GM: "We’re Forced to Make Hybrids." But Which Ones?

Last week, General Motors Vice Chairman Bob Lutz repeated his long-held opinion that hybrid gas-electric cars have a limited market and will not be profitable for the company. Yet, he believes GM will be forced to make more hybrids because of tougher fuel efficiency regulations. This begs the question: What hybrids should we expect from GM?

Slow and False Starts

Cadillac CTS

The CTS, Cadillac’s smallest sedan, has won rave reviews. Expect the CTS, and other smaller Caddies, to be offered with a full hybrid option, around 2012.

GM currently sells hybrid versions of large SUVs—the Cadillac Escalade Hybrid and the Chevy Tahoe Hybrid—as well as the Chevy Silverado hybrid pickup truck. These vehicles, which sell in relatively low numbers, use the company’s two-mode hybrid system, aimed at improved fuel economy while maintaining high-performance and towing capacity.

The company had been selling mild hybrids, in the form of the Chevy Malibu, Saturn Vue, and Saturn Aura—but those have been canceled. A plug-in hybrid version of the Saturn Vue crossover SUV was also jettisoned—although it may show up with different branding.

Cadillac Full Hybrids

According to Jim Hall of 2953 Analytics, the two-mode system will be migrating down to rear-drive sedans—the Cadillac ATS and CTS. The ATS, a luxury compact sometime referred to as a “baby Caddy,” is expected to go on sale in the US next year. Hall expects that the next-generation CTS, scheduled for 2012, eventually will offer the next-generation hybrid system. Hall’s viewpoint is supported by General Motors announcement last month that it will set up a $246 million facility to build electric motors to power future hybrids. GM said that the newly designed electric motors would appear in 2013.

“In the future, electric motors might become as important to GM as engines are now,” said Tom Stephens, GM vice chairman, global product operations.

Lower-Cost Higher-Volume Mild Hybrids

If cost is the worry about hybrids, then GM might try to produce less expensive mild hybrids. That’s what the company has been hinting at for about two years. In 2008, former GM CEO Rick Wagoner said, “In order to have a real impact in reducing oil consumption, oil imports, and CO2 emissions, advanced technologies must be affordable enough to drive high-volume applications.” Wagoner promised big: “We plan to roll out this next-generation hybrid technology globally, across our brands and regions, starting in 2010 in North America, and we expect that volumes will eventually exceed 100,000 units annually.” (In 2009, GM sold about 16,000 hybrids.)

Last year, at the SAE 2009 World Congress, Larry Nitz, GM Executive Director of Hybrid Powertrains, said the company will offer mild hybrids with power roughly equivalent power to the 2010 Honda Insight. Nitz, once again, emphasized that the mild hybrid system is a strategy for making hybrids cost-effective.

In the course of a couple of years, GM could be producing mild hybrids in decent numbers, full hybrids in small numbers, and a few standout electric-drive vehicles, most notably the Chevy Volt.

Last week, Lutz also said that General Motors will lose money on the Volt—for at least one or two generations of the vehicle. But he is willing to accept those losses to lead the way with a new electric-drive technology—and to benefit from the positive green marketing that the Volt will produce.

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  • Jack Levy

    First, I don’t believe any car company is going to make a car/truck line and sell it for a loss. They are just not going to make as much money (meaning loss to them). Back in the 90’s Ford was making $8,000+ on Explorers, GM making more the $15,000 on the 2003 Denali Pickup. If their profit margin is that huge they will take a hit on profit if the hybrid engine IS ACTUALLY more expensive to build. OK, with more parts and batteries I can see a more expensive engine. So, less profit IF they sell it for the same price.

    Most importantly, the focus, as stated in this article, was “aimed at improved fuel economy while maintaining high-performance and towing capacity”. What if, they also have as an option, a lighter duty, reduced performance vehicle (trucks included) that got gas mileage in the 30’s. Most truck owners don’t pull the max payload, if they pull at all. How often do you see a truck pulling anything on the road. And how many drivers out there really need the max performance out of a truck? They don’t. They just need/want a truck for occasional light duty hauling.

