GM’s Lutz: Consumers Will Pay to Go Green

January 15, 2008
“Everybody’s going to have to get with it,” says General Motors’ car czar, Bob Lutz. “Business as usual is not acceptable.”

The septuagenarian executive, long known as a proponent of power, is talking a very different game, these days promoting GM’s new green technology. But while the GM Vice Chairman insists the automaker will meet market demands – as well as tough new U.S. fuel economy regulations, he warns that consumers better be ready to pay – or sacrifice.

The alternatives are simple, Lutz suggested, during a discussion at the Detroit Auto Show. To maintain the sort of cars, trucks, and crossovers they have today, American motorists will have to pay as much as $10,000 a vehicle more to cover the cost of advanced powertrains, lighter-weight materials, and other advanced technology.

The alternative, he stressed, is “a shift in what is offered by the auto industry to the American public.” To underscore that point, Lutz noted that GM has already canceled plans for the next-generation Northstar V-8 now used in its Cadillac products. And it will likely switch from a rear-wheel-drive version of its big Chevrolet Impala sedan, powered by V-6s and V-8s, to a more fuel-efficient, front-drive design with smaller engines.

What could change that equation, however, is ethanol, Lutz insisted, especially if that alcohol fuel is produced using a new method called “cellulosic.” That technology can make use of wood pulp and other agricultural scraps, rather than corn and other food stocks. Earlier this week, at the Detroit show, GM CEO Rick Wagoner announced that GM would invest in the new cellulosic ethanol producer, Coskata.

The automaker has promised to make 50 percent of its vehicles capable of running on ethanol-based E85 fuel by 2012, though it remains to be seen if supplies will grow to meet potential demand.

While skeptics question whether ethanol can really supplant gasoline to any great degree, Lutz said it has a singular advantage over other advanced fuels, such as hydrogen, since it would require “a minimal tear-up in terms of price and what Americans like to drive.”

The reality seems to point toward some degree of “tear-up,” however. With Congress now mandating a goal of 35 mpg fuel economy, the V-8, said Lutz, “will remain, but I don’t see many (companies) investing lots of money” into developing future versions.

Diesel engines will likely replace V-8s in heavy-duty truck applications, he added, such as the full-size Chevrolet Silverado pickup, while V-6s and alternative powertrains, such as GM’s new two-mode hybrids, seem likely to become dominant in SUVs.

“You can make a small V-6 behave like a large V-8,” he said. “All it takes is money.” GM’s cross-town rival aims to prove that point with its new line of EcoBoost powertrains. The 3.5-liter V-6 version produces as much power and torque as a typical V-8, but the premium will be somewhere north of $1,000.

Meanwhile, Lutz put in a good word for GM's planned "extended-range electric vehicle," otherwise known as a plug-in hybrid. The Chevrolet Volt, which the automaker intends to launch in 2009, should deliver more than 30 miles on battery power alone. For longer drives, its gasoline engine would kick in.

Despite all the attention being paid to fuel economy and global warming, these days, Lutz questions whether U.S. consumers really are that serious about higher-mileage technology. Even at $3 a gallon, the past year’s run-up in fuel prices doesn’t impact the average consumer all that much, he contended.

“For many Americans, the difference between 20 and 30 mpg is, like, who cares?” argued Lutz. At most, it’s costing the typical commuter, he added, $20 to $30 a week.

But then again, the normally conservative executive suggested that if the country is really serious about slashing fuel consumption, it should bite the bullet and sharply rise fuel taxes.

The best way, he said, “is to use market mechanisms to transition the American (motor vehicle fleet) to something more like what Europeans drive.”

2008 Detroit Auto Show Coverage. Ford F-150, Hyundai Genesis and Corvette ZR1. by TCC Team (2008-01-09)

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