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Can Electrics Jumpstart Detroit?

Posted April 19, 2009 8:43 AM

U.S. automakers hope to breathe new life into the decaying auto economy by replacing the internal combustion engine with alternate power sources. General Motors is developing battery packs to give the Chevy Volt a fuel economy rating of 100 mpg, and Ford has sold 100,000 Escape hybrids. But more challenges lie ahead. Success will require hefty private investment and government support. Can U.S. industry develop the technology, and will it be enough to reverse the downward spiral of the auto industry?

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#1

Re: Can Electrics Jumpstart Detroit?

04/19/2009 5:58 PM

Sorry, but throwing money at Detroit will not change the situation.

100,000 hybrids is a very tiny fraction of the total vehicles sold. Hybrid sales do not generate revenue. I doubt that they pay the engineering cost.

The Chevy Volt is a very neat vehicle, but I can guarantee you that sales will be lower than hybrids. You can tax this nation to death and funnel billions of dollars to Detroit Michigan, but nothing will change except huge parking garages will be popping up all over to store hundreds of thousands of hybrids and electric cars that dealers can not sell.

The whole problem with Detroit is that there is a huge disconnect between what the government mandates they must sell and what the general buying public wants!

It stuns me to see educated people completely miss the crux of the biscuit when it comes to why Detroit is where it is. There are two primary reasons why, actually three:

1) The big three are mandated to build a percentage of cars that people do not want to buy.

2) The economic downturn has shut down the demand for cars. Even Toyota is at a loss, but they are not going extinct.

A third reason for Detroit's woes is the cost of building vehicles. The Auto Union is causing a huge loss of profit with wages and benefit demands that are out of scope. Since the Auto Unions are a powerful government lobby there is little hope to see a significant change.

I understand that the government wants us to drive more efficient cars, but the public just doesn't want them. Go look at the ten top selling cars for 2008. Hybrids are not on the list.

Either the hearts and minds of the people must change or the government mandates must change. I see little hope of this administration doing anything else but making the situation worse. Buy the time this administration is done and the EPA has their way two (if not all three) of the automakers will be government owned and run and producing even more vehicles that people do not want. The next step is to increase CAFE standards for all imports disproportionally to attempt to level the playing field between imports and government built vehicles. Then begin to tax gasoline at ever higher rates. Finally, the government will impose taxes on older vehicles or simply a limit as to how old a car you can drive (like Japan does now) to force people out of the cars they want to keep and buy cars they don't want to own.

In the end, Detroit will become government owned or supported at the expense of those that pay taxes.

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#2

Re: Can Electrics Jumpstart Detroit?

04/19/2009 6:55 PM

I should add in response to your question in the title text, "Can Electric's Jumpstart Detroit?"

Absolutely not. The current state of the art does not compete with current technology (gasoline engines) in performance or in cost. Even factoring savings with respect to cost of electricity versus a gallon of gas it will not do it.

Even if a sudden break trough in battery technology just magically appears it will take years to test, build, and deliver to the market. Look how long it took to develop the Volt and that was on a crash program. Even if that magic battery was available today, it will still take years to redesign the cars to use them and the production lines to build them along with the infrastructure to keep them running. Meanwhile Detroit will continue to slide into oblivion.

I can't imagine any auto executive really expects to turn around the company by replacing the gas engine with an electric one unless they are smoking something really good.

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#3

Re: Can Electrics Jumpstart Detroit?

04/19/2009 10:59 PM

I was never a fan of Hybrids due to the additional equipment cost usually cannot be recovered by the fuel mileage increase over the lifespan of the vehicle.

However one fascinating capability that the carmakers choose to ignore is that a Hybrid already has the required equipment onboard to make a really awesome power generation system. This can be used for powering a weekend cottage, or storm backup power during extended outages (anyone remember hurricane Ike?).

The gasoline engine generator, battery storage and AC inverter are already onboard, and everything is handily self-propelled! The batteries will allow the engine to cycle, instead of constantly running regardless of how light the amp load. How much more convenient can you get?

If the car companies could offer AC power as feature it would be enough to make even me purchase one.

