Electro-Shock Therapy

With the Chevy Volt, General Motors—battered, struggling for profitability, fed up with being eclipsed by Toyota and the Prius—is out to reinvent the automobile, and itself.
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‘Cosmic Proportions’

Of course, what I wondered is what everyone wonders: Can GM pull this off? Whenever I asked this question inside the company, I got one or another version of the same answer: “Failure is not an option.” Today’s GM, though not out of trouble, is off the critical list, thanks to a landmark labor agreement, reduced costs, and some widely acclaimed new cars; and the company now has hybrid and ethanol programs to fall back on if the Volt fails. Still, everyone agreed that failure on the Volt, real or perceived, would be a severe setback. And General Motors has tried moon shots before.

In the early 1980s, humiliated by its inability to build a car that met the Japanese challenge, GM announced a new program to create a space-age small car that would leapfrog the Japanese and, in the process, reinvent GM’s business model. It would be an effort of “cosmic proportions,” as the CEO in those days, Roger Smith, put it. The name—Saturn—recalled the space program. The development team was given free rein and $5 billion. “By 1985, the Saturn project had become a giant media event, propelled by a steady stream of tantalizing announcements from Roger Smith’s office,” Maryann Keller, a prominent automotive analyst, wrote in her 1989 book on GM, Rude Awakening. “With the promise of Saturn, the world was suddenly Roger Smith’s oyster.” The start-up moved at breakneck speed, growing from six people to 800 in the first year; it designed and built an all-new car in three years, Japan-fast and twice GM’s normal pace. The car was popular, the new production system and dealer network even more so: by 1992, there were waiting lists for Saturns.

And then Saturn withered. The cars sold well but struggled to break even, and GM’s union and bureaucracy pushed back against the division’s organizational privileges. Instead of nurturing and growing Saturn, GM merged it into the larger organizational blob and then neglected it. What was supposed to have been a tonic for the corporate culture became another victim of it. Only recently has Saturn gotten back on its feet.

GM’s history of great leaps forward dates to its founder, William Durant, who was known for his sometimes impulsive style. “Mr. Durant would proceed on a course of action guided solely, as far as I could tell, by some intuitive flash of brilliance,” his legendary successor, Alfred Sloan, once wrote. “He never felt obliged to make an engineering hunt for facts.” In the 1980s and 1990s, the company fought stagnation and decline with a series of what it hoped would be breakthroughs: a joint venture with Toyota in the early 1980s; acquisitions of two high-tech companies; a spending spree on robots and other advanced manufacturing technology; Saturn; the EV1. Some, like the acquisitions and the program to replace humans with robots (which ended up painting each other instead of the cars), failed outright. Others, like the joint venture, Saturn, and the EV1, yielded opportunities that GM failed to exploit.

History suggests that the largest dangers for the Volt are not technological but organizational and commercial. Will GM have the focus and creativity to market such an unconventional car? Will it have the doggedness, and the cash, to weather the inevitable commercial setbacks and financial losses? To judge solely from history, the odds are not great.

‘He Was a Follower

On the other hand, GM is not the company it was in the 1980s and 1990s. “There’s a generational change in GM,” Maryann Keller, who has tracked GM since the early 1970s, told me recently. “There’s a generation of managers who never knew the rich GM. These are people who are bruised and battered. These are the kind of people who can make change.” (And the worm turns: Toyota is now run by a generation that has known only success.)

GM, once notoriously smug, today is a hungry company. Its executives and engineers will recount, at the drop of a hat, the great technologies and cars that GM has fathered. They want some of that glory back. They know the world expects them to fail, and that makes them all the hungrier. “The empire strikes back,” is how one executive sums up the Volt’s effect on morale.

Rick Wagoner, the CEO, is a GM lifer who joined the company fresh out of Harvard Business School in 1977, and he knows his history. “Making big bets is not something this company has been averse to,” he told me. GM’s downfall has been in execution and follow-through, not ambition. “If I’ve learned anything over the past three or four years,” Wagoner said, it’s that “a lot of this business is sticking with it and persistence. In the coaching vernacular, we’re going to leave it on the floor to make this happen.”

