Lutz: Consumers Will Pay To Go Green

[nadepalma]

SOURCE: The Car Connection

GM’s Lutz: Consumers Will Pay To Go Green

“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 cancelled 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 towards 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 $1000.

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.

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[osv_alero]

And Lutz is right once again. Not many people are willing to spend an extra $3000, let alone an extra $10,000 on improving gas mileage in their vehicles. And though the media would like us to think the Suburbans and Expeditions have gone out of style, they still sell in big numbers.

A V6 that acts like a V8 is fine, as long as it has the same power and sounds as beautiful.

[MechEng]

$10K. Please this has gone on long enough. He is trying to scare people into reacting. GM could put the 2-mode in every vehicle, easily meeting CAFE for less than $10K. I think Bob Lutz has done GM some good but this has to be the dumbest thing I have ever heard him say.

And do we really need 16 threads on the same topic? The only diffrence seems to be that Bob Lutz keeps comming up with different random numbers to scare us. I guess the $6K number he threw out didn't scare us enough so now he has to make up a bigger number.

[4wdaaron]

bring on the E85 and diesel's!

[windvale]

Both the hated Prius and Camry Hybrid exceeds the 35 mpg target by a comfortable margin, and neither cost an additonal $10K. Am I missing something ?

[wescoent]

Originally Posted by windvale

Both the hated Prius and Camry Hybrid exceeds the 35 mpg target by a comfortable margin, and neither cost an additonal $10K. Am I missing something ?

The Prius is about the size of a Focus or Cobalt... does the Prius cost $15,000?

Secondly, Toyota sells every Camry hybrid at a big loss. Just because they don't cost $10,000 extra on the MSRP, doesn't mean they don't cost more.

[Buick61]

Meh. We've been paying more for cars over the years as technology advances. Early in the 20th Century, cars were typically $2,000 or more! That's right around $50,000 or so in today's money--for an average car! Then they got drastically cheaper in a hurry.

But, as cars started to get such nice things as automatic transmissions, power everything, oversquare high-output V8s, air-conditioning, and safety equipment, prices started to creep up ahead of inflation. In the 1950s and '60s, GM, Ford, and Chrysler just passed rising labor and technology costs on to the customer since there really was no competition to deal with. And even with Asian competition in the '80s and '90s, domestic car companies had no choice but to raise prices to deal with airbags, telecommunication devices, DOHC engines, ABS, and all the other junk we consider "standard" these days.

This "green technology" price jump is just more of the same that U.S. consumers have been dealing with for the last 60 years.

The top of the line 1959 Cadillac convertible was somewhere around $7,000 in 1959 dollars. If we take the XLR-V and put its price in '50s dollars, it would have cost $14,000! Double!

Again, nothing has changed. We've been paying forever for new technology, so this isn't something so hysterical.

Further, people didn't seem to have a problem spending an extra $5,000 - $10,000 for a jacked up station wagon in the 1990s. It was the biggest automotive craze of the last 15 years! So why would people suddenly protest the same bump for the current craze of the day? Hybrids are just as in style in 2008 as SUVs were in 1998.

[windvale]

Originally Posted by wescoent

The Prius is about the size of a Focus or Cobalt... does the Prius cost $15,000?

Secondly, Toyota sells every Camry hybrid at a big loss. Just because they don't cost $10,000 extra on the MSRP, doesn't mean they don't cost more.

Ah...negative. The Prius is listed as a mid-size car by both Motor Trend and Automobile magazine. And they *do* make a profit on the Prius.

[TimR]

Originally Posted by windvale

Both the hated Prius and Camry Hybrid exceeds the 35 mpg target by a comfortable margin, and neither cost an additonal $10K. Am I missing something ?

Yeah they are boring little s**tboxes!!!

[windvale]

Originally Posted by TimR

Yeah they are boring little s**tboxes!!!

Agreed. But I still don't think Lutz $10K is valid. GM is going to have to get it's head around producing some 35+ mpg cars - because for better or worse the landscape has changed. Period. And all the scare tactics in the world aint gonna change that...

[solman98]

Originally Posted by windvale

Ah...negative. The Prius is listed as a mid-size car by both Motor Trend and Automobile magazine. And they *do* make a profit on the Prius.

They can call it what they want, it's still the size of a compact.

[eaton53]

Both the hated Prius and Camry Hybrid exceeds the 35 mpg target by a comfortable margin, and neither cost an additonal $10K. Am I missing something ?

Yeah, you can't haul or tow anything large with them and Toyota doesn't make anything that can that gets decent mileage.

[awalbert88]

Originally Posted by MechEng

$10K. Please this has gone on long enough. He is trying to scare people into reacting. GM could put the 2-mode in every vehicle, easily meeting CAFE for less than $10K. I think Bob Lutz has done GM some good but this has to be the dumbest thing I have ever heard him say.

And do we really need 16 threads on the same topic? The only diffrence seems to be that Bob Lutz keeps comming up with different random numbers to scare us. I guess the $6K number he threw out didn't scare us enough so now he has to make up a bigger number.

The cars that meet or exceed 35MPG do not make up a large percentage of sales right now for any automaker. In order for the average fuel economy of ALL vehicles sold to reach 35MPG, it is going to cost a lot to bring up the numbers across the board. Sure, the small cars won't need a substantial increase in cost, but the larger vehicles that make up a very large portion of the market will require big time cost increases to reach 35MPG. So Americans can either change their buying habits, or accept higher prices for those bigger vehicles.

The two-mode is great, but it will not bring the CAFE average to 35MPG by itself. And the economy of scale simply isn't present yet to make this practical, because even a $1000 increase in price will send consumers flocking to the competition, regardless of fuel economy savings. A company like Toyota can afford to subsidize technologies like that to keep their prices competitive, but GM can't do that.

[awalbert88]

Originally Posted by windvale

Agreed. But I still don't think Lutz $10K is valid. GM is going to have to get it's head around producing some 35+ mpg cars - because for better or worse the landscape has changed. Period. And all the scare tactics in the world aint gonna change that...

"Some 35+ mpg cars"

Great. How does that bring the AVERAGE fuel economy of the entire fleet GM sells up to 35mpg? Any automaker can build a few cars that will do 35mpg+, but getting the entire lineup to average it is pretty damn expensive, regardless of who you are. Toyota is content to keep quiet on this issue, but you can bet they'd have preferred this increase not to pass.

[windvale]

Originally Posted by eaton53

Yeah, you can't haul or tow anything large with them and Toyota doesn't make anything that can that gets decent mileage.

I'm getting more confused by the moment. "Toyota doesn't make anything that gets decent mileage" ? I think the Prius gets fairly good mileage - better than anything GM is currently offering unless I'm deliousional. And it's the 8th best selling vehicle in the U.S., and they make a profit on it. No, it's not muscle car. No, you can't tow an Airstream with it. No, it's not my cup of tea either. But it is a car, it get's better than 35 mpg, and it doesn't cost 10K more than other similar sized cars.