Green Motors: GM transitions with some help from the fed

Matt Purple Fellow, Defense Priorities
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It’s August, the time of year when demand for gasoline spikes as Americans hit the road in high numbers. Summer means road trips and joyrides, which translates into lots and lots of fuel.

But auto giant General Motors is marching to the tune of a different drum than most consumers. Their message: More green, less gas.

“We very much believe that we need to move away from petroleum. We can’t have a 96-97% dependence on petroleum,” Rob Peterson, a spokesman for GM, told The Daily Caller.

It’s a new look for the car corporation that many feared would collapse during the financial crisis. Instead, thanks to a helpful hand from the government, GM is afloat and continuing to reinvent itself as a green company.

More than half of GM’s patents in 2009 were for green technologies. GM also recently invested in Bright Automotive, a startup working to develop a plug-in electric van.

Most recently, GM announced the completion of the 2011 Chevrolet Volt, an electric car that can run for 40 miles on a battery charge before a gas engine kicks in to generate more electricity. The Volt will be released in November with a price tag of $41,000.

Reception to the Volt has been lukewarm so far. Edward Niedermeyer, editor of the website The Truth About Cars, penned a scathing review of the Volt in the New York Times, calling the hybrid an “electric lemon” and claiming taxpayers wasted tens of billions for its development.

“In the end, making the bailout work — whatever the cost — is the only good reason for buying a Volt. The car is not just an environmental hair shirt (a charge leveled at the Prius early in its existence), it is an act of political self-denial as well,” Niedermeyer wrote.

The review touched a nerve at the White House and led Press Secretary Robert Gibbs to compare Niedermeyer to his namesake character in the movie Animal House.

But how much of a role did the federal government play in GM’s going green? The feds hold a 60% equity stake in GM, a measure taken last year to allegedly prevent the company’s collapse. Some detractors have nicknamed the company “Government Motors” and charged that the Obama Administration is forcing GM to develop hybrids.

That’s not quite the case, said Rebecca Lindland, Director at IHS Automotive. Lindland noted that GM was investing in green technologies well before the bailouts, including the Volt which was announced in 2007.

The real cause? “CAFE standards,” Lindland told The Daily Caller. “That is it. There hasn’t been anything else. That’s been the driving force behind the industry for the past couple years.”

Corporate Average Fuel Economy standards have been in hot-button political issue for several years, especially for environmentalists. Congress passed the most recent CAFE increase in 2007, raising the national average to 35 miles per gallon by 2020, a 40% increase. The rule applies to cars, light trucks, and SUVs.

The EPA clamped down even further earlier this year, raising CAFE standards to 35.5 miles per gallon by 2016. The rules will begin with 2012 models.
Barack Obama has indicated he may go even further. In a presidential memorandum released in May, the president asked governmental departments to work with California to develop a tighter national fuel economy standard. California has the strictest CAFE standards in the country. Obama also expressed an interest in regulating fuel economies for medium- and heavy-duty trucks.

All this is intended to nudge car companies toward producing more fuel-efficient models.

“The U.S. hasn’t put the right policies into place so green companies don’t know if there is a market for their products,” said energy czar Carol Browner in May.

Car companies are taking the cue and it’s not just General Motors. Ford is reinventing its popular Explorer SUV to achieve between 20% and 30% better fuel economy, at a cost to aerodynamics, according to Lindland.

Peterson acknowledged that CAFE standards do play a role in GM’s new green bent and that the Volt is a part of that.

“The CAFE standards are going to require that we have higher fuel efficiency and much of that fuel efficiency can come from electricity,” he said.

But he also said CAFE standards weren’t the entire picture. GM really does believe that the future lies in green fuels.

“I think the government likes to see companies [investing in green technologies] and they’ve been very much supportive of our movement towards that, but it’s hardly a government mandate that we have to put [hybrids] out on the road. We’re doing this because it’s the right thing to do,” he said.

In the meantime, GM is continuing to expand on the Volt and has a second generation of electric cars in the works. The company expects the price of such hybrids to come down as the technology evolves. Already over the past decade, the company has reduced electric battery sizes by about two-thirds, among other improvements.

GM is also dabbling in other alternative fuels, including hydrogen power. Three years ago, the company launched a fleet of hydrogen fuel-cell vehicles, although their development has been snagged by a lack of hydrogen pump stations.

Ethanol also plays a role. GM is working with two companies, Coskata and Mascoma, to develop biofuels from non-food sources like waste and woodchips.

But consumer demand continues to remain a stubborn problem for green car advocates. Hybrids represented just 2.8% of all cars sold in 2009 and total hybrid sales have been decreasing since 2007. A recent survey of auto dealerships by found that nine of the ten fastest-selling cars were SUVs.

The most popular GM vehicle in 2009? The full-size pickup Chevy Silverado.