Ford's Think electric car, first produced in 2002. (Ted Andkilde / PictureDesk / NEWSCOM / FILE)
Seeking $34 billion from Congress, automakers promise electric cars
By Eoin O'Carroll | 12.03.08
Ford, General Motors, and Chrysler, seeking access to $34 billion in taxpayer-financed loans, have presented to Congress plans to invest in clean technologies and to accelerate the development of fuel efficient vehicles.
Ford asked for $9 billion, which it describes in a press release as “potential access to a temporary bridge loan.” But it does not expect to have to tap into the credit line. The company says that it expects to make it through next year without federal assistance, and that it projects that its pretax earnings will break even or be profitable in 2011. But it says that it would like to have the cash handy, in case the economy worsens unexpectedly or one of its major competitors goes bankrupt, disrupting Ford’s suppliers, dealers, and creditors.
Ford is in better shape than the two other major US automakers. General Motors, which owes creditors $45 billion, told the a Senate panel that, unless it receives $18 billion in loans over the next year, it will be forced into bankruptcy. Chrysler says that it owes creditors more than $26 billion, and asked for $7 billion in loans.
CEOs of the so-called Big Three approached lawmakers in Washington two weeks ago to ask for a total of $25 billion in taxpayer-financed loans to rescue their flagging industry. They left empty-handed and chagrined after it was revealed that they flew to Washington in separate private jets. Congressional leaders demanded detailed plans from the automakers.
They returned this week – this time via company cars – asking for a higher figure and presenting their plans to the Senate Banking Committee.
Ford’s plan [PDF] promises a battery-powered electric van that will be available to commercial fleets beginning in 2010, followed by an electric sedan a year later. The company also spells out a detailed plan to invest about $14 billion over the next seven years on technologies to improve fuel efficiency by 25 percent.
GM’s plan [PDF] promises to “substantially change its product mix over the next four years, and launch predominately high-mileage, energy-efficient cars and crossovers.” The company touted its Chevy Volt, a fully electric car that is scheduled for production in 2010, and introducing a competitor to Daimler’s Smart Fortwo, which runs on a conventional internal combustion engine but is very fuel-efficient because of its tiny size. The company also touts its flex-fuel – that is, corn ethanol – equipped vehicles, which are widely regarded as disastrous by environmentalists, and its investment in hydrogen fuel cells, a technology that many regard as currently impractical. [Eoin’s note: I originally mischaracterized the maker of the Fortwo.]
By 2012, GM promises to offer 15 hybrid models. It currently offers six, more than any manufacturer.
The company is also expected to sell its Saab brand, as well as Hummer, a brand loathed by environmentalists worldwide.
Chrysler’s plan was not available on their company website, but it was published on Autoblog. The company’s Global Electric Motorcars division is currently the largest domestic producer of all-electric vehicles, but they have limited range and power. Chrysler promises an all-electric, full-function car for 2010, and three more by 2013. The automaker also promises improved fuel efficiency for 73 percent of its 2009 models.
Additionally, each of the CEOs have promised to accept annual salaries of only $1 if they take government loans. All of these plans – particularly Ford’s – sound like promising steps toward sustainable motoring, albeit ones that should have been taken at least a decade ago. If the Big Three’s CEOs are able use taxpayers money to successfully deliver on their electric promises, maybe they deserve to have their salaries doubled.
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2. John Latusek | 12.03.08
Ford in particular has no excuse for merely inching forward on electric vehicles. They have immediate access to a product that is fully developed and in production - the Smith Ampere all-electric delivery van.
Made by Smith Electric Vehicles, but engineered with Ford assistance and utilising an established Ford vehicle.
Target market for all the Smith vehicles (the 12ton Newton, the 3.5ton Edison, the 2ton Ampere) is the depot-based delivery fleet, where the distance limitations of EVs are not an issue. This might sound like a mere niche market - but there are hundreds of thousands of vehicles in this category. Every postal delivery fleet worldwide is depot-based.
