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.
|(Photo credit: Alex Wong/Getty Images)|
Last year, while he was working in Germany as an engineer for General Motors, Andrew Farah got a call from a senior engineer in Detroit asking him to come home.
A car. A special car.
Farah had heard about it, of course. The Chevrolet Volt was the automotive sensation of 2007, a new kind of electric hybrid that GM was proposing to have in showrooms in late 2010. Farah had advocated a similar design years earlier, so he didn’t need to be sold on the idea.
Still, he hesitated. GM had called him because of his deep experience with battery-driven electric cars. In the 1990s, he had worked on GM’s EV1, an all-electric technological masterpiece that had done so poorly commercially that GM wound up crushing the cars amid a hail of public condemnation. Farah had been fiercely committed to the EV1, and he was not about to relive the disappointment.
“Hell, no,” he said. “I’ve been on programs like this before. They’re not real.”
“No,” came the reply. “This one is real.” Farah asked to talk to other senior executives, and they concurred. So, in the spring of last year, he took one of the hardest jobs at GM, and became the Volt’s chief engineer.
And how, I ask over coffee early one February morning in Detroit, is it going? It is 6 a.m., and Farah, who is 47 and has angular features and prominent black glasses, is rushing to make a 7 a.m. meeting. The car, he says, is 10 weeks behind the original schedule. Any more slippage, and the 2010 deadline will be history. Even if no more time is lost, he will have only eight weeks to test the underbody, the car’s structural base.
Is that enough time? He answers indirectly. In some cars, he says, testing the underbody can take a year.
GM, he tells me, is taking an industrial organization designed to grind out incremental improvements and repurposing it for a technological leap. “I spend 20 percent of my time being a psychologist and counselor,” he says. “I tell people, ‘Yes, there’s a lot of risk. And, yes, that’s OK.’
“It’s not a program for the faint of heart.”
When one of the world’s mightiest corporations throws everything it’s got at a project, and when it shreds its rule book in the process, the results are likely to be impressive. Still, even for General Motors, the Volt is a reach. If it meets specifications, it will charge up overnight from any standard electrical socket. It will go 40 miles on a charge. Then a small gasoline engine will ignite. The engine’s sole job will be to drive a generator, whose sole job will be to maintain the battery’s charge—not to drive the wheels, which will never see anything but electricity. In generator mode, the car will drive hundreds of miles on a tank of gas, at about 50 miles per gallon. But about three-fourths of Americans commute less than 40 miles a day, so on most days most Volt drivers would use no gas at all.
Because it will have both an electric and a gasoline motor on board, the Volt will be a hybrid. But it will be like no hybrid on the road today. Existing hybrids are gasoline-powered cars, with an electric assist to improve the gas mileage. The Volt will be an electric-powered car, with a gasoline assist to increase the battery’s range.
Electric drive is as old as the automobile itself. Anyone who has ridden in a golf cart has experienced it. Compared with the fire-breathing internal combustion engine, an electric motor is simple, quiet, and clean, and it provides marvelous acceleration and torque. For a century, though, the deal-breaker has been the battery. Any battery with nearly enough power to drive a full-size car was prohibitively large and heavy, prohibitively expensive, unable to go more than a few miles on a charge, or (usually) all of the above. Only recently has the advent of lithium-ion batteries brought a full-range electric car into the realm of the practical. Even so, the battery for the Volt doesn’t yet exist, at least not at a mass-market price, and building it poses formidable challenges. Loading enough energy into a sufficiently small, lightweight package is hard (the battery isn’t much good unless it fits in the car); keeping it cool lest it burst into flames is harder; making it durable enough to last 10 years on bumpy roads is harder yet; manufacturing it in high volumes and at mass-market prices may be hardest of all.
Given the challenges, standard procedure dictates first building and testing the battery, and only then designing a car around it. That process, however, would take until 2012 or 2013—time GM does not have if it wants to beat Toyota. The only hope of meeting the 2010 deadline is to invent the battery while simultaneously designing the car. Just-in-time inventory is common now in the car business, but just-in-time invention on the Volt’s scale is new to GM and probably to the modern automotive industry.
Many in the industry will tell you there’s a good reason car companies don’t do things this way. Toyota, which is proceeding much more cautiously with its own plug-in car, has made no secret of its belief that neither GM nor anyone else can keep the Volt’s promises. When I called Menahem Anderman, a prominent battery consultant in California, he said the lithium-ion battery will be expensive—far too expensive to make sense as a business proposition as long as gas is $3 or $4 a gallon. (“At $10 a gallon we can have a different discussion.”) Its life is unproven, and unprovable in the short time GM has allotted. To deliver tens of thousands of vehicles in 2010, Anderman said, “they should have had hundreds of them already driving around for two or three years. Hundreds. Not everybody can say it publicly, but everybody in the high-volume industry is saying, ‘What are they thinking about?’” An executive with a GM competitor, after making some of the same points, offered forthrightness in exchange for anonymity: “They’re making a huge mistake.”
