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Published on December 2nd, 2008 | by Nick Chambers

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Next Up For Bailout Money: GM Says it Needs $18 Billion


As the second of the Big Three to come wagging their tails between their legs to the US Congress, General Motors is asking for a total of $18 billion dollars to avoid imminent bankruptcy. The only problem: nobody gave them the electric car memo.

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Unlike Ford, which in their tail wagging earlier today made a huge shift to focusing on electric car development, GM chose to focus their restructuring plan on the fact that they have a large number of fuel efficient vehicles (defined as 30+ mpg on the highway) already on the road. Plus, they say that by 2012 more than half of their cars will be flex-fuel capable.

They make a passing mention of the upcoming Volt and highlight the upcoming introduction of SUV and pickup truck hybrids like the 2009 Saturn VUE, Silverado and Sierra hybrids. By 2012, GM says it will offer 15 hybrid models.

Oh man. Whoop-dee. Where’s the reinvigoration? Where’re the new strategies? WTF? We already know about flex-fuel cars and Detroit has done a piss-poor job of marketing them. We already know about your old-school hybrid technology. Nobody cares about hybrid SUVs anymore. Give me a break GM. Are you really going to hang your hat on the one piece of truly innovative technology you have — the Volt? Have you given up?

I’m sorry, but the writing’s on the wall. These are not the solutions that Americans are clamoring for or excited to support. The fact of the matter is that companies like Nissan, Mitsubishi and now Ford have seen the future of driving for most people, and that future is electric.

Look, as much as I appreciate the fact that current electric car technology won’t fit everybody’s needs — read: rural folks who drive long distances daily and haul a lot — and that clean car technology for those folks involves biofuel powered automobiles, the electric car looks like it’s the best solution for 80-90% of the US’ driving population.

Certainly flex-fuel vehicles are going to be an integral portion of our automotive future (if the manufacturers would just start tuning cars to actually run efficiently on ethanol), but it’s not the best available technology for short distance commuters or city folks.

For GM to come up with this as their best plan shows a lack of initiative and creativity. It’s like they went home and sulked and procrastinated until the night before the big project was due and then did some s@#t piece of BS right before it was due.

Just ridiculous. Didn’t the Big Three talk to each other before presenting their plans? Didn’t GM realize it was going to come off looking like the schmuck? Give me a break. All their plan shows is that they’re as resistant as ever to real change.

You can read the press release here

Download the actual restructuring plan here

Photo Credit: gotplaid?‘s Flickr Photostream under a Creative Commons License


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About the Author

Not your traditional car guy.



  • Tim Cleland

    Maybe deep down they want to go into bankruptcy to rid themselves of UAW contracts and dealer franchise agreements.

    I’ve actually stood up for GM in that I’ve pointed out on several blogs that GM cars lead in fuel economy in many classes (Cobalt/G5 XFE, Malibu/Aura/G6 4-cyl, full-size trucks, full-size SUVs, full-size hybrid truck/SUV) plus a slew of other cars that are also very fuel efficient if not leaders in their class (HHR, Vibe, Astra, Aveo/G3), but the truth is they simply cannot compete with all their problems (UAW contracts, retiree medical, too many brands that they can’t eliminate due to state laws).

    GM needs SUV/truck sales to remain profitable because their overhead is so high that only large, more luxurious vehicles have a large enough profit margin for them. The problem is that no one wants (nor can afford) those vehicles anymore due to gas prices (the memory of $4-5/gal gas has made CAFE irrelevant…people are enforcing their own private CAFE rules with their wallets).

  • Tim Cleland

    Maybe deep down they want to go into bankruptcy to rid themselves of UAW contracts and dealer franchise agreements.

    I’ve actually stood up for GM in that I’ve pointed out on several blogs that GM cars lead in fuel economy in many classes (Cobalt/G5 XFE, Malibu/Aura/G6 4-cyl, full-size trucks, full-size SUVs, full-size hybrid truck/SUV) plus a slew of other cars that are also very fuel efficient if not leaders in their class (HHR, Vibe, Astra, Aveo/G3), but the truth is they simply cannot compete with all their problems (UAW contracts, retiree medical, too many brands that they can’t eliminate due to state laws).