My own feeling, just a reporter’s guess, is that battery glitches have reduced the odds of GM’s having the Volt in showrooms by late 2010, but advances in the underlying technology have increased the odds of its producing the Volt early in the decade. In other words, delay on the order of months is looking more likely, but delay on the order of years is looking less likely. I’d also guess that the car’s sticker price will be higher than GM initially hoped, maybe north of $35,000.

How much the calendar and the price matter will depend on the competition. Despite its head start, GM will have to fight to be first. In January, after a year of watching GM bask in the Volt’s publicity, Toyota reacted. At the 2008 Detroit auto show, Katsuaki Watanabe, the president, announced that Toyota would produce a lithium-ion plug-in car of its own, and would have it on the street in test fleets “not at the end of 2010, but earlier than that.” Toyota was talking about a few hundred experimental cars in a controlled setting, not tens of thousands of cars in dealer showrooms, a much less ambitious goal than GM’s. But Toyota is famous for under-promising and over-delivering.

In February, Tesla, the Silicon Valley company, announced plans for an electric sedan with a gasoline-powered generator, like the Volt—but set to arrive a year earlier, in late 2009. In March, BMW said it might produce an electric car for the U.S. market, and in May, Nissan said it would have one in test fleets in 2010. The drumbeat seems likely to continue. Simply by announcing the Volt, GM has attracted a bevy of competitors, bringing the electric car’s mass-market advent from over the horizon to around the corner.

GM’s leaders, needless to say, do not particularly welcome the competition from a business point of view. But they relish it from a psychological one. When I asked Larry Burns, the R&D vice president, how he felt about Toyota’s plans, he said, “Paranoid, because they’re good.” But the real answer was the grin that spread across his face as he recalled Watanabe’s announcement and said, savoring each syllable, “He was a follower.”

‘I Just Want to Be a Part of This’

In late March, at the New York auto show, I checked back in with Andrew Farah, the Volt’s chief engineer, and asked for an update. “Still just as bad as before,” he said. When I mentioned that another executive had said the underbody was a well-proven design that didn’t need much testing, he shot me a look of disbelief. “There’s a big gaping hole down the center of this car where the battery goes.”

All around us, at the Chevrolet stand, a crowd was forming. Volt fans from as far away as Arizona, Colorado, and California had made the pilgrimage to question the team about the car.

“Maybe what we’re going to learn out of this isn’t some technological thing,” Farah said. “Maybe what we’re learning is to be more comfortable with a higher level of risk.” I asked if he did feel comfortable with the risks the program was taking. He thought for a moment. “I realize there’s no other way to do it, so I am comfortable with it.” Was he holding up under the pressure? He thought again. “It’s my job to hold up.”

As the event began, I melted into the crowd. Next to me was a 23-year-old grad student who thought the car was historic; next to him, a 21-year-old network engineer who said he loved the car and would buy one now if he could; next to him, a 59-year-old foreman (and grandfather) who said, “I just want to be a part of this.” None of them were car people or GM people, at least not before the Volt. Glancing at the concept car on the dais, I realized I was looking at the Barack Obama of automobiles—everyone’s hope for change.

At the podium, Bob Lutz was saying, “I think the whole company has now learned the lesson that when you set out and do bold things, you win, and when you’re cautious and let someone else do the bold things, you lose.” The crowd applauded warmly. A voice called out, “You’re absolutely right, Bob!”

Lutz said, “It may be years before we make a dime on this product. Years! And the board said, ‘Don’t even talk about profitability. General Motors needs this car.’”

I couldn’t see Andrew Farah just then, but for a moment I almost envied him.

Jonathan Rauch is an Atlantic correspondent.
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Jonathan Rauch is a contributing editor of The Atlantic and National Journal and a senior fellow at the Brookings Institution.

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