DETROIT –Co. has signaled it plans additional derivatives from its Chevrolet Volt extended-range electric-vehicle architecture, but the outlook on whether the auto maker will be able to make money on the advanced technology remains clouded, a top executive says.
Stephen J. Girsky, vice chairman-corporate business development, says GM is “putting a lot of emphasis on driving the cost down,” taking aim initially at the $7,500 chunk of the Volt’s price tag currently subsidized by U.S. tax credits available to buyers of the small sedan.
But he characterizes the effort as “in the early days,” and says more time is needed before declaring the Volt solidly on the path to profitability.
Ventures LLC, a subsidiary charged with ferreting out promising transportation technology startups, is one of the critical components in the auto maker’s effort to drive EREV costs down, Girsky says.
GM Ventures last week doled out $5 million to a maker of cordless charging devices for personal electronic devices that will be made available in vehicles beginning mid-2012, and in September it joined Itochu Technology Ventures in a $4.2 million investment in Ann Arbor, MI-based Sakti3 Inc. related to lithium-ion battery development.
Girsky says a new announcement could come this week on another tie-up that could have direct impact on GM’s EREV technology.
“We’ve got another one coming that, if it works, could take another couple grand out of the cost of the battery,” he tells media at a roundtable discussion at the North American International Auto Show here.
GM came to the conclusion it needed more EREV models six months ago, when it “re-racked” its product plan to meet tougher emissions and fuel-economy targets for 2016 and beyond, Girsky says.
Some vehicles in the pipeline were dumped because they were unlikely to work in the environment of 35.5 mpg (6.6 L/100 km) corporate average fuel economy standards for 2016 and even tougher mileage requirements looming beyond.
The focus was sharpened on more fuel-efficient models and on getting the technologies needed “off the shelf and into the car to enable these cars to make it,” Girsky says.
“EREV is one of these technologies,” he adds. “It works in certain segments. And it also works assuming you can get the costs down, and there’s a big focus on that.”
Girsky notes the Volt’s $40,000 sticker puts the car in the upper 20% of the U.S. market in terms of price.
“Eighty percent of the market transacts below $40,000, so the marketing guys are nervous that we can’t jam a lot of $40,000 vehicles in here,” he says. “Not only do we have to drive the cost down $7,500 because the tax credit will go away eventually, but then we’ve got to get the cost down (further) to get a margin for us on this car. That’s the exercise that’s going on here.
“(And) you need to get more products off of EREV to get the marketing guys comfortable that you can knock off different (vehicle) segments,” he adds. “That’s what they’re trying to do.”
GM CEO Dan Akerson indicated this week an EREV multipurpose vehicle is in the pipeline. The model presumably would compete with the upcomingPrius V hybrid unveiled at the auto show here and slated to hit the U.S. market later this year.
The product plan will remain fluid, Girsky says, to enable GM to react to any market changes, such as a sharp fluctuation in oil prices.
“We’ve got this plan that goes out to 2016, sort of a hard five (years), and (then) a soft five,” he says. “The engineers would like a hard plan (that’s) locked in and will never move, but that’s not the world we live in.”
Despite the profit uncertainty, Girsky defends the investment in EREV and says the new product plan is a sign the old GM has vanished.
In the past, the auto maker would have waited for “better clarity” on market direction before committing to advanced technology such as EREV, he says. “You guys know better than me that if you wait, you’re going to get run over.
“(But) we’re in uncharted waters here. You’re basically making a bet – and a lot of these are billion-dollar bets. So you want to diversify your risk, which means create a number of products off a Volt platform or bring in partners or any number of things.”