    GM needs SUV/truck sales to remain profitable because their overhead is so high that only large, more luxurious vehicles have a large enough profit margin for them. The problem is that no one wants (nor can afford) those vehicles anymore due to gas prices (the memory of $4-5/gal gas has made CAFE irrelevant…people are enforcing their own private CAFE rules with their wallets).

  • http://www.scientificleader.com Matt Barney

    I agree with Tim Cleland. If they don’t really want to go bankrupt, and actually have a running start without the straightjacket of the union contracts, something is seriously wrong with the leadership – http://blog.scientificleader.com/2008/12/02/suffering-from-human-capital-distortion/

  • http://www.scientificleader.com Matt Barney

    I agree with Tim Cleland. If they don’t really want to go bankrupt, and actually have a running start without the straightjacket of the union contracts, something is seriously wrong with the leadership – http://blog.scientificleader.com/2008/12/02/suffering-from-human-capital-distortion/

  • Doug

    I really think 1 of the “big” 3 needs to be made an example of to wake the others up. Personally I think Chrysler should be allowed to die and GM be forced into chapter 11. Of the 3 only Ford has actually increased the quality of its cars over the last decade. GM may have better fuel economy, but the cars are all poorly made POS.

  • Doug

    I really think 1 of the “big” 3 needs to be made an example of to wake the others up. Personally I think Chrysler should be allowed to die and GM be forced into chapter 11. Of the 3 only Ford has actually increased the quality of its cars over the last decade. GM may have better fuel economy, but the cars are all poorly made POS.

  • Michael Bryant

    how about the hyodgen fuel internal combustion engine car. Cost around natrual gas car and cheaper to electric car with same range. Maybe if tank teck gets cheaper the cost will go down for the ice hyodgen fuel car. A home hydorgen genortor will make paratical.

  • Michael Bryant

    how about the hyodgen fuel internal combustion engine car. Cost around natrual gas car and cheaper to electric car with same range. Maybe if tank teck gets cheaper the cost will go down for the ice hyodgen fuel car. A home hydorgen genortor will make paratical.

  • Phil Colley

    I’m with GM Communications and we’ve been on an advanced technology path for several years now, which we’ve addressed in our plan to Congress. Consumers deserve choices and we envision a future of energy diversity with electricity, biofuels, hydrogen and petroleum-based fuels because our customers’ needs are vast. There is no silver bullet solution and we will continue to work toward that future.

    Some key points of clarification:

    1) GM is leading the charge in mainstream electric vehicle development with the Chevy Volt. We moved electric vehicles to the forefront of the debate when we revealed the Volt in 2007.

    2) Our 2-mode hybrid system is arguably the most advanced production hybrid system on the market today. It was the first application of 2-mode hybrid technology for passenger cars and offers 50 percent improvement in city fuel economy for all GM vehicles equipped with the system. Plus, the GM-Allison version of this technology is also used extensively for major-market public transit buses. Since 2003, our hybrid buses have saved more than five million gallons of fuel and almost 50,000 metric tons of CO2 by our estimates.

    3) We also agree flex-fuel vehicles are an “integral portion of our automotive future,” which is why GM has led the way in producing and promoting the use of flex-fuel vehicles. We are the clear leader in number of flex-fuel vehicles on the road, and we’ve even invested in the promising future of cellulosic ethanol through strategic alliances with Coskata and Mascoma.

  • Phil Colley

    I’m with GM Communications and we’ve been on an advanced technology path for several years now, which we’ve addressed in our plan to Congress. Consumers deserve choices and we envision a future of energy diversity with electricity, biofuels, hydrogen and petroleum-based fuels because our customers’ needs are vast. There is no silver bullet solution and we will continue to work toward that future.

    Some key points of clarification:

    1) GM is leading the charge in mainstream electric vehicle development with the Chevy Volt. We moved electric vehicles to the forefront of the debate when we revealed the Volt in 2007.

    2) Our 2-mode hybrid system is arguably the most advanced production hybrid system on the market today. It was the first application of 2-mode hybrid technology for passenger cars and offers 50 percent improvement in city fuel economy for all GM vehicles equipped with the system. Plus, the GM-Allison version of this technology is also used extensively for major-market public transit buses. Since 2003, our hybrid buses have saved more than five million gallons of fuel and almost 50,000 metric tons of CO2 by our estimates.

    3) We also agree flex-fuel vehicles are an “integral portion of our automotive future,” which is why GM has led the way in producing and promoting the use of flex-fuel vehicles. We are the clear leader in number of flex-fuel vehicles on the road, and we’ve even invested in the promising future of cellulosic ethanol through strategic alliances with Coskata and Mascoma.

  • Travis

    I’m curious about the needs of 80-90% of drivers being satisfied by electric cars. I’m not disputing it, I’m just curious where the # came from. I would guess that more than 10-20% of Americans are rural folks who drive long distances.

    Also, if people in cities used other sources of transportation more frequently then their need for driving electric cars would go down,a nd would also lower the % of Americans looking for electric.

  • Travis

    I’m curious about the needs of 80-90% of drivers being satisfied by electric cars. I’m not disputing it, I’m just curious where the # came from. I would guess that more than 10-20% of Americans are rural folks who drive long distances.

    Also, if people in cities used other sources of transportation more frequently then their need for driving electric cars would go down,a nd would also lower the % of Americans looking for electric.

  • Nick Chambers

    Travis (Mr. W),

    Those statistics are routinely thrown around by marketing execs of all the major car companies and by government officials at the DOE and EPA. For instance, here’s a DOE press release talking about their plug-in hybrid program that states that a 40 mile range is enough to satisfy 70% of all daily US driving needs:

    http://www.energy.gov/news/6337.htm

    My estimate of 80-90% is more than likely on the low end, and it’s actually more like 95-97% of all US daily driving needs are covered by a range of 100-130 miles.

    Here’s a Gallup poll that shows how long the average commute in the US is. Granted length of time can be deceiving and may not be directly correlated to distance, but any roundtrip commute under an hour and a half is more than likely less than 130 miles. If you accept this logic, according to that Gallup poll,81% of people commute less than 130 miles each day. Also, those statistics do not include people who don’t drive to work every day (retirees, permanently disabled, teenagers, college students, stay at home parents) who more than likely also drive less than 100-130 miles each day.

    http://www.gallup.com/poll/28504/Workers-Average-Commute-RoundTrip-Minutes-Typical-Day.aspx

    If people in cities had access to good public transportation (which is what I assume you’re insinuating), then for sure a certain amount of those people would stop driving their short distance commutes, but, being Americans, this will be a small amount of people. Plus, it doesn’t account for those of us that live just far enough away to never get on the public transportation radar.

  • April

    The debates have certainly been interesting. I weighed in with my opinion and suggestions to the Congressional Financial Services Committee and the Senate Banking Committee.

    I don’t think any one group can assume full responsibility for our gas mileage problems. The unions’ influence rises and falls, just like the automakers, and EPA, DOE, White House, and Capitol Hill. There is no reason to blame the unions for everything. Honestly, GM (salaried) management made the promise of retiree benefits back in 1950. The promise of security isn’t the problem. Management’s inability to produce enough revenue by staying ahead of competition to make good on those promises is a problem.

    As far Capitol Hill caving in on increasing CAFE standards over the last 30 years, what’s their excuse? The lobbyists made them do it? What’s consumers’ excuse for not demanding higher CAFE standards? Gas prices started falling (much like now). None of us can afford to make the same dopey mistakes now. We’ve deferred into the future what can’t be deferred any longer.

    Whether all or some of the automakers get federal bridge loans, there will be layoffs. Personally, I think the absolutely best course of action that can be taken is for some of the funding to be set aside for training mechanics to convert existing cars. Also to infuse the SBA to help those laid off workers to build their own car start ups.

    As we know from this site and others, a natural gas-powered car niche market is gaining traction in Utah.

    As we have heard from T. Boone Pickens (“been an oil man all his life” and got plenty wealthy in that field), natural gas is a viable bridge fuel because US current reserves will last roughly 11 years, and it’s cleaner than fossil fuels. A natgas/plug-in would extend the longevity by at least a decade. And clean up our air while reducing reliance on OPEC (which incidentally includes Iran and Venezuela).