The people at GM understand very well the reasons they’re not supposed to do what they’re doing. They offer a variety of retorts. Batteries will improve and get cheaper. Gas prices will rise. They have two decades’ worth of experience with electric drive. They have smart algorithms to test the battery. Strict new fuel-economy standards will vindicate the business case. But, at bottom, what they say is that the challenge is part of the point. They have something to prove.
In conversations with everyone from staff engineers to Rick Wagoner, the chairman and CEO, I heard references to the Apollo program. “John Kennedy didn’t say, ‘Let’s go to the moon and, you know, we’ll get there as soon as we can,’” Wagoner said in a recent interview in his office, atop a high-rise in Detroit. “I asked our experts, ‘Guys, do we have a reasonable chance of making it or not?’ Yes. ‘Well, then, let’s go for what we want rather than go for what we know we can do.’” With the Volt, GM—battered, beleaguered, struggling for profitability—hopes to re-engineer not just the car but the way the public thinks about cars, the way the public thinks about GM, and the way GM thinks about itself.
The company turns 100 this year, but amid the birthday celebrations it can expect a slap in the face: in 2008 GM is likely to be demoted to No. 2 among the world’s carmakers. Memories of past glory make being overtaken by Toyota all the more galling. In the 1950s and 1960s, GM poured forth a stream of innovations in design and technology. In the 1960s, it manufactured nearly 60 percent of the cars sold in America. Then, of course, the Japanese arrived, the energy crisis hit, and GM began to look like the company that never missed an opportunity to miss an opportunity. In the 1970s, when gas prices rose, GM proved incapable of building a decent small car. In the 1980s, when the Japanese redefined quality, GM failed to respond, because its brands were competing against each other instead of the imports. In the 1990s, when minivans and SUVs took off, GM was caught unprepared. In the early part of this decade, it decided hybrids were too unprofitable to pursue, leaving a gap in the market that Toyota, with its Prius, brilliantly and mercilessly exploited. By the time GM recognized its blunder and launched its own hybrids, Toyota dominated the field.
GM also had problems with high health-care and manufacturing costs, expensive union contracts, excess capacity, poor quality, lackluster designs. Its public image got so bad that focus groups liked the company’s cars better when the logo was removed. In 2005, GM lost $8.6 billion and saw its bonds downgraded to junk rating. Analysts were speculating about bankruptcy.
Adding insult to injury, the prominent acquisition of Hummer in 1999 had made GM a poster child for environmental irresponsibility, even as Toyota and the Prius piled up accolades for eco-friendliness. “We looked at the Prius and the masterful job of positioning and public relations Toyota did with that,” Steve Harris, GM’s top PR executive, says, “and we thought, That could have been us.”
The combination of bad news and worse publicity created a sense of emergency. “Everyone’s thinking the same thing: We’ve got to turn this thing around,” one executive told me. “We’ve got to get our mojo back on advanced technology. The PR guys want something more sexy and dramatic, a singular point for our message. This issue of the environmental image was hurting the company substantially.” Playing it safe looked paradoxically more dangerous than taking a gamble. The company was conductive to a high-voltage jolt, and Bob Lutz provided the spark.
|Mr. Environment? Vice Chairman Bob Lutz, who pushed hard for the Volt, with part of his personal fleet|
After a storied career at GM, BMW, Ford, and Chrysler, Lutz returned to GM in 2001, as vice chairman, to reinvigorate its droopy product line. He is not the first person you might expect to bend GM’s will toward politically correct propulsion. For one thing, he is not what you would call green. A tall, gravel-voiced former Marine pilot in his 70s, he has a carbon footprint approximately the size of Delaware, thanks to his 16 classic cars and eight motorcycles and two helicopters and two military-surplus fighter jets (which he flies). He relishes his cigar-chomping, fast-driving image, and scoffs at any notion that he has converted to environmentalism. A few months ago, while GM was busy trying to improve its environmental image, he couldn’t stop himself from telling reporters that global warming is a “total crock of shit.”
