This Week in Autos

It was another exciting week in automaker-land. We heard that sales continued to climb in April, General Motors made a dramatic hire, and the industry pondered a surprising report on the electric-vehicle front. Here's a look at some of the stories you might have missed this week:

Does Nissan have a secret advantage?
Nissan has said that its upcoming all-electric Leaf will earn a profit at the announced price of $33,000 --a statement met with considerable skepticism. Most critics believed that battery prices were too high to make the math work unless Nissan cut some un-Nissan-like corners with the rest of the car.

But if a report in Wednesday's Times of London is to be believed, the real breakthrough behind the Leaf may have to do with the production of its batteries. The article, a profile of Nissan green-car executive Andy Palmer, mentioned in passing (presumably with Palmer as the source) that the Leaf's 24 kilowatt-hour lithium-ion battery pack costs £6,000 (about $8,800) to produce.

That works out to about $370 a kWh, which is way less than anyone has been expecting. Last I heard, a few months back, General Motors said that it was hoping to get to $500 per kWh by next spring -- a statement met with a scoff by folks at Ford (NYSE: F  ) , who said that $700 per kWh was the best they could do from Asian sources, and Johnson Controls (NYSE: JCI  ) , who have said they see prices falling under $500 -- but by 2015, not by next spring.

So what's happening? It's possible that the global rush to this technology has resulted in something of an oversupply. Deutsche Bank analysts said in March that they had heard of large-scale bids around $400 per kWh for delivery in the "2011/2012 time period" and that electric-car battery costs were coming down faster than they had expected.

How big a deal is this? It's a very big deal -- affordable batteries are a must-have if electric vehicles are ever going to reach the mass-adoption stage. I don't think it's a coincidence that the stock prices of battery makers A123 Systems (Nasdaq: AONE  ) and Valence Technology (Nasdaq: VLNC  ) dropped abruptly on Wednesday morning, and have essentially been falling ever since. If costs are coming down that quickly, those firms' growth projections are going to take a big haircut.

New auto safety rules may be coming
The U.S. House of Representatives has begun work on a comprehensive package -- some would say "mishmash" -- of auto safety reforms, spurred in no small part by the epic Toyota (NYSE: TM  ) recalls earlier this year. This is the first time in a decade -- since the Firestone Tire/Ford Explorer uproar -- that Congress has attempted to address auto safety in any significant way.

So what changes are we likely to see? It's hard to say at this stage -- the sausage-making has just begun. But key provisions being discussed include:

  • "Black boxes" capable of recording data in the critical few moments before an accident -- similar to those on airliners -- would be fitted to all new cars.
  • Brake override systems capable of stopping a car even if the engine is at full throttle would be required;
  • Enhanced powers for the National Highway Traffic Safety Administration, including the authority to order an immediate recall under certain circumstances;
  • Removal of the cap that famously limited Toyota's fine for the unintended-recall debacle to $16.4 million rather than the theoretical $13.8 billion that could have been assessed.

Again, it's in the early days yet, so it's hard to say what will actually happen. But this time around, the industry is signaling that it will get on board, at least to some extent, so some significant change is likely.

Another sign of culture change at GM
This report may seem like "inside baseball", but I take it as another sign that General Motors' entrenched corporate culture -- the one that ran the company into the ground -- is changing: GM lifer and VP of Marketing Susan Docherty -- the kind of executive who would have been untouchable just a few years ago, and whose efforts had been less than enthusiastically received within the industry -- was ousted on Wednesday.

For longtime GM watchers, that was shocking enough -- but even more shocking is that they went outside the company for a replacement, naming former Hyundai marketing whiz Joel Ewanick to the post. Coming in the wake of GM's poaching of new CFO Chris Liddell from Microsoft -- a superb hire, early signs suggest -- it's hard not to wonder whether hiring great people from outside the company might actually become a trend.

Geez, maybe GM really is finally getting their act together. Wouldn't that be interesting?

Fool contributor John Rosevear owns shares of Ford. Microsoft is a Motley Fool Inside Value recommendation. Ford is a Motley Fool Stock Advisor selection. Motley Fool Options has recommended a diagonal call position on Microsoft. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.


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