Yesterday I wrote glowingly of GM’s announcement that the 230 mpg Chevy Volt will be on the market by the end of 2010. I said, and still believe that this is both exciting news and a challenge that will test environmentalists’ belief in their cause; will environmentalists buy this car or will they continue to wait until the government subsidizes the car?
Then reader Brett pointed out Tom Blumer’s article on NewsBusters questioning GM’s 8-K report filed with the SEC Friday. Blumer points to concerns over who really controls GM, their reduced dealer network, and the resulting decrease in forecast sales, and both the lack of consumer confidence in GM and anger from the bailout. He added an additional concern around GM’s reporting requirements and their ability and willingness to file statements. There is, in short, a lot to be concerned with after so much of our money went into saving GM.
GM emerged from bankruptcy claiming itself reinvented, in the midst of a recession that is killing the car industry. GM has a long, difficult struggle ahead, against many of the same issues that led to its failure. Industry experts think the Volt and future electric cars are essential to the automaker’s future, but GM has to be able to get those cars to market and get consumers into showrooms.
GM was saved, in part, on the promise of the company building electric cars that could reduce global warming and our need for foreign oil. Electric cars were deemed to be important by our government. That leads me to ask; is it possible that by interfering in GM’s business, the government hurt the chances of success for the Volt?
GM got itself into trouble for a variety of reasons, mostly problems of its own creation. When this recession hit, GM was too weak to survive. The company is still weak financially, lacks good products, and has a terrible public image. Is this the company that is best positioned to optimize the Volt and the technology for electric cars?
My reason for asking is that had GM been allowed to suffer in the free market, as other troubled companies have had to do, the assets like the Volt would not have disappeared. Another company would have bought GM’s assets, including the Volt. Perhaps that company would be better at designing and selling cars. I wonder if, for example, Toyota had obtained the Volt technology and put it in the frame of its Corolla, the Volt would do better than it will as a GM car?
Let me ask my question from a broader perspective: Is it possible that by interfering in the free market to protect GM, the government hurt an important asset for fighting global warming and reducing our dependence on foreign oil?
Unintended consequences?
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There’s a lot of spirited debate about the pros and cons of the engineering specifcs of the GM Volt vs. that of the Nissan Leaf. Follow headlines that read “Nissan Laughs off Threat from GM Volt”. These cars are at least a year or so away from being mass-produced, with Nissan claiming that their price tag will be at least $10,000 less than GM.
Given the enormous amount of market share the Big 3 have lost over the last 12 years due to numerous reasons, one has to wonder if the electric car, when finally produced, will be GM’s savior and bring them back to their past glory. I don’t know.
As for the planned IPO in 2010, I would hope that investors would be able to obtain complete and ACCURATE financials before they spend their dollars. Just don’t hear very much about Motors Liquidation Company these days.