But Lutz is also, as he has described himself, “a walking contradiction.” He is trilingual (English, French, and German), the sophisticated product of an elite upbringing in both Switzerland and America, and he spent years successfully working in Europe, where gas is expensive and cars are small. Like many of GM’s top executives nowadays, he is convinced that dependence on a single, increasingly problematic fuel, gasoline, has become the auto industry’s Achilles’ heel. Plug-in cars run on as many different fuels as the electricity plants that charge them: coal, methane, nuclear, hydro, and wind, and potentially solar, biofuels, and garbage—but almost never Saudi or Venezuelan oil. This suits Lutz, a hawk on energy security. “The one thing I care about is getting off imported oil,” he told me in December, over dinner in Detroit. And, as it happens, his last stop before GM was the chairmanship of Exide, a battery company. There, he became fascinated with electric drive.
When he returned, Lutz had, as a GM engineer recalls, “batteries on the brain.” He nagged and he nagged, but the company pushed back. The EV1 had been a commercial flop and a public-relations fiasco, and no one wanted to go back down that road. Then, in late 2005, Lutz got wind that a Silicon Valley start-up, Tesla Motors, was moving toward production of a high-performance electric roadster. (It’s available this year, if you have $100,000.) At that point, Lutz “just lost it,” as he puts it. He refused to accept that a small start-up company could build and sell an electric car but mighty GM couldn’t. In early 2006, he summoned Jon Lauckner and told him to dream up an electric concept car for the 2007 Detroit auto show, a year away. The car had to be more than just interesting, he said. It had to be remarkable: a game-changer.
Lauckner, 50, is vice president of global program management, which puts him in charge of moving vehicles through GM’s new-product pipeline. His father and grandfather worked for GM. Although he has a Stanford management degree, Lauckner is an engineer to the core. Ask him why he is so sure the Volt is doable, and he is likely to say, “I work in power train!” He sees the Volt as an engineering problem that, with enough determination, can be broken down and solved. He also thinks engineers do their best work when asked to stretch, and the further the better. “Risk is my friend,” he once told me. “I like risk. You either go big or go home.”
In February 2006, Lauckner pulled together a brainstorming team that included, unusually, a public-relations man, Chris Preuss. Then just turning 40, Preuss was a Chrysler veteran who had come to GM in the late 1990s and discovered a depressingly hidebound organization. Things had improved since then, but not enough for Preuss. While Lutz was agitating for electric drive, Preuss had been arguing that GM needed a breakthrough product in the mold of the iPod. “Apple Computer was almost on its last breath,” Preuss says. “Once the iPod hit, all the other things they had suddenly looked relevant again.”
That March, the group laid its conclusions before Rick Wagoner and the rest of the top leadership. Preuss and Larry Burns, who runs the company’s research operations and is regarded in the industry as something of a visionary, did not pull punches. GM had to show a real change of mind on the environment and sustainability or remain Toyota’s doormat. It had to lead on plug-ins or get left behind in yet another new market. It had to restore credibility damaged by the mishandling of the EV1, the abdication on hybrids, and the repeated failure to deliver on promises. It needed not just one more in a long series of research programs and concept cars but a real-world product, one ambitious enough to impress even the cynics.
The group proposed a plug-in that would drive at least 10 miles on a charge. It would be a cool, stylish, high-tech car, marketed to trendsetters. They called it the iCar.
The senior leadership green-lighted the project. Burns left the meeting feeling euphoric.
Lauckner’s engineers, meanwhile, were struggling with the battery problem. With anything like an affordable battery, an all-electric car would lack the range consumers expect. But a Prius-style hybrid, however well executed, would amount to a mere me-too. The solution turned up in the form of a rediscovery. In the early 1990s, engineers testing the EV1 had been vexed by its limited range. After 60 miles or so on the test track, they would have to wait hours for the car to recharge. So they rigged up a motorcycle engine, connected it to a generator, and connected that to the battery. Now the car recharged itself while driving. Some of the engineers—among them, Andrew Farah—thought this was a nifty arrangement and pressed to develop it. A few years later, GM put an onboard recharger in an EV1 show car.
And that was as far as the idea got. It elicited zero interest, because in the 1990s, policy makers and car companies were focused on zero emissions—that is, on cars that burn no gas at all. By 2006, however, all of that had changed. Thanks to the Prius, the market was brisk for hybrids, and the public seemed receptive to a plug-in car; but Toyota and Honda were pooh-poohing plug-in technology as unready for prime time. GM’s brainstormers thought they saw a gap in the Japanese line and relished the thought of doing to Toyota what Toyota had done to them. After a sometimes heated debate, they decided the iCar would be the lineal descendant of that once-orphaned test car.
The company then made a series of decisions that look, in hindsight, startlingly audacious. Instead of becoming a safer bet as it ran the internal slalom, the iCar became more ambitious. Its target range on a single charge increased from “at least” 10 miles to 40—the outer limit of what seemed possible. Not a few outsiders think this decision was misguided; a 20-mile battery, say, would still allow many commuters to drive gas-free most days, and it would be easier and cheaper to build. But Lauckner, always pushing, insisted on a car that the public would perceive not just as saving gasoline (that was Prius territory) but as replacing gasoline. The Volt, as the iCar was eventually renamed, had to be perceived as severing the umbilical cord between the car and the gas pump, and nothing less than the longest feasible gas-free range, he believed, would accomplish that.
