Is GM Getting Serious About Electric Cars?

General Motors (NYSE: GM  ) product development chief Mary Barra told reporters on Wednesday that GM's future green-car efforts would focus on plug-in hybrids and pure electric vehicles, rather than conventional hybrids.

Rather than going head-to-head with companies like Toyota (NYSE: TM  ) and Ford (NYSE: F  ) that have made big investments in hybrid powertrains, GM has narrowed its future product development emphasis in an effort to defend and expand on the technological lead it established with the Chevy Volt, Barra said.

It's an interesting shift in strategy. But the really interesting part is that Barra expects these cars to become a big part of GM's business – soon.

"Mild hybrids" to roll out in big numbers
Barra said that by 2017, the General expects to be selling 500,000 vehicles a year with some sort of electric propulsion technology, whether plug-in hybrids, pure EVs, or "mild hybrids."

That number sounds outrageous, but it represents only about 6% of the roughly 9-million vehicles GM sold around the world last year. And it's easy to take a conservative view and say that most of those will fall into the "mild hybrid" category: GM's "eAssist" system, already available in some Buick and Chevy sedans, is a sort of battery-powered mileage booster.

Those cars can't run on pure electric power, like a Prius or Fusion Hybrid can, but they do get significantly better mileage thanks to an electric-powered assist – up to 25% better, in some cases. Cars with eAssist account for about half of the roughly 50,000 vehicles GM has sold in the U.S. this year that contain some sort of electrified propulsion technology.

An evolution of the eAssist system might account for the bulk of GM's target of 500,000 sales in 2017. But it's not where GM's research dollars are likely to be going.

More advanced cars on the way
Barra said in a statement released by GM: "Plug-based solutions will play a significant role in our technology portfolio going forward ... The plug-in offers a unique opportunity to change the way people commute."

Barra is talking about both pure electric cars and so-called "plug-in" hybrids, which can be charged via external sources and give a limited range – typically 20 or 30 miles – without using any gas. The Chevy Volt is perhaps the most famous, but Toyota, Ford, and others have introduced plug-ins of their own, or announced plans to do so in the near future.

GM's near-term plans include an all-electric version of its Chevy Spark minicar, which is set to go on sale in the U.S. and Korea next year. The Spark EV was originally thought to be a token gesture by GM, one intended to help it comply with new U.S. fuel-economy rules – but Barra insists that GM is serious about selling it. "We're not building the Spark EV to check a regulatory box," she said.

As for the Volt, sales have been middling, in part because of its high price. But it's about to get an upscale sibling: The Cadillac ELR, a swooping and luxurious two-door that incorporates the Volt's technology, will also enter production at GM's Volt factory in Detroit next year.

The upshot: GM is getting serious
It's easy to see all of this as posturing by the General. While Toyota and Ford push far ahead with more advanced hybrids, and Motor Trend's "Car of the Year" award went to Tesla Motors' (Nasdaq: TSLA  ) stunning Model S, GM needs to say something to show that it's still in the game, now that the Volt is old news.

But I think GM is serious here. Part of the seriousness comes from knowing that electric car efforts will continue to be encouraged by the U.S. government, now that President Obama has been reelected.

More to the point, I think GM's current management team – in contrast to some of its predecessors -- knows that the General will need more than gestures to be taken seriously around the world as a green contender in coming years, no matter the political environment here in the U.S.

With the auto-show season about to begin, I won't be surprised if GM announces some significant new products that take advantage of advanced electrification technologies. In fact, I'll be surprised if they don't. Stay tuned.

It's true that decades of mismanagement of General Motors led to a painful bankruptcy in 2009, but it emerged a leaner, stronger company. GM's turnaround, however, is still a work in progress. Investors around the world are wondering if GM has what it takes to reclaim its former glory. I recently put together a brand-new premium research report telling you what you need to know about GM and its turnaround. If you own or are thinking about owning GM, then you don't want to miss this report. Click here now to get started.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2115575, ~/Articles/ArticleHandler.aspx, 9/16/2014 5:44:04 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement