GM Hopes Volt Juices Its Future

Story by The Wall Street Journal

General Motors Co., outlining a raft of new vehicles designed to reinvigorate its lineup, said its much-awaited Chevrolet Volt is expected to get 230 miles per gallon in city driving.

The Volt is at the forefront of GM's efforts to win back lost U.S. market share with 25 product launches by 2011.



At 230 mpg, the Volt would dwarf the fuel economy of any mass-market vehicle on sale today, including Toyota Motor Corp.'s Prius hybrid, which is rated at 51 mpg in city driving. It also could deliver a big boost to GM's efforts to cultivate a green image, a key element of the company's restructuring.

The Volt is set for U.S. launch late next year as a 2011 model. The mileage expectation reflects new methodology for electric and plug-in hybrid cars being finalized by the Environmental Protection Agency that factors in electricity used to try to reach a miles-per-gallon equivalent. The intent is to allow consumers to measure the vehicles against traditional gasoline-powered ones.

The EPA said it hasn't tested the Volt.

The Volt is powered by a lithium-ion battery pack, with a range of about 40 miles, that can be recharged through a traditional power outlet. For longer drives, a small gasoline engine takes over, powering a generator that creates electricity to run the car's motors. The Volt's expected total range on one tank of gas is more than 300 miles, GM said.

Frederick "Fritz" Henderson, GM's chief executive, said at a media event that owners who charge the Volt daily could go days without the gas engine firing up. The U.S. Transportation Department says 80% of Americans commute less than 40 miles a day.

Mr. Henderson added he is confident the Volt's combined city and highway mileage -- the figure commonly used to gauge efficiency -- will be in the triple digits. "Having a car that gets triple-digit fuel economy can and will be a game-changer for us," he said.

GM's mileage estimate for the Volt promises to start a battle among auto makers as they rush to deliver electric cars, a segment that some executives believe could account for 10% of sales within four years.Nissan Motor Co. plans to launch next year the Leaf, a plug-in hatchback. On Tuesday it responded to the Volt news with a reminder that the Leaf would get a 367-mpg rating under the EPA draft guidelines. But unlike the Volt, the all-electric Leaf will need to be recharged when its battery expires after about 100 miles.

Mr. Henderson acknowledged the Volt's high price, expected at around $40,000, and lack of available public recharging stations are potential challenges. Even with an expected $7,500 tax credit the Volt will cost substantially more than the $22,000 Prius. Charging the batteries should cost owners about 88 cents on average, GM said.

The Volt will be unprofitable for GM at launch because of the high costs of its development and the batteries. GM is counting on economies of scale to make the vehicle profitable eventually.

The new GM board has said it wants management to accelerate product launches. Coming models include high-end compact cars for Buick and Cadillac, a convertible version of the Chevrolet Camaro and a revamped Chevrolet Aveo subcompact.

Mr. Henderson said GM remains on track to have positive net cash flow next year and post a net profit by 2011. He also said it intends to increase production as the "cash for clunkers" rebates boost demand for its vehicles.

Chrysler and General Motors Offer Employees Buyouts

GM, Chrysler Offer New Buyouts
'Attrition Program' Incentives Will Include Cash
and Vehicle Vouchers.

Article by Wall Street Journal

General Motors Corp. and Chrysler LLC, under pressure to comply with viability requirements set by the Treasury Department, plan to unveil attrition programs at U.S. plants as early as this week in order to trim labor costs further, according to people familiar with the matter.

United Auto Workers officials at GM have received details of the plans, which include worker buyouts, but the auto maker hasn't yet disclosed specifics publicly. A GM spokesman said he couldn't comment on the matter.

GM and Chrysler, recipients of federal loans to help them survive a severe slump in auto sales, must submit plans to the government by Feb. 17, 2009 on how they intend to get back on track. Cutting hourly labor costs represents a substantial portion of what is expected to be included in those plans.

A UAW spokesman couldn't be reached for comment. GM union officials have been told that the program is intended to "address the number of surplus employees and create the potential for hiring entry-level employees when the business environment improves," according to these officials.

All hourly employees will be able to retire either on a normal or a voluntary basis, depending on their tenure, and receive a $25,000 vehicle voucher and $20,000 cash. The vehicle voucher will be valid for 18 months.

GM told union officials that there are certain restrictions being placed on the company's plan by the Treasury Department, including restriction of the use of pension funds to pay for attrition packages.

For Chrysler, retirement-eligible workers who leave will get a $50,000 incentive plus a $25,000 Chrysler vehicle voucher, according to a union official who reviewed a notice from the company. Workers who take a buyout and leave with no retiree health-care benefits get $75,000 and a $25,000 car voucher, the person said. Last year, retirement-eligible workers received $70,000, while those who took buyouts got $100,000.

"Given the difficult economic and market conditions in the U.S., Chrysler LLC determined in December 2008 that it would offer another phase of special [attrition] programs," Chrysler spokeswoman Shawn Morgan said without confirming actual details of the offer.

The majority of unionized hourly workers will have until Feb. 25 to decide, she said.
She said the original plan was to offer the program in December and January, but "due to the fact that many of the company's facilities had suspended production for extended periods in December and January, the program offerings are being rolled out now."

A Ford Motor Co. spokeswoman had no comment on whether the auto maker will offer a similar program. Ford hasn't asked for a federal bailout.