    If GM would get out of the mindset that they have to build THE most powerful, highest performing, gas hog, and built practical cars and trucks they would cater to a larger market.

    Ford is slowly starting to produce cars this way.

  • kahmke

    i’ll believe anything positive from goverment motors when and IF I see it. from last year on they are guilty until proven inocent. Also believe gm will be bankrupt again in 18 months. please no second bailout with my tax dollars.

  • Mr.Bear

    At $40,000 a pop they are going to be losing money on the Volt? That’s impressive.

  • Nelson Lu

    Somehow, Toyota and Ford both are claiming (and appear to be) making money from their hybrids, and GM can’t do it.

  • Anonymous

    “Bob Lutz repeated his long-held opinion that hybrid gas-electric cars have a limited market”

    GM still don’t get it. Why did gov bail out GM? why is bob still at the helm?

  • DownUnder

    Agree w/ Anonymous, why Bob is still there? No wonder . . .

  • Scott Z

    The guy at the helm of GM when it fell is giving his opinion of hybrids???

    I will invest my money opposite of anything Bob Lutz would suggest. I refused to buy GM about 15 years ago after looking at reliability ratings. Good to know I made a wise move.

  • Dom

    Well GM, if you don’t want to make more hybirds, how about importing some of your outstanding European diesel models??? That’s what I’d be interested anyway…

  • PatrickPunch

    It’s the management policy of Bob Lutz and his colleagues that is costing GM a lot of money worldwide. GM employees are made redundant, factories are closed and shareholders loose their money.

    Nevertheless, this guy stays in place.

  • ex-EV1 driver

    If GM (Lutz) would do things based on what customers want (fuel efficient and alternative fuel vehicles) and not what Lutz wants (antiquated speed metal that he can actually understand), then maybe they could actually run a business. Until then, calling something a hybrid that isn’t or making a complex Rube-Goldberg machine like the “2-Mode Hybrid” isn’t going to do anything except to prove that “hybrids won’t work”.
    The only thing that makes sense, of course, is that proving that “hybrids won’t work” is the goal, just as “proving that EVs wouldn’t work in the ’90’s” was the goal then.

  • Eric

    The fact they still have this dummy running the company is really all I need to know about GM right now. I will not buy GM ever again as long as they are dragging their heels to avoid innovation. Ford is the last best hope for the old American big 3.

  • Old Man Crowder

    “We’re forced to make hybrids”… Waaaahhh!!! Boo hoo!!

    All the other manufacturers must abide by the same rules, don’t they? How come I don’t hear any complaints from the other guys?

    Toyota/Lexus doesn’t seem to have a problem making them. Ford seems to be doing all right. Nissan is coming along and even Honda is still kicking around (but just barely).

    It’s like GM is trying beat out Chrysler for the title of: “Who can uni-brow knuckle-drag the longest on fuel efficiency?”

  • david miller

    First of all Bob L has good points.

    he is being totally frank. The car companies are forced to make hybrids now.

    To be totally honest hybrids are a cop-out they are hybrid technology.

    In the past and present hybrid stands for transitional technology.

    That being said Hybrids are really a fad because full electric or all electric is the way to go.

    When batteries and fuel cells come down in price etc, the internal combustion engine will die.

    It really need to die years ago but the oil companies have kept us hooked.

    So my opinion is bob is right we are forced to make hybrids for now.

    Electric is the future and what GM really wants to do is make the Voltech system.

    I respect GM and lutz in one way they are honest.

    Something Toyota is not.

  • frank filters

    Yes I agree,

    GM is honest, Toyota is not.

    In fact Toyota is so dishonest they are killing people to keep up there” Image”

    Now they have no ” Image” because they are killing people.

  • JBob

    I’d say that if force is necessary since every major car company has fought increases in fuel economy in the last 40 years.. even the venerable Toyota.

    You wanna know which company to watch in the next 10 years?
    Hyundai. They’re going places.

    As for GM, they’re a sink-hole of old ideas run by people who think the world is still flat.

    Lutz, while the ringleader behind the Volt initiative has primarily contributed a significant amount of his career behind vehicles that are heavy fuel users (Pontiac GTO, Pontiac G8, Cadillac CTS, Buick Enclave, Cadillac CTS Coupe, Chevrolet Camaro, Buick Lacrosse, Chevrolet Equinox, and Cadillac SRX to name a few).

    He has also bumped around at Ford, BMW and Chrysler and was CEO of of Exide Technologies until the year it filed for bankruptcy (probably due to his outstanding leadership of the company).

    GM is like our govt. Too saturated with either the ultra left or ultra right, and not enough moderate thinking to make truly informed decision making about future automotive tech.

  • Shines

    Ford, Toyota, and Honda seem perfectly capable of making profitable hybrids. So what is Lutz saying? GM can’t do it? That’s a can do attitude – NOT.
    Hybrids are a cop out – they are hybrids??? Hybrid isn’t the same as concept. It is more the line of enhancement. The inefficiency in conventional engines and brakes is that a lot of power and braking is lost/wasted as heat. Hybrids convert the braking heat to energy stored in the battery and the electric motors are more efficient allowing the heat losing conventional engine to be smaller.
    So even though a hybrid has mutiple engines (gas and electric) and multiple storage (fuel and battery) they end up still being more efficient (better fuel economy for the size of the vehicle) than conventionally run vehicles. So, I say “Good for the hybrid owners.” I hope to buy one some day soon.

  • Paul F$^k Off

    What kind of hybrids to expect from gm?

    Some news earlier this week about GM funded research into using Ultracaps with belt driven alternator / starter hybrids. There’s almost zero chance they’ll use the Ultracaps (as they are still astronomically expensive) but we can expect more of the alternator run as a starter routine as it costs them almost nothing to add.

    GM ‘apparently’ already make 8 hybrid models but they are these SUPER MILD HYBRIDS using the alternator and a larger battery.. and they find no-one is fooled by these joke vehicles and sales are weak.

    The good news is… they’ve just announced they’ll invest $450M in an EV motor plant, so all the belly aching about not profitable will halt once that comes on line and they get more enthusiastic about earning some ROI.

  • Carl

    No matter what happens,


    Think about making the investment pay.

  • George Harvey

    I need a car for commuting that is reliable, cheap to run, and a pleasure to drive. The ideal car for me would be a plug-in electric like Mitsubishi’s MiEV or the Nissan Leaf.

    Even more ideal would be a car like one of these with a small one-cylinder diesel engine-driven generator for recharging that could be attached to the car for longer trips.

    I don’t want luxury, but I do want high quality and low maintenance, along with high performance.

  • Samie

    GM: “We’re Forced to Make Hybrids.” But Which Ones?

    Funny title if you ask me.

    Where GM is in trouble is not offering a hybrid sedan or small hybrid SUV. Sure they may sell the Chevy Cruze but they have no answers for the Hybrid Fusion, Hybrid Camry, or even a Prius. If gasoline prices go up consumers will overlook many GM products. That spells trouble. To move into the future all car companies need to have a diverse lineup of vehicles. I suspect Bob Lutz comments are intended to try an loosen future regulations. If Mr. Lutz was referencing to skipping over hybrids for electric vehicles I would clearly get his intentions. Sadly the protectionist type of attitude shared by Reps & Demos may help bring down the company again as the political circus often shares short-term ideas with folks like GM. Business as usual may not cut it if uncertainty arises with future petro prices.

  • AP

    Warning: Response by GM engineer, who might be biased. But listen to the logic.

    Emotions aside, Lutz is right. Everyone in the industry knows that Toyota lost money for years on the Prius, but hypocritically subsidized it internally by selling highly-profitable Tundras. They may be breaking even on them now, but maybe not-they lost billions of dollars last year, after all.