    As we know from Fast Company magazine, an open source site for car designers and engineers is making strides. http://www.theoscarproject.org/

    Supporting training for current car conversion will help all three automakers in the event that demand decreases more than they anticipate. It’s a stream of income with arguably higher profit margins, even though the sale is less than a new car. It will also save plenty more dealerships from going under. They may still lose some workers, but their doors will remain open. Converting existing gas guzzlers lowers emissions exponentially faster and buys time for the automakers to exceed CAFE standards with new car production.

    Bankruptcy is not a viable option. It’s too expensive. Too time consuming. And for comparison, let’s remember that Delphi went into bankruptcy reorganization in 2005 – and hasn’t emerged yet. They’re only one supplier. GM has over 200,000 employees. Bankruptcy is hardly feasible.

    We have innovation on our side and we can do this. We have to.

  • April

    The debates have certainly been interesting. I weighed in with my opinion and suggestions to the Congressional Financial Services Committee and the Senate Banking Committee.

    I don’t think any one group can assume full responsibility for our gas mileage problems. The unions’ influence rises and falls, just like the automakers, and EPA, DOE, White House, and Capitol Hill. There is no reason to blame the unions for everything. Honestly, GM (salaried) management made the promise of retiree benefits back in 1950. The promise of security isn’t the problem. Management’s inability to produce enough revenue by staying ahead of competition to make good on those promises is a problem.

    As far Capitol Hill caving in on increasing CAFE standards over the last 30 years, what’s their excuse? The lobbyists made them do it? What’s consumers’ excuse for not demanding higher CAFE standards? Gas prices started falling (much like now). None of us can afford to make the same dopey mistakes now. We’ve deferred into the future what can’t be deferred any longer.

    Whether all or some of the automakers get federal bridge loans, there will be layoffs. Personally, I think the absolutely best course of action that can be taken is for some of the funding to be set aside for training mechanics to convert existing cars. Also to infuse the SBA to help those laid off workers to build their own car start ups.

    As we know from this site and others, a natural gas-powered car niche market is gaining traction in Utah.

    As we have heard from T. Boone Pickens (“been an oil man all his life” and got plenty wealthy in that field), natural gas is a viable bridge fuel because US current reserves will last roughly 11 years, and it’s cleaner than fossil fuels. A natgas/plug-in would extend the longevity by at least a decade. And clean up our air while reducing reliance on OPEC (which incidentally includes Iran and Venezuela).

    As we know from Fast Company magazine, an open source site for car designers and engineers is making strides. http://www.theoscarproject.org/

    Supporting training for current car conversion will help all three automakers in the event that demand decreases more than they anticipate. It’s a stream of income with arguably higher profit margins, even though the sale is less than a new car. It will also save plenty more dealerships from going under. They may still lose some workers, but their doors will remain open. Converting existing gas guzzlers lowers emissions exponentially faster and buys time for the automakers to exceed CAFE standards with new car production.

    Bankruptcy is not a viable option. It’s too expensive. Too time consuming. And for comparison, let’s remember that Delphi went into bankruptcy reorganization in 2005 – and hasn’t emerged yet. They’re only one supplier. GM has over 200,000 employees. Bankruptcy is hardly feasible.

    We have innovation on our side and we can do this. We have to.

  • larry sloma

    What about the high mileage gas development 20 some years ago? A Chevy truck (might have been a Blazer) doing 50+ mpg? Getting 38 mpg in Europe with American cars built to Europe standards? I rode in one.

    Another comment-tons of dollars on development and the car leaders fly around in spendy jets and have kudos from the bucks wasted. They are used to a handout and the socialistic mentality of our liberal leaders who hand out tax money like leaves blowing off trees. Is this what we spend our lives and die for? Are we slaves or worse?

  • larry sloma

    What about the high mileage gas development 20 some years ago? A Chevy truck (might have been a Blazer) doing 50+ mpg? Getting 38 mpg in Europe with American cars built to Europe standards? I rode in one.

    Another comment-tons of dollars on development and the car leaders fly around in spendy jets and have kudos from the bucks wasted. They are used to a handout and the socialistic mentality of our liberal leaders who hand out tax money like leaves blowing off trees. Is this what we spend our lives and die for? Are we slaves or worse?

