It's not exactly been an easy few days for General Motors. Late Sunday, news that Rick Wagoner had been forced out as GM's CEO by the Obama administration leaked to the press. The very next day, President Obama revealed that the government would not provide GM (or Chrysler) with additional long-term federal bailout money.
Instead, GM was told that it would be given 60-days to turn the boat around or it would face bankruptcy.
With the clock ticking on GM's plan for action, the company is now asking for more money according to Reuters. This time around, GM is asking for $2.6 billion USD in low-interest loans to develop more vehicles based on the Chevrolet Volt platform. GM is already seeking $7.7 billion USD from a U.S. Department of Energy program to aid automakers in the development of fuel efficient vehicles.
Interestingly enough, President Obama's automotive task force has already noted [PDF] that the Volt isn't enough to save GM and that the company has bigger issues that need to be resolved. The task force cited GM's continued reliance on profits from large trucks as a sticking point.
"GM earns a large share of its profits from high-margin trucks and SUVs, which are vulnerable to a continuing shift in consumer preference to smaller vehicles," noted the task force in GM's viability summary. "Additionally, while the Chevy Volt holds promise, it will likely be too expensive to be commercially successful in the short-term."
Criticism of GM and the viability of the Volt program continued. "GM is at least one generation behind Toyota on advanced, ‘green’ powertrain development. In an attempt to leapfrog Toyota, GM has devoted significant resources to the Chevy Volt. While the Volt holds promise, it is currently projected to be much more expensive than its gasoline-fueled peers and will likely need substantial reductions in manufacturing cost in order to become commercially viable."
It is likely that the call for an additional $2.6 billion USD might be frowned upon by the government. Currently, there are only two other known variants of the Volt in existence with only one of them being production-ready. The Opel Ampera is a production-ready rebadge of the Volt and features differing front and rear bodywork while retaining the same interior.
The other Volt-derivative is the Cadillac Converj concept car that was unveiled during the Detroit Auto Show. The sleek, two-door coupe is sure to turn many heads, but its price tag is sure to eclipse that of the Volt which is expected to retail for around $40,000 or more before a $7,500 tax credit.
In order to get platform costs for the Volt down, GM is going to have to come up with a way to spread the development costs across a large number of vehicles. Toyota realized this when it developed its third-generation Prius. The Prius went from using its own platform to sharing a platform with the more plebian Toyota Corolla and Matrix.
quote: You say they can't make a profit. That's fallacy number one. Why can't they? They AREN'T making a profit, but does that mean they never can?
quote:He said they can't be profitable, I said they aren't now, but certainly they have the possibility to be in the future. Get it? Do you understand it now? I don't know where the rest of your rubbish comes from, that's all I was saying.
quote: GM is worth the effort, because the country is worse off with them gone
quote: This entire policy of propping up companies is good business.
quote: Other automakers are also losing revenue and would collapse so the question is who is left standing when the economy improves
quote: If you were considering buying a car today you would have to do considerable research to find one that was not only what you wanted but also did not ask for financial assistance, and of the few that haven't yet many of those will have to before long.
quote: Quite simply you know little about the auto industry and have only a greedy knee-jerk reaction without understanding cause or consequence.
quote: It's a United States investment, that they will find a way to spend your tax money no matter what, so the question is do they waste it away on pork projects that do not keep major industry productive, or do they keep our GDP higher which is very important in our long term economic needs?
quote: You are treating this as an individual business while I see it as an economic plan because there is not just one business involved. Do you realize that all the supporting businesses in the industry that could fail make up a larger lost value than GM itself?
quote: Make no mistake, its going to happen eventually. We can keep feeding these people money and rack up untold trillions in debt that will take half a lifetime to pay off or we can let the recession take its course and be done with it much sooner. This pain is not avoidable, the sooner people figure that out the less it will cost us in the long run and the sooner we can rebuild.
quote: All this money has to be paid back someday. At the rate they are going they will have 2 choices; 1. they can levy crushing taxes which will send us into a depression, or 2. they can print the money and turn us into another Zimbabwe with run away inflation.
quote: WHAT!? are you out of your mind? Its "good business" for the American tax payers to spend hundreds of billions of dollars to pad the pockets of a company that can't turn a profit because they have an unsustainable business model...? Since when has bad business (losing money) become "good business"? GM in its current form is a bottomless pit. If we give them 8 trillion dollars all it will do is delay the inevetable they lose money on their cars because their labor costs are too high. Plain and simple, any money that we give them only allows them to run an operating loss longer before they get right back to where they are now.