The french and japaneses postal services have already declared that they will be going almost wholly electric. Globally this is a huge market. Not as big as the car market of course, but big enough for Ford to show they really mean it. At the Commercial Vehicles show in Birmingham, UK, last April, Ford featured the Smith Ampere on their own stand. It would be good to see them seriously marketing it worldwide.
3. Rick Sanford | 12.03.08
The smart fortwo is not in any way shape or form a GM product. It is produced by the Mercedes division of Daimler.
GM’s Plan: “The company touted its Chevy Volt, a fully electric car that is scheduled for production in 2010, and its Smart Fortwo, which runs on a conventional internal combustion engine but is very fuel-efficient because of its tiny size. :
4. Eoin | 12.03.08
Rick, you’re right, I misread GM’s blueprint which read: “The Plan includes introducing this market‘s smallest 4-passenger vehicle, achieving higher fuel economy than the 2-passenger Smart Fortwo, the most fuel-
efficient non-hybrid vehicle in the U.S. market today.” Serves me right for skimming. But it doesn’t serve my readers right. I regret the error.
5. Tom Anderson | 12.03.08
The answer for US auto companies is broader than making electric vehicles or even hybrids. We are fortunate to be in a crisis, and the GOOD thing about that is it allows you to evaluate in the context of glaring reality, and do the important things that you might not otherwise have an opportunity to do. Things like right-sizing the business for today’s economic and competitive climate, shedding excess plant capacity, scaling back or eliminating non-productive programs like guaranteed lifetime employment and jobs banks, restructuring employer-provided health care programs……all things that need to happen to give US manufacturers comparable cost structure. Internal combustion gasoline engines, AND diesels, will continue to be a viable part of the vehicle fleet for the foreseeable future, in part driven by cost/value considerations. Let’s hope the CEO’s take this opportunity to do what’s really needed to be successful.
6. AWBilinski | 12.03.08
The irony of these Captains of Industry/Champions of Capitalism coming to DC and looking for US taxpayers to bail them out for their poor business judgment (does anyone remember what happened in 1973 and 1979?) would be absolutely delicious were it not so galling and the magnitude of potential harm to our economy so great. Lehman Bros. was allowed to fail and the consensus now is that it was a bad decision. Given the massive network of connections reaching throughout our economy, we cannot refuse to help prevent the likely economic meltdown that the failure of GM and Chrysler would entail for our country as well as economic trading partners abroad. At the same time, I, for one, would be terribly impressed if these gentlemen and the other top echelons at the big three who have without doubt been very well compensated despite their myopia since the first oil shock in 1973, would reach into their own pockets and start to show a sense of responsibility both for the mess and for the cost of the workout. Not one of the people who have benefited the most over the last 20 or so years from financial chicanery and corporate entitlement in the top percentile of compensation have offered to pitch in to help solve the problems they are largely responsible for. Sorry for the ranting. But, I believe this whole mess just didn’t have to be, if some of our leaders had shown the courage to first be a responsible member of society and not just out for themselves.
7. Tom Anderson | 12.03.08
If we want to talk about leadership and courage, as AWBilinski raises in a prior comment, how about asking our legislators to have the courage to suggest that we help finance some of the clean energy / alternative energy research needed by implementing a federal gas tax which would stabilize pump prices at $3 or $3.50 a gallon? Pennsylvania did something similar with electric bills to fund clean coal research. The side benefit of stable, relatively high (for the US, not for the world) gas prices is it would continue to promote responsible driving behavior and increase the market for fuel efficient vehicles, both good outcomes.
8. Bob B | 12.03.08
Compare the price of computers & cars over the past 10? Autos are through the roof. Also, back in 1990 I bought a new Suzuki Swift that got 40 mpg with the AC running most of the time. Today, a new swift gets around 31 mpg. There are many examples from all car companies. Seems the poor efficiency has been designed into autos.
