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.