied by his equally important announcement that GM would begin to produce itsVue model using its current hybrid system to achieve 20 percent better fuel efficiency, as well as a second model with improvements that would allow 45 percent better mileage. That could mean GM truly gets it.

More important, GM has made real business commitments dedicated to perfecting the technology needed to bring its Volt to market. In January 2007 it signed two agreements with battery developers to prove the reliability of lithium ion batteries. One of them, the A123 Company, described the batteries as merely needing engineering improvements to be ready for the road. They already power a wide variety of Black & Decker power tools; they just need to be configured for safety and reliability in a car.

For now, Chelsea Sexton is cautiously optimistic. "They have come full circle and are trying to do better," she says. "They are starting to see how much enthusiasm there is for that technology."26 Felix Kramer adds, "I think Detroit is starting to get it. We consider it a victory for the grassroots, CalCars, and the Internet-led effort."27

"We must—as a business necessity—develop alternative sources of propulsion," says Wagoner.28 But GM has much catching up to do. Sales

The electric car has come full circle from the 1830s, when Robert Anderson of Scotland invented the first electric carriage, to today's plug-in-hybrids. Shown here: Thomas Edison poses alongside the electric Bailey roadster; GM unveils the plug-in Volt in 2006. (U.S. Department of the Interior, National Park Service, Edison Historical Site, 14.625/12 neg. 214; Chevrolet.)

The electric car has come full circle from the 1830s, when Robert Anderson of Scotland invented the first electric carriage, to today's plug-in-hybrids. Shown here: Thomas Edison poses alongside the electric Bailey roadster; GM unveils the plug-in Volt in 2006. (U.S. Department of the Interior, National Park Service, Edison Historical Site, 14.625/12 neg. 214; Chevrolet.)

of Toyota's hybrids already exceed the entire sales of GM's Saturn models, and sales of hybrids are expected to rise from 200,000 in 2006 to 535,000 in 2011, according to J. D. Powers and Associates.29

There is no doubt that GM is committed to hybrids in China. GM's Chinese sales increased 36 percent in 2005 and, on November 6, 2006, Wagoner announced that the company will build Chinese hybrids in collaboration with a local partner, Shanghai Automotive Industry Corporation.

GM is not alone in starting down the hybrid path. At the same Los Angeles Auto Show, Ford announced that it has redesigned its Escape hybrid to be quieter and less expensive, and Nissan announced its intention to build hybrids. But right now GM and Ford are staring into the abyss of a financial crisis. Both have had to mortgage their plants for operating capital. Attitudes may indeed be changing—impending demise has a way of focusing the mind.

When twenty-one new alternative-fuel vehicles were showcased at the LA Auto Show in November 2006, it was clear that the tectonic plates of the international auto industry were moving. "It sort of feels like the early part of the twentieth century, when everyone was trying to figure out whether to go with steam or electricity or gasoline," says

Gavin Conway, editor of Automobile magazine. "People are saying, do we go with electric, hybrids, diesel, or what?"30

Whatever the direction, the production infrastructure is already being put in place, with leadership from rank-and-file members of the industry. A prime mover in these efforts is Charles Griffith, head of the automobile program for the Ann Arbor-based Ecology Center and a member of the Michigan Apollo Alliance. He launched the Green Machines Tour, a series of research projects and events drawing attention to the auto jobs that are being created today in plants across America's manufacturing Rust Belt through energy efficiency. Workers are already building advanced transmissions, hybrid drive trains, and more efficient gasoline and diesel engines and working with lightweight composite materials and other elements of the cars of the future.

In Michigan alone, Griffith has identified fifteen different plants producing technology that improves fuel efficiency. He can point to $1.5 billion of investment in new manufacturing technology, money that will go into building the next generation of product, investments that will create or preserve more than 2,300 jobs and increase fuel efficiency up to 20 percent.31

Describing these investment levels, Griffith says, "Yes, the industry is reeling now, but they also are making huge investments in the next generation of products. Toyota is not going to march in and take over all of these plants and save the day for these communities. It is going to have to come down to the Big Three investing in these new technologies that make transportation more efficient."

These plant upgrades are saving real jobs. In Ypsilanti, Michigan, in a factory on the edge of closing, GM invested $450 million in a new, highly efficient, six-speed transmission that will improve fuel economy by as much as 10 percent over a standard four-speed transmission.32 That investment saved 650 jobs. Ford invested $170 million in its Livonia transmission plant, which since 2005 has been producing over 100,000 of those high-efficiency transmissions a year to put in its Mustangs, Explorers, and other lines.

"Displacement on demand" technology saves from 5 to 20 percent of fuel by allowing half the cylinders in an eight-cylinder engine to shut down when driving conditions are not demanding, turning a gas guzzler into a more efficient, four-cylinder engine much of the time. Another 5 percent gain can be squeezed out of engines using "dual variable valve timing," a technology creating five hundred new union jobs and built at a new joint venture of DaimlerChrysler, Hyundai, and Mitsubishi in Dundee, Michigan.33 Numbers like these explain why UAW president Ron Gettelfinger has said, "Retooling our auto industry to produce cleaner, greener vehicles has to be part of any comprehensive energy and jobs strategy for Michigan."34

These are not only blue-collar, assembly-line jobs. Recently, GM, DaimlerChrysler, and BMW launched the new Hybrid Development Center in Troy, Michigan—which employs over five hundred engineers, technicians, and other specialists—to speed up the development and deployment of hybrid technology.35 In an industry that sells over 16 million cars and trucks a year in the United States, each of these changes is small, but with billions of dollars flowing to new fuel-saving technology and research, there is hope that this is more than window dressing; and in every community where a plant is saved, the impact is enormous. Only time will tell whether a comprehensive change in strategy is truly coming to Detroit.

We need more than promises. But should they succeed, the companies that gave us the Corvette, the Mustang, and the GTO will be part of the new, clean-energy future. If they do not, other companies will.

Let's pull for the home team. It's a good play for Chevrolet.

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