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116 comments on DrumBeat: January 7, 2007

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odograph on January 7, 2007 - 10:57am

Ten years ago GM was telling a story: we'd drive gasoline cars (and SUVs!) now, and when oil or global warming became a problem, hydrogen cars would be ready to replace them. This might have been a cynical marketing move ( tobacco companies & cancer, Exxon & global warming, GM & fossil fuels ), but it is also possible that they bought into it themselves, over time.

They may have come to believe their own BS that oil would stay cheap, and then (cheap?) hydrogen would be there to replace it.

I snagged this quote in July of 2005:

[…] Sherrie Childers Arb, director of environment and energy communications for GM, said it’s wrong to assume higher oil prices.

“Our indicators show that oil will go down, not up,” she said, pointing to information she gets from the federal Energy Information Agency, which is part of the Department of Energy.

By 2010, the agency expects a barrel of oil to fall to $26, she said.

The source is now gone but my old blog entry is here: http://odograph.com/?p=267

Anyway, I think GM got caught flat-footed, either because they thought they had more time to run the SUV -> hydrogen game, or because they'd fallen for their own marketing. At that point they were stuck with a lot of product and a long design cycle (it takes years to get a totally new car on the road). So they had to talk a story that supported their current inventory. They had (desperately) to keep people buying, while (secretly?) in the back room scrambling to come up with the new generation.

But again the interesting thing is that they can't be too "forward" in their statements. They've got a lot of Tahoes down there on the lot, right now.

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ThatsItImout on January 8, 2007 - 1:55am

odograph,
Great post, and points to at least two very important issues:

The first is the way GM execs can pull the idiotic EIA projections out of the hat for cover. I complained of this in other posts, in that these projections will be used by bankers, venture capitalists, and large corporations to justify their argument that there is no need for change, at least not yet.

The other point you make "They've got a lot of Tahoes down there on the lot, right now." Exactly, and they still have a huge investment in tooling and assembly plants to somehow try to modify or expense down as no longer useful. It is a huge logistical undertaking for a company already bleeding badly financially. One way forward may be to use one of it's more "offbeat" nameplates, like Saab, to make the switch to really advanced vehicles, the type that would lure the "first adaptors" of new tech as much for novelty sake as anything else (the Toyota Prius has done well among that type of buyer), and then move from division to division. After all, work trucks will still be needed, and going to an advanced drivetrain, such as hydraulic hybrid with either propane or Diesel engines could buy them a window of time costing down the chasis assembly lines of the current chassis, as they plan for a more radical product.

Anyway they do it, it won't be easy, and if we do get a sudden flood of cheap oil from new production, they will be caught flat footed, with an advanced product and no one greatly interested in it (they recall well the EV-1, praised but never profitable).

Roger Conner known to you as ThatsItImout

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