    He’s also right that hybrid still make little sense in terms of economic benefit to the customer when it comes to saving money on gas, since gas is so cheap.

    He’s also been right in saying that to encourage the purchase of hybrids (and other efficient vehicles), the right approach would be to increase the fuel tax, not to increase CAFE.

    I’ll add that it is hypocritical for the government to keep gas cheap, then require us to sell fuel-efficient cars to people who don’t require them (financially), in order to sell the less-efficient cars that most people have wanted. Yes, makers have sold small cars at a loss to “buy” the opportunity to sell more profitable cars. Call it a bribe to CAFE (personally I like small cars, so it has benefitted me).

    I’ll also add that a higher fuel tax would create a market where smaller cars are profitable and respected, in the industry and by consumers, rather than regarded as “econo-boxes.”

    The upshot:

    What most of you are really saying is that you don’t like the fact that he’s complaining about the government forcing car makers (not just GM) to make cars that don’t have a natural market (as witnessed by the 3% market share of hybrids, despite considerable incentives). You’d rather he would take his bitter government medicine with some honey, shut up, and make the cars that Americans (well, 3% of Americans) want.

    This is double-speak right out of 1984!

    The most ironic thing to me is that some of you also complain there is some sort of favoritism toward GM, since we are currently government owned (which should only last about 10 more months, so get your digs in now). Believe me, we don’t feel like “Golden Boys” that can do no wrong because of the government equity-it can’t end soon enough for me!

    So tell me where I’m wrong, WITH FACTS, because otherwise you look like whining eco-weenies, which isn’t a stereotype that I want to share with other posters here.

  • Shines

    AP – Maybe the media isn’t portraying Lutz fairly. If he says the Govt should increase gas tax to promote fuel saving by citizens (both for the sake of the environment and the reduction of foreign oil consumption) and not just force manufacturers to make more efficient vehicles then OK.

    No facts here but I think the US is headed towards a large vehicle bubble – if it hasn’t already burst.

    Maybe he has and we haven’t heard it, but Lutz is in the better position (actually Ford, Toyota and Honda are) to be stating up front;

    “CAFE rules are stupid and American politicians are cowards by setting up CAFE instead of increasing gas taxes.”

    Who else should step up and speak loudly? Where are today’s prophets?

  • AP

    Shines, he has been pushing the fuel tax with Congress for 20+ years. No one listens. They are too worried about re-election. It’s easier to blame someone in the private sector (auto companies). I agree we should complain more loudly, but then people would blame GM for higher gas taxes.

    Maybe if more people stood up for it….

    So we (the auto companies) have the privilege of being in the middle. We are criticized by the government (Pelosi, Obama, Reid, etc.) for not making the vehicles people supposedly want, while the government

    1) ensures the demand for fuel-efficient vehicles will remain weak, through the low gas tax, but
    2) ensures the supply for fuel-efficient vehicles will remain high.

    Anybody who passed Economics I: guess why it’s so hard to make money in the US auto industry (no wonder the government has to bribe people to buy them with tax credits). That brings up the government’s next step:

    3) bail out the domestic makers (except Ford) when policies (1) and (2) follow their logical course, but make sure you (as a senator or representative)

    a) rake the auto axec’s over the coals and call them wasteful for flying a corporate jet (while doing so yourself on the taxpayer’s dime), even though it saves executives’ valuable time, and after giving the banks, who took 20 times the money, a free pass,

    b) promote your “own state’s” auto industry, which in some cases means assembly only, the other 90% of the work being done in Korea, pretending that business model is better for the US,

    c) never admit that you work in a government whose policies contributed to the conflict between auto makers and consumers, and that you could change the laws to remedy this, but you won’t,

    d) point out that GM and Ford make more fuel-efficient vehicles in other countries, but fail to add that the policies in those countries encourage the vehicles that our government SAYS it wants, but doesn’t encourage.

    So the government hates us and makes it difficult, then the public hates us because we fail, and no one owns up to any of it, except us.