quote: I hope that most Americans vote with their pocket book and support those automobile manufacturers that made wise choices and managed themselves properly and didn't ask for money from the public that none of us will ever see again.
quote: This is actually why the automotive industry is FOR nationalizing our health care - it will lower their costs and make them more competitive.
quote: Letting GM fail is a race towards socialism in the US.
quote: That's why they're trouble, they cannot get voluntary funds because people refuse to give it to them, it doesn't even matter what their reasons are, it's their property
quote: The market is supposed to work like this, and others refuse to invest with them because they are not convinced. That's why they're trouble, they cannot get voluntary funds because people refuse to give it to them, it doesn't even matter what their reasons are, it's their property. You do not have the power to vote someone else's money into that company by force, which is what a bailout is. Got it?
quote: I do think they can be, and I think they've done a lot of good things recently, and have good technology.
quote: When you say it's your money, what happened to all the money GM poured into the government in taxes?
quote: I mean, the way you guys talk is like this company never contributed anything to the U.S. economy, or ever paid taxes.
quote: Well, if they weren't around, the dramatic contributions they made to our economy and budget, directly or indirectly, would probably have come out of your pocket.
quote: No, we talk like we want fairness. Guess who else pays taxes? Everybody else, including competing companies who are operating more efficiently and are effectively subsidizing any money GM receives under your too big to fail umbrella. What freaking chance do they have with your mindset?
quote: The only flaw with that reasoning is assuming that GM's competitors are paying the same amount of taxes to the US government, which is *NOT* the case.
quote: Oh, and consider this: Do you think for one second that the Japanese government would refuse to loan Toyota a loan if they ran into financial difficulty?
quote: Again, it's entrepreneurship, not benevolence. Big difference.
quote: Everyone has their choice. The biggest cloud that most people can't see through is that, yes, it is YOUR money that they are considering pouring into this "car".
quote: Please all you Obama supporters and people on the fence about this, take this to heart, Obama is literally spending money that we have NOT created yet.
quote: That's what governments do.
quote: ...or at least that's what our gov't has been doing for quite some time.
quote: And btw, both Repub n Dem Presidents have enabled and kept this line of thinking going so lets not even think about starting up th blame game here.
quote: quote: That's what governments do.???? Is this meant to just be dismissive of the issue, or deflective or just plain ignorant ? With all due respect, Obama is projecting spending plans that are greater than the combined sum of EVERY PRESIDENT WHO EVER LIVED. This is not business as usual.
quote: quote: ...or at least that's what our gov't has been doing for quite some time.Not even close. Are you that in the tank, or just completely ignorant to the massive scale of debt that we are talking about here ? TRILLIONS. Even saying the numbers of these huge sums like they are as common as bottled water seemed ludicrous !!
quote: 1:You know what, I will fully give you that the last administration and Republican congress wasn't as fiscally conservative as we would have liked. But that time is over now. And with all due respect, the irresponsibility of the Bush administration and members of Congress seem like meer drops in the bucket compared to what Obama is proposing.2:And not just spending. Make no mistake about it, Obama and the Liberals are fully intent on federalizing every last aspect of our lives, our businesses, and our healthcare. Folks, this is NOT something to cheer at. And for you to say this is the same " line of thinking " as the past 8 years shows you are either totally biased or just not understanding what's happening here.3:Even the MOST optimistic figures on Obama's Cap and Trade policy, the ones he himself uses, detail debt and loss of GDP that this country simply cannot, and will not, overcome ! Do you understand what is happening !?4:Our way of life, the very ideals and freedoms and rights that we hold dear, are being bought - traded - and bartered away from us. All to voracious applause by you guys !5:This is not business as usual. These are not the same old policies we see year after year that really don't impact our lives. Obama's plans and vision will make a very REAL, and negative, impact on ALL of our lives. Not just the "rich" that he keeps bringing up to get you guys to go along with his rhetoric.6:We are facing the biggest threat to our way of life, and it's coming from within. And you guys are still bringing up Bush !!??
quote: 2: No I'm not seeing how the gov't is trying to nationalize or as you said, "Federalize" businesses. Please explain this one to me in a calm manner, thank u. /genuine
quote: Yes, national health care is completely taking away my freedom to...do what exactly?
quote: "After the first 3 years -- that is to say, beginning in 1940 -- you will pay, and your employer will pay, 1.5 cents for each dollar you earn, up to $3,000 a year. ... Beginning in 1943, you will pay 2 cents, and so will your employer, for every dollar you earn for the next 3 years. ... And finally, beginning in 1949, 12 years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay."
quote: We are facing the biggest threat to our way of life, and it's coming from within. And you guys are still bringing up Bush !!??
quote: Don't forget their liabilities of 177 billion.
quote: They are worth the goods they produce.
quote: Everyone seems hung up on numbers without seeing that producing a lot of automobiles is a productive end that benefits our GDP...because in the end they are producing something of value instead of just seeing the money vanish into thin air.
quote: You keep thinking "lose money" which is incorrect. THe money is coming from the government and returning back to the government from taxable income, goods and services, in addition to reducing government payout from unemployment and other services.
quote: By my logic, if the government paid people on welfare the same that they already do, but required them to produce 5 billion dollars worth of goods, then instead of nothing from the money we have 5 billion dollars worth of goods AND taxable income, purchases, etc., returning.Like it or not, the former is far worse than the latter.
quote: and now they are asking for $2.6 Billion more - twice what they are even worth!
quote: No one predicted the severe downturn, no one.
quote: GM has so much good, but also they were shackled with UAW and very high labor costs. This lodestone around their neck presented huge problems in low cost vehicles, and let's hope they get more concessions from the UAW so they can get their labor costs in line with Toyota's. If they do, this company will come out of this fine.
quote: When you think of how much money GM has paid the government in taxes, and also those downstream from it have paid (employees, car dealerships, etc...), it makes it a little easier to stomach these loans.
quote: I still think there's a lot of good there, and while they'll suffer for a while,
quote: My main issue with your argument is the really short-sighted view that they should stop investing in future products. If that's what you think they should do, then I would agree with your first premise, that they'll never be profitable. You can't stop investing in R&D, or new products, and hope to become healthy.
quote: When you think of how much money GM has paid the government in taxes, and also those downstream from it have paid (employees, car dealerships, etc...), it makes it a little easier to stomach these loans. They have contributed a lot in taxes, and also have created a lot of vehicles when we were at war.
quote: I was hoping the money was to produce spin offs of the power train, not just re-branding and re-trimming of the Volt.
quote: "GM is at least one generation behind Toyota on advanced, ‘green’ powertrain development..."
quote: In any event, they made this a $40K hybrid when Toyota's average is in the low-20's. Honda already went bust on the Accord hybrids because no one bought them in that segment. So I think there was a marketing mistake here.
quote: You can usually tell those that are at least mildly anti-GM/Volt by the price they give the Volt. GM has never once given an estimate for the price of the Volt. They have made vague statements Mid to High 30,000s.My guess is they will try hard to get the base price to be less than 37,500 so they can claim the overall car is less than 30,000 with rebate... Left-Number Syndrome being what it is..
quote: This is a great time to announce that you've been researching and developing such a technology, but to be actually bringing it out and hoping it revives your franchise at the cost of what first-gen technology will be priced at was and is a huge mistake and miscalculation.
quote: When the Volt program started the economy was roaring and gas prices were sky high... it was the "right" time to start the program and probably a little late. Abandoning the program now during the economic downturn is probably a bad choice for the company.
quote: Don't delay developing the technology you believe will be the future of your company because you might have trouble selling 10,000-25,000 units a year!
quote: The Volt was not intented to and will not revive GM as a company.
quote: I didn't say delay development, I said delay selling the first-gen technology since they have parallel projects in which they are developing 2nd and 3rd gen. versions OF this tech which will be able to be produced at lower costs.
quote: Has anyone engaged in a study to determine whether or not we can really support large numbers of electric cars and/or hybrids that need to be plugged in to recharge?
quote: This time around, GM is asking for $2.6 billion USD in low-interest loans to develop more vehicles based on the Chevrolet Volt platform. GM is already seeking $7.7 billion USD from a U.S. Department of Energy program to aid automakers in the development of fuel efficient vehicles.
quote: "GM earns a large share of its profits from high-margin trucks and SUVs, which are vulnerable to a continuing shift in consumer preference to smaller vehicles," noted the task force in GM's viability summary. "Additionally, while the Chevy Volt holds promise, it will likely be too expensive to be commercially successful in the short-term."