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#4

Re: Can Electrics Jumpstart Detroit?

04/20/2009 6:41 AM

Interesting that both of my posts were marked Off-Topic. Did I miss something? I thought the topic was specifically about electric cars and will that turn around Detroit.

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#12
In reply to #4

Re: Can Electrics Jumpstart Detroit?

04/20/2009 4:22 PM

I thought that was strange too. Must be a troll.

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#5

Re: Can Electrics Jumpstart Detroit?

04/20/2009 8:19 AM

The problem with Detroit has nothing to do with the internal combustion engine and everything to do with and inability to compete. As GM brings out the Volt there will be competition from the other automakers as well. Chances are the competition will have an edge on the Volt because they are able to bring the design to market more quickly and thus have newer technology. The technology is being developed along several lines but it is Toyota that holds a strong patent position in hybrids. So much so that Ford hybrids license the Toyota technology. The alternate energy technology battle is already well underway and Detroit is loosing. Again.

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#7
In reply to #5

Re: Can Electrics Jumpstart Detroit?

04/20/2009 11:55 AM

"...Ford hybrids license the Toyota technology...and Detroit is loosing [sic]. Again."

This statement is not 100% accurate. Ford did indeed license Toyota technology back in 2004 to build their entry vehicle into the hybrid market, the Escape.

Currently Nissan licenses the Toyota Synergy technology for the 2009 Altima hybrid.

The 2010 Ford Fusion hybrid uses their own technology, and Car and Driver magazine reported it is superior to the Camry & Altima hybrid. Considering Car and Driver robotically gushes over anything foreign, this is quite a statement.

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#8
In reply to #7

Re: Can Electrics Jumpstart Detroit?

04/20/2009 2:29 PM

Thanks for bringing me up to date. For GM and Chrysler I would think that it is still a matter of "too little, too late."

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#11
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Re: Can Electrics Jumpstart Detroit?

04/20/2009 4:17 PM

It's meaningless for Ford, too. Ford sold the most hybrids in 2008 for a total of 19,522 vehicles.

Compare that with Ford's total sales in 2008 of 544,769 vehicles. Hybrids accounted for 3.5% of Fords sales. No body wants them!

Even if hybrid sales increased 100% it would still be like peeing in the pool (after consuming a few Detroit Growlers).

Now, if you think hybrid sales are dismal, imagine what the numbers would be for electric cars with a range of 50 miles and a battery life between 3 to 7 years?

So, better toss up a few more Detroit Growlers.

Yes, this comment contains facts and is very likely to be considered to be 'off-topic', too.

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#15
In reply to #7

Re: Can Electrics Jumpstart Detroit?

04/21/2009 4:52 AM

Thanks for setting them straight. Domestic producers will grab and eventually dominate in electricity; flex fuel; ... etc. BTW, GM's problems right now are mostly domestic; but China and it's billions...GM China can't keep up with the demand. Once GM completes its restucturing and its union busting under bankrupcty it will come back strongly on the domestic side, too. Ford too is set to emerge stronger under former Boeing leadership. For anyone under 40-ish, a few round lots bet on GM and/or Ford are almost a sure thing long term.

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#6

Re: Can Electrics Jumpstart Detroit?

04/20/2009 11:24 AM

Here in the UK the government will give away £2000 to all the buyers of electric-hybrid cars! If you choose to buy an all electric vehicle they will give you £5000!!!

They are also planning to put an electric contact in every filling station as soon as the new quick-charge batteries are out into production!

Spencer.

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#9

Re: Can Electrics Jumpstart Detroit?

04/20/2009 3:27 PM

All of our money, and all the presidents men;

Can't put Detroit, back on the road again!

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#10

Re: Can Electrics Jumpstart Detroit?

04/20/2009 3:45 PM

Well, well Detroit is failing. They are failing because the good old boys are going down the drain with the "good old days" of gas guzzling fossil fueled vehicles. My contention is to let them fail. Where one door closes another opens, Let the struggling little guy have a crack at building the next door buster vehicle.

Japan has built cars that can get 30 to 39 mph, Detroit can barley build a car that gets 20 mph without going to the repair guy every 10 months or so.

Well folks I have done it, I have designed a car that never needs gasoline, oil, or a recharge.... EVER ! I am now waiting on the U.S. Government stimulus pkg to kick in so I can actually build a prototype. GM, Ford or Chrysler had the chance to hire me but due to circumstances I was born with, I did not qualify to work for them. Vendetta yes! giving the public a coast to coast limitless vehicle most definately.....keep looking at the site as I will post a video of the prototype in the near future.

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#13
In reply to #10

Re: Can Electrics Jumpstart Detroit?

04/20/2009 4:25 PM

I am sorry, but I would disagree. People buy foreign because of perceived value, not fuel economy.

US buyers do not care that much about fuel economy. If that were true, then why are 50% of all new sales SUVs?

Also, GM and Toyota total world sales are neck and neck. So, the number of vehicles sold does not support your claim that they are not selling enough cars nor that fuel economy is the issue.

The issue is purely profit. GM makes less profit than Toyota on a car-by-car basis. That translates to GM having a higher operating cost, principly centered around labor costs and pensions.

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#18
In reply to #13

Re: Can Electrics Jumpstart Detroit?

05/01/2009 11:21 AM

Anonymous Hero:

Regarding your claim that US Automakers,such as GM, have a higher production cost and less profit. How do you respond to the last several years of GM offering the public steeply discounted cars (note: only on all the big gas guzzlers) and zero percent interest? Wouldn' this practice have a significant impact on profit? And if not, why or how?

Don't you believe that GM stimulated that segment of the market? That what they have done is flooded the market w/ what they choose to? And yes, the statistics show that based on sales those big gas guzzlers were what the 'public' wanted; but isn't the statistics skewed based on market manipulation (i.e. sales incentives, etc)?

In your earlier post you mention that the gov't will impose ever higher taxes on gas, older cars, etc. Are you an advocate of this, or an opponent? What is your stance in regards to energy? Shall we continue down the gasoline road, or is it time to start moving to new (i.e. clean) energy systems? I ask, because if you're a gasoline fan you'll obviously think that Detroit should remain as a producer of gas vehicles and avoid any association w/ electric/fuel cell/etc.

PS - This is way off topic. But so be it.

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#19
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Re: Can Electrics Jumpstart Detroit?

05/01/2009 1:38 PM

Great questions! I'll try to answer them in order.

I believe that the last two years of steep discounts are purely designed to ramp up the number of sales. Typically, these "incentives" are designed to move product that is not moving as quickly as the seller likes, but it can become widespread is the whole line is not moving fast enough.

As GM's profit and market share dwindles, GM is trying to find that sweet spot in sales. Another aspect is volume of sales versus production. GM has a pretty large overstock of product, so you adjust the cost until you reach the sales figures you want. That is a bit of an over simplification of the situation, but it is basically sound.

I guess the "market manipulation" is an interesting term. Every free enterprise does that by adjusting their price points so that demand matches production. Again, that is a bit simplistic, but is a good general rule.

GM, Ford, and Chrysler have good reason to create pricing incentives for their trucks and SUVs. First, SUVs and trucks are exempt from many of the Federal regulations that were designed for cars when they were the dominant species on the road. The Federal Government created this situation and all automakers adjusted their product lines to maximize profit (do you blame them?), so SUVs and trucks were a logical shift for all automakers. Since regulations are more lax (including safety), the costs to build these vehicles are cheaper, which generates greater profit.

For the auto industry it has been a win-win because costs went down and at the same time that popularity for SUVs and trucks soared. This kept the retail price (and resale prices for used vehicles) high compared to cars, which generates better profits.

I do not support taxation by the government to manipulate people's buying habits. One of the founding principles of free enterprise is that it tends to seek its own level. As a popular product becomes scarce, the price will go up. The same will happen with gasoline when supplies dwindle, the price goes up. We have seen this over and over at the pumps for decades. When the price for an object gets to a critical point other options materialize that become cost effective solutions. So, as the cost of energy gets higher, consumers start looking for better and cheaper solutions, which creates new markets for entrepreneurs seeking to tap into those markets.

In other words, it is a self correcting process to a large extent. However, when governments impose their will on free enterprise the normal supply-demand gets disrupted and has spin-off consequences, which is almost always negative.

Left to their own devices, alternative fuels and electric vehicles will become available when the market demands them. To try to force people to buy something that they do not want and at a price that is higher than what they are currently paying simply does not work. Frustrated by their constituents, governments react by imposing more and more regulations to move their people, kicking and screaming, to where the government wants them. The good news for the governments is that voters have a short memory and are easily manipulated by rhetoric, so we are where we are today because of this.

I think Detroit should be free to serve their markets as they see fit. When the market decides that they want something different, enterprise will adjust to serve that market. Unfortunately, our domestic auto industry is in a stranglehold between government regulation and union labor costs.

As a final note, I am not advocating zero government regulations. We need some form of framework for business to operate from. Anti-trust laws are a good example. However, business regulation legislation have spiraled out of control (like our tax code) and it has been a Band-aid upon Band-aid approach to fix problems in previous regulations.

In the end, I think the taxation solution will rule the day because it increases government revenue, which has also spiraled out of control, and forces people to buy what the government wants.

It is bad now and only will get worse (just look at the mountain of debt that local, State, and Federal governments have piled up). When you figure in all of the taxes the average middle class citizen pays (Federal, State, Social Security, Medicare, sales tax, Federal and State taxes on commodities we buy (i.e, gas, liquor, etc.)...) we are approaching 70% of out gross income! That means that the first 255 days of each year is spent paying taxes in some form. The good news is that you can keep the revenue from the remaining 110 days, but don't get too cozy because the Government is going to find even more ways to tap into that remaining 110 days.

The pain of all of that does not strike home until you quit working for someone else and work for yourself because you spend all your time collecting all the checks, but wait, then you have to pay taxes on all that money you earned. You don't notice that when you collect a paycheck from your employer when he deducts those taxes before you see the money.

Way off subject here.

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#14

Re: Can Electrics Jumpstart Detroit?

04/20/2009 5:40 PM

"Can the U.S. industry develop the technology, and will it be enough to reverse the downward spiral of the auto industry?"

I believe that the US could develop most any technology. People working in the US have developed a multitude of technologies. The is evidence of success in the past that implies success possible in the future.

Sometimes industries contract to a level commensurate with the demand.

On the one hand the population in the world will increase and demand for toys and cars is assured to increase simply due to population increases.

Factors of Finance do have strong influence over whether or not the US can reverse the downward spiral for its indigenous car companies. (Until you have things like an International Minimum Wage, nation state competition for value added creations cannot be reconciled without tarriffs and protectionist measures.)

The US market for cars is highly influenced by the culture.

In the US a car is not simply for getting to work and back, but it is an escape vehicle.

I have been up mountains in a VW Bug, and it is scary to find yourself going no more than 15 or 20 miles an hour.

Nobody in the US really wants a car that won't get them from NYC to LA.

The Electric car that will do that on at least Highway 40 from Wilmington to Barstow will succeed, regardless of who makes it.

P.S. So far we do not know generally what the great electric motors are, as we knew of something like the Ford V8, Chrysler 273, (8) Franklin, or Cleveland, not to mention aircraft engines like the Cyclone, R2800, 1830, or Lycoming. When there is a known motor that is commonly built to power we will move forward.

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#16

Re: Can Electrics Jumpstart Detroit?

04/21/2009 11:57 AM

Volt is not the "hybrid" as we know it. Its a plug in vehicle. It run on battery and then gas engine when battery ran flat. The gas engine won't charge the battery.

US and Canada is trying to push "plug-in" vehicle as "Green" vehicle. They've completely missed the point. Those plug in take power from the grid. They'll put more load on the grid and the grid is not green at all. Unless they have a plan to move the grid to green power with higher capacity, we'll be in deep $hit.

There also is plan for hydrogen highway. To me its another hype to take tax payer's money.

To the consumers, cost is a huge factor. Its more so in current economy. Nobody want to spend an extra $3000 on a car that will pay back in 10 years. Put money in mass transit and make them green at the same time. You need lots of milage to recover the investment in current hybrid technology.

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#17
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Re: Can Electrics Jumpstart Detroit?

04/21/2009 12:25 PM

Less pollution is generated on a per mile basis with electricity than with gasoline.

The reason is that even with a large portion of US electricity made from coal, the coal plants have better pollution control than a car. Also, an electric motor is many time more effiient than any gasoline engine.

Nothing is totally pollution free, but electric propulsion generates less on a per mile basis than gasoline. That doesn't take into account recycling of batteries, but we don't really know the pollution cost of that yet.

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#20
In reply to #17

Re: Can Electrics Jumpstart Detroit?

05/01/2009 2:37 PM

Dear Anonymous Hero, Your writings on this subject are passionate and well informed. Further they are open minded, as your last post makes extremely clear.

As I see the situation the conflicts between the Unions, and Detroit Automakers are a touchstone conflict illustrating metaforical fault lines in a transitional period.

I myself wonder why there is such worry about car batteries when car battery recycling in the US is so successful?

Car start battery recycling is extremely successful, and a "system" in place that could well be applied to newer batteries.

-At least from what I know and have observed.

The addition of capacitors in the Hybrid mix is a good thing.

I am a Federalist, and maybe well on my way to Unitary Anarchism, with a Technocratic Branch of Government.

The Technocratic Branch of Government may well be empowered to make the best machines, the cheapest.

I myself cannot see how we can overcome the confluence of imperatives unless we make an electric road.

Whatever Detroit makes, or Japan makes, or Germany or Russia, China, or India that goes down the road, and up and down mountains, must now act like an automobile.

The only way to achieve that is to make a vehicle that has enough energy storage capacity to make it to the power feeding road.

This is obviously possible when you consider the railroad tracks that exist in our wonderful old world.

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#21
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Re: Can Electrics Jumpstart Detroit?

05/02/2009 7:23 AM

Thanks. The electric road is an interesting idea.

The problem with batteries is not going to be simply recycling, although, the number of recycled batteries will go up orders of magnitude and the chemicals invlolved probably will be trickier. We still need batteries that work in a very harsh and widely varying climate and temperature, have power densities an order of magnitude higher than current designs, and are safe (fail safe in event of accidents, etc.). We have a long road to go before we get there, but demand will ultimately push us there.

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Re: Can Electrics Jumpstart Detroit?

05/02/2009 1:52 PM

Out of the Globalspec I have seen reports of fine batteries from Electrochem. By "fine" I mean batteries providing power in extreme temperatures.

Then again if something is actually impossible, it is actually impossible, and cost is a contributing factor as far as what that really means.

On the thread about Fiat and Gold based money I have worked with ideas pivoting on the elimination of "off book" expenses, which when applied to auto companies is starkly illustrated by who pays for people who are worn out.

In Canada you get your Healtcare from the government of Canada, for instance, as opposed to in the US, your Healthcare and pension come from GM, if you work, or work for GM.

For the US based Auto Companies I would about recommend they simply move all their operations and workers that they want to Canada, for they have a working system in place, alleviating some of the mess grown like weeds within the legacy Auto building companies.

Just because I am labor, it does not mean I cannot think like the owner, and see why they have motivations to do things counter to my interests in the world that exists.

I am pleased greatly that you said you were interested in the electric road.

Chrisg288 has come up with an interesting design for such a thing. I think there are some pictures of it in a Favorite Inventions Thread Ky started.

Yesterday I was looking at a CSX pickup truck that had wheels that allowed it to ride the rails. Chrisg288s design has great potential for obviating pedistrian, squirrel, dogs and others shock factors on the electric road, though in the end I feel the electric road is really more suited to superhighway than urban tight operations.

Of late I am wondering how to put iron flakes in asphalt, and give safe power to vehicles through an insulating cover.

At this point I am in over my head for the details of all of it.

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