9. Michael Winfrey | 12.03.08
I have read this story and do not believe that everyone is being held accountable. It’s important to realize that these companies are still publicly traded and share holders and stock trading effect this company enormously. I would propose that taxpayer investments be protected by a stock trading “freeze” on these companies for the period of this loan. It would allow the companies to hold stockholders accountable for decisions made and give companies stability.
10. Ron Scheurer | 12.03.08
When Ford made it first production model of the Festiva years ago, I rented one and managed about 45 to 50 MPG on a road trip to Vancouver, BC. What happened to that car when it got revamped? It get worse gas mileage than I get out of my 2004 Subaru Forester; 24 to 30 MPG. So much for expecting American car companies to make fuel efficient cars, or expecting Americans to buy them.
Electric cars? I can see highway plug-in sockets every 50 miles or so for a quick charge, but I keep wondering where people expect all of the needed electrical components to come from. Coal fired power plants?
11. Marshall Waddell | 12.03.08
GM’s intent to offer 15 hybrid models by 2012 leaves me scratching my head. Does the world really need 15 hybrid models from any one manufacturer? This is not to suggest a return to populist Beetles,Trabants or 2CV’s (even reengineered versions), mind you, but it does appear preferable that a company in such tough straits instead build fewer models, and build them exceptionally well, rather than introduce 15 hybrid models to an already bloated product range.
12. Frank Gallo | 12.03.08
There are a lot of excuses by the automakers for doing nothing now to use taxpayer’s money effectively. And what about the UAW? It is wonderful that these auto workers have such great benefits and pay but its about time they also come down to earth and find out how the rest of the country manages. It ain’t easy and its about time they learned how hard it is. The CEOs want everyone to think that their dollar a year pay is a real sacrifice. I don’t think there are many people who really believe that. Nobody trusts the Detroit automakers or the UAW. Too many lies and too much stupidity there. And too many tax dollars used to bail out all that stupidity.
13. Frank Gallo | 12.03.08
By the way, the automakers already have the wherewithall to make electric vehicles. They made electric trucks and sold them toward the end of WWII. I know because I stood next to one and I was amazed to watch it quietly go on its way when the light turned green. Go to your museums, guys. Dig into your vaults. Get the blueprints out and get moving.
14. Seth | 12.03.08
Funny how they are using the Think electric vehicle for the main picture. Ford sold that unit off years ago, and it is now owned by a Norway company. I hear the company is doing well and started selling the vehicle in Europe this year.
15. Tom | 12.03.08
Instead of throwing billions at industries that have regressive cultures, seeking always to squeeze fuel efficiency and reliability out of design, let’s dump them like a bad date and instead give those billions to a promising new California company that’s producing 200+mpg electric hybrids for $26K per——and that’s before mass production.
16. Sher Orpen | 12.03.08
I believe you have an error in your analysis of GM’s plan. You say they tout THEIR Smart Fortwo, but the plan actually says (pg 21), “The Plan includes introducing this market‘s smallest 4-passenger vehicle, achieving higher fuel economy than the 2-passenger Smart Fortwo, the most fuel-efficient non-hybrid vehicle in the U.S. market today.” The Smart fortwo is, as far as I know, a Mercedes product. (But what do I know? I’ve only had mine on order for a year!!)
17. TK | 12.03.08
Any Detroit bailout should be fully funded by an increased gas tax. This would give both Detroit and the consumer an incentive toward efficiency.
18. Mary Rene | 12.03.08
Smith Electric Vehicles are cleaning up in Great Britain—WHY NOT HERE?
I would buy one of the all-electric plug in delivery vehicles tomorrow if one showed up in a Ford show room. WHY CAN’T WE BUY THEM HERE? Because of the oil companies. We could have free electricity in our homes like the rural people of India– but that would be (bad) for the economy– because of the Oil and Natural Gas, and Electric companies. We are slaves to them.
