Column: On the Road

As the auto industry struggles, opportunity sits in the driveway
Rob Cleveland

Rob Cleveland

I held back submitting this monthly column until the end of March to see what latest theatrics would wash over the auto industry. I wasn’t disappointed. The Obama administration looked over the homework submitted by GM and Chrysler – homework designed to demonstrate how they were going to get out of their collective messes – and sent them back to detention to do it over again.

On top of it all, long-time CEO at GM Rick Wagoner was summarily dismissed, as if one lone auto executive had been responsible for creating an unworkable fiscal structure and a corporate culture developed over decades of booms and busts in the auto business. And just for good measure, the government is insisting that Chrysler and Fiat hook up – something they were bound to do anyway – making this requirement the equivalent of forcing children to eat dessert.

Those inside the industry recognized the Obama administration’s reply for what it is – political theatre. Only 16% of Americans polled believe the auto industry should get additional loans, making any decision to give GM and Chrysler more money…toxic. Obama had to scold the two companies, and chastise them for not being aggressive enough in their restructuring plan to show that the money he is bound to give them came after careful review and critique. And Wagoner? Bob Lutz, GM’s vice-chairman, called it throwing the virgin into the volcano to appease the gods a few months ago. I’m having trouble picturing Mr. Wagoner in a hula skirt, but the analogy fits.

Despite all of the pronouncements and lecture, something major is missing from the activity. It is an opportunity not just to save GM and Chrysler, but also to change the fundamental landscape of the auto industry and our energy consumption patterns across America. Sound too far-fetched, too grandiose? Well so does universal health care and rebuilding our education system, but I expect the Obama administration to handle these problems too.

Government’s job is not to try and decide how many employees GM should have, or whether or not a tie in with Fiat is a good idea. Government’s job should be to instigate fundamental change. As part of the loan package, the Obama administration could require GM and Chrysler to roll out their production-ready electric vehicles in 2010, offering the first real step towards a fundamental shift in how Americans get around and what they consume in order to do it.

Are these cars ready? GM and Chrysler both have pre-production models that have been driven by hundreds of people, including the hypercritical automotive press. The general consensus is that they are as good as any pre-production model can be. GM and Chrysler are not exactly bullish on how profitable the vehicles will be once they are in showrooms, but it seems pretty clear that they’re not making money on their gas-powered cars and trucks anyway, so why not at least lose money on something that shifts the environmental burden and the energy focus to the electricity industry.

If this kind of authoritarian mandate sounds too socialist, you’re close, because the Chinese are doing exactly this. The New York Times reports that Chinese leaders are planning to pour vast government resources into the development of electric vehicle technology and EV production. This comes from the very top down, meaning they have the means and the political will to actually pull off this grandiose plan.

Make no mistake; the Chinese aren’t doing it to save the planet from global warming or pollution (much of the new electricity demand in China will likely come from coal or nuclear power plants). Instead, they are eliminating a massive liability – their dependence on foreign oil. Most of China’s oil comes in from the Middle East, and must take a long sea route to show up in Chinese ports. The U.S. has a pretty big navy. Actually, it is considered the best and the biggest in the world. So the math isn’t hard. Either the Chinese government builds a massive navy that can go head to head with the U.S. to guarantee its energy security, or it reduces oil imports to negligible volumes by developing technology solutions that also could also be exported around the world, making the Chinese government even more money.

Meanwhile, back in Washington D.C. and Detroit, government is fretting over details about projected U.S. vehicle market volume (not even Nostradamus knows where that is going) and standalone viability casting a wafer-thin veneer over the obvious political subterfuge. I’m not advocating communism by any stretch, but if the executive branch is going to make a decision about the car companies unilaterally anyway, why not step up and make a decision to promote real and resounding change that will live on for generations.

Call it a silver lining, lemonade out of lemons, making the best of a bad situation. Whatever the label, the ideal confluence of events is upon us: needy car companies, a president who has made energy efficiency a keystone of his administration and a genuine shift in consumption patterns made by the American public that are more sensitive to the environment.

Change. Hopefully it won’t just be a tidy campaign slogan. If it is, you can bet the Republican Party – the authors of this miserable state of affairs – will be using exactly the same theme to rebuke the incumbent in 2012, blaming him for the failure of our manufacturing base, and the lack of progress in reducing our dependence on foreign oil. My hope is that President Obama realizes the opportunity in front of him and acts in a way that realizes those lofty goals he now is obliged to execute. 

About the author: Rob Cleveland is CEO of ICON Creative Technologies Group and a co-owner of Vinology Restaurant in Ann Arbor.


  1. By Milo
    April 5, 2009 at 11:45 am | permalink

    I agree that a new energy policy is much needed, and a great way to invigorate the auto industry, but government mandates that companies make a particular type of vehicle won’t bring Detroit back to profitability. As long as the government allows the price of gasoline to remain cheap (under $4 gallon), demand and profits will be in large, low mpg cars. We are a consumer economy,the government should try to stimulate the demand for efficient cars, not force the supply.

  2. By bc
    April 5, 2009 at 6:13 pm | permalink

    great – rush the process (and progress) so they launch electric vehicles early before the kinks are out. that won’t open them to criticism at all, will it?!

  3. April 5, 2009 at 7:15 pm | permalink

    The “process” at GM alone has been going on since the 1970s when that company introduced an electrically powered version of the Chevette, called the Electrovette powered by 12 lead-acid batteries. That was followed up in the mid 90s by the EV1. If either of these programs were mandated in some way at their onset, we would have 20 to 40 years of electric vehicle powertrain evolution under our belt. ICE technology has had 110 years of R&D. When do you cut the cord and take those first steps towards the mass market? And when does criticism ever stop? Even gasoline engines are prone review, critique and outright failure. I think the time has come both in technology and consumer sentiment to take a leap of faith and get on with it, rather than gnashing our teeth about what might be.

  4. By JW
    April 6, 2009 at 7:30 am | permalink

    Right on! Why wait until 2010 (GM has already indicated the Chevy Volt will be introduced in the fall of next year)? Because, clearly, if the hand-build and massaged prototypes are good enough for the automotive press, the vehicle is ready for volume production for the general public. Why not 2009? Those bumbling idiots are really dragging their feet on this since a full series hybrid Volt is just one step away from an electric Chevette. For real Change, the Government should also mandate that Federal Motors produce hydrogen fuel cell cars *now* since that technology has also been around a long time.

  5. April 6, 2009 at 9:18 am | permalink

    GM also has working, prototype hydrogen vehicles too so I agree with you minus the sarcasm. But if you’re adamant that EVs and hydrogen technology won’t work, then you better start campaigning now to get Cheney into the White House by 2012 to guarantee our oil supplies. He’ll be more than happy to take Iran out (shock and awe part deux starring Charlie Sheen) to keep them from disrupting Middle East oil markets. Of course we’ll have to re-open Gitmo to take care of all of those enemy combatants but hey sacrificing our moral standing around the world is a lot easier than trying to bring EV technology to the mass market.

  6. By bc
    April 6, 2009 at 12:28 pm | permalink

    so does this make you feel any better -

    Michigan is expanding its tax incentive program for companies developing and making advanced batteries used in hybrid and electric vehicles.

    Gov. Jennifer Granholm signed a bill into law Monday adding $220 million to the program. Granholm earlier this year signed legislation starting the initiative with refundable tax credits worth up to $335 million.