The electric car – the last sign of hope for troubled U.S. car makers?

The Chevrolet Beat

No automanufacturer can ignore that the time of cheap gasoline will never come back and that the vast majority of drivers simply cannot anymore afford driving cars with a high gas consumption. The oil price hike and the consequences of the housing slump threaten the very survival of some car companies. Especially the Big Three automakers from Detroit – GM, Ford and Chrysler – that relied on their quite successful gas-guzzling pick-up trucks and SUVs for too long a time and were powerful symbols of the strength of the American industry are now in deep trouble. Car sales plunged and the outlook for the Big Three is rather gloomy. The CEOs seem to realize that their business model is not working anymore. Their shares have hit rock bottom and analysts who have concerns about their liquidity downgraded credit ratings to junk bond status. With no recovery in sight in the second half and car sales anticipated to continue to be weak, the companies’ CEOs are busy to assure that they have enough financial flexibility and liquidity to survive until a new product line could make them thrive again.

General Motors is a giant that was the number one automaker since 1931, but Toyota caught up in 2007 and does much better in every respect. While Toyota is extremely profitable, GM had an annual loss of $38.7 billion in 2007. GM’s shares are at their lowest level since 1954 after an analyst didn’t rule out bankruptcy if the market continues to deteriorate. However, GM retained its #1 position in the U.S. as Toyota suffered an even more significant decline in U.S. sales. (Though Toyota has an outstanding green image, Toyota’s pick-ups and SUVs are also gas-guzzling and polluting and make up a considerable share of Toyota’s U.S. car sales.) But General Motors CEO Rick Wagoner could have recognized that a radical product lineup is the last chance for a turnaround.

 GM will cut thousands of jobs and reduce its production capacity by closing down factories of heavy trucks and vans. Its fleet downsizing is to be a shift-away from its famous off-road vehicles and SUVs which are anything but fuel-efficient or green. On June 3rd, Rick Wagoner said that GM was considering all of its options for Hummer, including selling the brand. Instead, GM will reassign a large number of engineers to its new product line of electric vehicles and small fuel-efficient cars. The Chevrolet Volt plug-in hybrid will go on sale in 2010. The Chevy Volt is an electric vehicle with “range extender” which means that a lithium-ion battery will be the only power source for a range up to 40 miles.  A gas or ethanol-driven engine will extend the range up to 640 miles by recharging the battery. Unless driving more than 40 miles, the Chevy Volt doesn’t need any gasoline and does not produce any emissions. Thus, it’s suitable for commuters who live in a 40 mile range of their workplace where they could recharge the battery in 6.5 hours. Besides, GM plans to sell its Chevrolet Beat mini car in also in the United States though it was only planned for sale in Asia and Latin America. The car was designed and will be assembled in South Korea. With the new fuel-consciousness of American drivers – the Chevy Beat gets 40 miles a gallon which makes it the most fuel-efficient car in North America next to hybrids – the Beat is a viable tool to get back some car buyers in the U.S. GM could turn around its image and its situation by aggressively shifting to fuel-efficient and modern cars and tapping into the need of millions of middle-class Americans struggling with high gas prices who commute between their suburb homes and their workplaces in urban areas.

While Ford remains competitive enough with its numerous successful compact cars like the Ford Focus, I’m afraid that Chrysler won’t survive these turbulent times. As far as I know Chrysler is the only major automanufacturer without an electric car on the drawing board. Chrysler is probably in the worst position and might run out of cash in the not too distant future. Besides, its product lineup is terrible and therefore Chrysler suffers from the most severe decline in U.S. sales of all car makers. Chrysler’s sales dropped more than 36% compared with 2007. And due to a lack of cash, Chrysler might not be able to take over a small electric car start-up whereas Ford and GM could probably afford such a step.

Check out

All major auto-manufacturers are designing their own electric cars , The electric car on the fast track and California’s Hydrogen Highway as well as all posts still to come for information on cars using alternatives to fossil fuels.



Filed under Economy, Uncategorized

2 responses to “The electric car – the last sign of hope for troubled U.S. car makers?

  1. Pingback: I’ll take a summer break… « What Matters

  2. Pingback: The Air Car could revolutionize transportation - an electric car without an electric motor « What Matters

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