19. Paddy Rao | 12.03.08
They promise to make cars, but who will buy them besides friends and family?
That said, GM needs to make a rule that employees should buy at a premium if they want their jobs. If GM employees bought their cars at a premium instead of a discount, we should all be fine.
I mean, they should believe in the cars they make, right?
20. DavePad | 12.03.08
Lot of good posts here. Just to add that these same auto makers are pushing out something they call ” hybrids ” which still do not get the gas mileage I get with my 2003 Toyota corolla. They’ll probably push out a poorly designed, useless electric vehicle that deliberately will not sell and say , ” see, American’s don’t like it ”
I agree they should show their veracity by pushing out the EV 1’s.
21. k dunbar | 12.04.08
ALL Americans (and including especially their politicians) are complete and total irresponsible thoughtless gulible fools if they believe anything any of these auto industry mafia type ceos have to say in these hearings about the design, development and production of automobiles–they have been avoiding, evading, lying, distorting, deceiving, covering-up, grafting, cheating, stealing, bribing, black-mailing, etc., for the last 75 years, and along with their oily co-partners will continue to do so until they are legally held accountable, found gulity and severely punished for the unimaginable amount of damage environmentally, economically, politically and spiritually these industries have perpetrated on every level of life on this planet. If big tobacco can be help responsible then certainly these two other death and destruction dealing brothers can be held responsible. You could have had the catalitic converter (admittedly a very small insignificant pollution reduction device) installed on your automobiles in America 40 years prior to it becoming legally mandatory on all cars–they had the technology, the tooling, the understanding and they had LA County Supervisor Kenneth Hahn begging them for TEN YEARS (starting in 1953) to please do something to help reduce the amount of brownish smoky haze (this is the point where your adjective SMOG originated) beginning to settle daily over the LA basin–now an unbearable unliviable unmittigated disaster of air contamination. These ceos had nothing but excuses, put-offs, more deception, fraud, lying and finally came up with in 1961 the puny insignificant idea of “positive crankcase ventillation” ——which was had been known to the entire auto industry for at least 25 years before Hahn wrote the first of his many letters to the industry asking for help. Do you really need a new car every year?!?!?!? How about every 5 or even 10 years–you see you bought these guys and their sick degenerate insidious promotion that you have to have a brand new car every year! This is called “perceived obsolesence” the other one you have fallen victim to is called “planned obsolesence.” These guys will never treat like humans.
22. nita mitchell | 12.04.08
the American car companies lost confidence because of shoddy manufacture during the 70s and 80s. People paid not only for their cars but for numerous repairs. Perhaps a way to regain that confidence would be through reliable guarantees of their products.
23. Dwayne Haskell | 12.06.08
Have we all forgotten that we already have had electric cars? Watch “Who killed the electric car”. You can get it on Netflix.
These bozos took away all the cars they had leased and destroyed them. Then the state of the art battery technology at the time was sold….to an oil company!
Now they are spending millions to redevelop the technology? That must be the type of great decision making that justifies their huge salaries and bonuses.
In no way will an electric vehicle solve our problems, but if we don’t start to really develop these technologies, we will never be free from the greenhouse gas producing, horrid gas mileage means of transportation we currently have.
The oil companies and auto companies are so intertwined with each other, that unless something extremely drastic happens to convince the automakers to take the public’s interest in mind over their own bank account’s interest, we will always have this problem. I don’t think for a minute that the auto industry doesn’t get millions in kickbacks just to keep the gas mileage of US made vehicles very low.
Oh, did forgot to mention the fact that I also hate making oil men rich? Bunch of thieves, the whole lot of them.
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1. Doug Korthof | 12.03.08
No bailout for GM unless it resumes production and SALE of the EV1!
No waiting until 2011!
Now is the time to resume production, they are already using our money to pay for bad loans given to buy gas-guzzlers.
They are financing gas-guzzlers but not Electric cars.