  • OKSnoey

    If there’s to be a bailout then it should be driven by the viability of the plans. The bailout funding should be prorated by the the quality of the plans that they have and the share of the line-ups that offer 60+ MPG and their plans to retrofit their existing installed base in the market. If GM can’t get this figured out then they need to be dissolved with the manufacturing capacity assigned, by a bankruptcy judge, to other manaufacturers that can do the job. What a bunch of nitwits…

  • OKSnoey

    If there’s to be a bailout then it should be driven by the viability of the plans. The bailout funding should be prorated by the the quality of the plans that they have and the share of the line-ups that offer 60+ MPG and their plans to retrofit their existing installed base in the market. If GM can’t get this figured out then they need to be dissolved with the manufacturing capacity assigned, by a bankruptcy judge, to other manaufacturers that can do the job. What a bunch of nitwits…

  • Travis

    Thanks for the feedback Nick!

    Mr. W

  • Travis

    Thanks for the feedback Nick!

    Mr. W

  • Travis

    April – I totally agree with you. Congress is being really hard on the auto industry (which is warranted) but they are foregetting they voted against higher standards for emmissions and gas mileage. How soon they forget and how quick they are to point the finger.

  • Travis

    April – I totally agree with you. Congress is being really hard on the auto industry (which is warranted) but they are foregetting they voted against higher standards for emmissions and gas mileage. How soon they forget and how quick they are to point the finger.

  • Doug

    The government should not have to legislate this stuff. It is sad that Americans as consumers have not forced this issue sooner.

  • Doug

    The government should not have to legislate this stuff. It is sad that Americans as consumers have not forced this issue sooner.

  • BRIAN

    The big three are in trouble due to lack of leadership at CEO level and the

    Boards. Some recommendation they need to do . This will stream line there

    operations. 1.) No CEO’s should be paid no more than 400,000 year salary

    anything else should be base on performance of the company. 2.) eliminate at

    all plant level the production manager position this is another level of

    management not require. The Plant Manger can handle all the duties of the

    production manger.

    3) eliminate all the extra perks upper management get to drive a company car

    paid gas and insurance at all levels from Supertendents at plant level and up

    this is very cost. 4) Used of the Corp Planes understand GM has 8 planes sale

    them. Most of the meeting can be done by satellite if face to face meeting is

    necessary 5.) All three companies are TOP HEAVY at higher MANAGEMENT and Union

    positions. A example union has spirit guide, the average 20% clip board non

    productive jobs in the union that is NOT authorized by head count this at most

    of the plants. They could eliminate all Supertendents at plants and just

    keep one Area mangers, 6) Union should have to pay part of there benefits like

    insurance the salary employee has paid there insurance for 20+ years while the

    union pay nothing no cost of living allowance 7.) eliminate several clip board

    jobs in the union is a waste of manpower and money such as problem solvers,

    quality jobs, lean manufactory nothing lean about any of these position they

    screw off and are appoint position by the union.

    . 8) Wages reduce for the union employees just reduce the contact pay raise in

    the up coming year wage freeze this will put them in line with the foreign auto

    workers pay 9.) Attendances Policy for the union employee are out of control

    unable to get ride of the bad actors with this current union

    contacts absentee problems is protect by the union 10) Develop car & trucks

    that can get 40-50 miles a gallon. The government has to STOP the companies from

    leaving USA install heavy taxes and tariffs on company that left USA.

    . JOBS are the key to our economy however the mismanagement need a new

    direction and replace the CEO’s and Boards that don’t get it. It look like Wall

    Street did not get equal treatment as the auto companies they were give a blank

    check with no controls or accountability. Not sure if we can identified where

    the money went with the Wall Street bail out – why ? Those CEO’s need to be

    address the same applied with the salary caps. Several should go to jail. IF YOU

    ALLOW THE CEO ON WALL STREET TO GET AWAY WITH THIS WILL SEND THE WRONG MESSAGE.