    No, I’m not frustrated.

  • Sol

    I am amused by the statement from the GM engineer that everyone knows that Toyota lost money….

    three items:

    1. I heard the same comment from friends in GM back in the early 90s that did not believe that Lexus was profitable.

    2. All manufacturers lose money on the first production units until the R&D and plant costs are amortorized across a unit volumes.

    3. you can spin a business case almost anyway you want, the question is whether you actually believe in what you are doing and are playing to win.

  • AP

    You do the math. Toyota lost money once Sequoias and Tunrdas didn’t sell. What’s so amusing? Their hypocrisy?

  • joe pah

    GM is still the union driven dinosaur we all have come to know and hate. All they want to build are 3 ton pickups and SUVs that can support their union and corporate pig needs. They do not care if another 5000 American soldiers are sent to die in the middle East to defend our rights to fill those 13 mpg pig trucks and SUVs.

    Just follow Toyota’s business plan of building cars that the public wants, and develop hybrids that can actually make a difference in our need to import deadly oil.

  • AP

    joe pah,
    You’re ignoring the fact that Toyota has a brand new plant in Mississippi all tooled up to make more Tundras and Sequoias, which they’d be making right now if not for Hurricane Katrina (which we all know was Bush’s fault). (This could have subsidized many more Priuses, and maybe they wouldn’t have lost money last year.)

    Oh, but once they realized that Tundras and Sequoias weren’t “the cars that America wants,” they started tooling up to build Priuses there. Then gas prices dropped, and they “pulled the plug” on that. (So to anyone who says that Prius sales are limited by capacity problems, that was intentional).

    If Toyota had their way, they would become known as the “new and better GM” that sold a full line of vehicles Americans NEED (incuding all the trucks we make). In fact, they want to be known as an American company, unless their CEO is called to testify to the American Congress. Oh, I guess he changed his mind now. I imagine he doesn’t understand our culture.

    Speaking of risking the lives of American soldiers for oil, think how little that bothered a Japanese car company like Toyota when building their plant in Texas to make Tundras and Sequoias. Our soldiers take the risk to protect oil availability, they (and the rest of the world) reap the benefit.

    By the way, do you know what drove the Japanese to bomb Pearl Harbor? We cut off their oil imports from China, etc., that they had captured, since they have no oil of their own. So don’t act like Americans are doing something wrong or unusual in fighting for oil to be available and reliable.

    If you don’t like the fact that people commute in 13 mpg SUV’s, don’t blame GM. Blame the government that keeps gas cheap while instituting CAFE to get rid of big cars (which are more fuel-efficient than trucks). We can’t stop making trucks, because some people need them. We can’t ration them. What do you want us to do, ask for proof of need? This is America!

    Also, note that the American people used to look up to companies like GM for paying what they did and building the middle class. I guess we’ve forgotten that – now it was stupid. It did get out of control, though, but now UAW autoworkers are on par with the Japanese transplants. That’s probably about right.

    Blind hate toward domestic auto companies because we all “know” they are no good is a disservice to the truth, the companies, and to you as a consumer. Don’t be prejudiced yourself – Toyota isn’t exactly infallible.

    I just wish we worked harder on reducing oil usage and could avoid some of the conflicts abroad …. and here.

  • Collin Burnell

    I would buy a Malibu if it got 30+ MPG’s. Very Handsome Car, Particularly in the GM Cherry Red.

  • freak000

    Every car company is developing a hybrid vehicle which will be mainstream in less than ten years. I want to commend the current administration in Washington in passing the new CAFE standards which have been ignored in the last administration!

    Hyundai has the most intersting RD in developing a lithium polymer battery vs the current lithium ion. The polymer battery is much lighter and smaller in addition to holding 30% more power. They will be warranted for ten years or 100000 miles.

    I am 6’2″ and fit in the Honda Insight with plenty of leg and hip room. I am holding off on buying a hybrid until 2013 betting the Hyundai will have a winner.