    It clear that Washington Republican don’t get it, the three Republican Senators

    ( Ky,Tenn, Alabama) have foreign auto factories in there state its clear

    another attack on the middle class again by the rich republicans that don’t give

    a dam about jobs or the economy. Why did they not address the Wall Street CEO’s

    like they have done the auto companies. Republican way of thinking that has got

    us in this mess to begin with. The Last Depression was start by a Republican is

    time for another?

  • BRIAN

    The big three are in trouble due to lack of leadership at CEO level and the

    Boards. Some recommendation they need to do . This will stream line there

    operations. 1.) No CEO’s should be paid no more than 400,000 year salary

    anything else should be base on performance of the company. 2.) eliminate at

    all plant level the production manager position this is another level of

    management not require. The Plant Manger can handle all the duties of the

    production manger.

    3) eliminate all the extra perks upper management get to drive a company car

    paid gas and insurance at all levels from Supertendents at plant level and up

    this is very cost. 4) Used of the Corp Planes understand GM has 8 planes sale

    them. Most of the meeting can be done by satellite if face to face meeting is

    necessary 5.) All three companies are TOP HEAVY at higher MANAGEMENT and Union

    positions. A example union has spirit guide, the average 20% clip board non

    productive jobs in the union that is NOT authorized by head count this at most

    of the plants. They could eliminate all Supertendents at plants and just

    keep one Area mangers, 6) Union should have to pay part of there benefits like

    insurance the salary employee has paid there insurance for 20+ years while the

    union pay nothing no cost of living allowance 7.) eliminate several clip board

    jobs in the union is a waste of manpower and money such as problem solvers,

    quality jobs, lean manufactory nothing lean about any of these position they

    screw off and are appoint position by the union.

    . 8) Wages reduce for the union employees just reduce the contact pay raise in

    the up coming year wage freeze this will put them in line with the foreign auto

    workers pay 9.) Attendances Policy for the union employee are out of control

    unable to get ride of the bad actors with this current union

    contacts absentee problems is protect by the union 10) Develop car & trucks

    that can get 40-50 miles a gallon. The government has to STOP the companies from

    leaving USA install heavy taxes and tariffs on company that left USA.

    . JOBS are the key to our economy however the mismanagement need a new

    direction and replace the CEO’s and Boards that don’t get it. It look like Wall

    Street did not get equal treatment as the auto companies they were give a blank

    check with no controls or accountability. Not sure if we can identified where

    the money went with the Wall Street bail out – why ? Those CEO’s need to be

    address the same applied with the salary caps. Several should go to jail. IF YOU

    ALLOW THE CEO ON WALL STREET TO GET AWAY WITH THIS WILL SEND THE WRONG MESSAGE.

    It clear that Washington Republican don’t get it, the three Republican Senators

    ( Ky,Tenn, Alabama) have foreign auto factories in there state its clear

    another attack on the middle class again by the rich republicans that don’t give

    a dam about jobs or the economy. Why did they not address the Wall Street CEO’s

    like they have done the auto companies. Republican way of thinking that has got

    us in this mess to begin with. The Last Depression was start by a Republican is

    time for another?

  • Uncle B

    The (GRD) great republican depression is a necessary purge of the American soul! It will rid the world and the American mind of the “entitlement” notion, and lower expectations so drastically, a 14 hp, 40 mph, 200 mpg golf cart will be considered a great luxury! The huge and powerful empire, the U.S.S.R. collapsed in very short time, for the same reasons we are finding carrying on difficult. Beware, it can so happen to us, they left a legacy of unused armament stockpiles greater than our entire military forces. If the Chinese turn Obama down for a loan to get out of trouble, we are screwed tight in the tender spot without grease! The car companies will be the smallest part of our survival problems to be sure.

  • Uncle B

    The (GRD) great republican depression is a necessary purge of the American soul! It will rid the world and the American mind of the “entitlement” notion, and lower expectations so drastically, a 14 hp, 40 mph, 200 mpg golf cart will be considered a great luxury! The huge and powerful empire, the U.S.S.R. collapsed in very short time, for the same reasons we are finding carrying on difficult. Beware, it can so happen to us, they left a legacy of unused armament stockpiles greater than our entire military forces. If the Chinese turn Obama down for a loan to get out of trouble, we are screwed tight in the tender spot without grease! The car companies will be the smallest part of our survival problems to be sure.

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