Yet this adventurous car would be branded Chevrolet. Chevy is GM’s biggest brand, and the only brand it sells everywhere it does business. The last time GM tried for a big breakthrough, in the 1980s, it avoided the Chevy brand, instead creating a new division under a new name (Saturn). This time, GM was proposing to tie its core brand to an untested technology. “If we want to make a big difference with this,” Wagoner told me, “we have to do this with a big brand.”
Producing a high-end statement car for trendsetters, as Tesla is doing, would have been pretty safe, but positioning the Volt as affordable family transportation—Chevy’s bread and butter—is an order of magnitude harder. It implies selling not thousands but hundreds of thousands of cars, and at Chevrolet rather than Cadillac prices. The battery alone is likely to cost something in the high four figures. At Chevy prices, GM can expect to lose money on every Volt it sells, at least in the early going, and possibly for years.
Outflanking Toyota makes good sense strategically, but GM’s market capitalization is less than a tenth of Toyota’s. Unless battery costs fall as quickly as GM hopes, the car could break the bank by succeeding.
Perhaps most audacious of all was a decision to allow unusual public access to the Volt program. The industry’s standard procedure is to develop new products, especially risky ones, out of sight, unveiling them only when proven. GM decided to do exactly the opposite. The PR department flung open the doors. GM executives discuss the program’s progress as publicly as if it were a bill in Congress. They show off photos of batteries under development. They promise to let reporters ride in test cars. They lead them through the labs and design centers and even into the wind tunnel. They run ads, for instance in this magazine, touting the Volt in the present tense, as if it already existed. By earlier this year, expectations were so high that President Bush was commending the car, and it had developed a national grassroots following. This article is itself a product of the fishbowl strategy.
GM is using the publicity to excite the public, of course. It is also using the publicity to push itself. “We thought it would be a motivating thing to do,” Wagoner says. “Certainly it gets everybody aligned”—not always easy in a giant corporation. And GM wants credit for trying, which it never received for the EV1. “If it fails,” Harris says of the Volt, “we want people to know exactly why it failed. It wasn’t lack of commitment or passion on our part; we hit a hard point we couldn’t get around.”
On the other hand, if it fails, it will fail in full view. GM will have given its critics the most spectacular example yet of a broken promise, and Toyota will look prudent instead of timid.
Each of these decisions was ambitious; together, they amounted to an all-in commitment. The company hoped to make a splash with the Volt at the concept car’s unveiling in January 2007, at the Detroit auto show. Even so, executives were stunned by the public’s reaction. GM won both North American Car and Truck of the Year, but the enthusiasm created by the Volt completely eclipsed that news. “We were pumped for something big,” Wagoner says, “but this was a lot bigger.”
Riding the wave of euphoria following the show, GM’s board of directors urged the project on. Although GM had made no formal decision to produce the Volt, what had begun as an experiment was coming to be regarded inside the company as destined. Momentum built still further that spring, as GM began staffing the project with dozens of its ablest engineers—people like Andrew Farah, plucked on short notice from whatever it was they were doing, anywhere in the world.
The pencil pushers had done none of the marketing and cost studies that typically precede a product launch, but no matter. Normally, Bob Lutz says, “you basically define the whole future of the car on paper before you give the go-ahead to start spending some serious engineering and design money on it. And in this case it was completely backwards. We saw that we had a smash hit that hugely resonated with the public, and we just decided: let’s go to work. No business case, but let’s get this thing into production-ready form, and we’ll worry about the cost and investment and the profitability later.”
If GM was seeking to seize the world’s attention and upstage Toyota, it had succeeded, spectacularly. But now it had to build the car.
Lance Turner is 43, of medium height, with a thatch of brown hair and a soft, round face commandeered by heavy, square glasses. Like many at the heart of the Volt project, Turner is a gearhead, the sort of person who gets excited by a histogram of cell voltages. (Don’t ask.) GM is full of people who have labored for years on advanced-technology concept cars and test vehicles—“science projects,” in the company vernacular—with no prospect of seeing their handiwork reach showrooms. For them, the Volt is a jailbreak. Turner, an electrical engineer who worked on the ill-starred EV1 and a series of forgotten electric concept cars with names like Precept (bad name for a car) and Impact (even worse), woke up one morning to find himself in the middle of GM’s busiest intersection. He is the guy testing the battery.
“It’s swim. I already know,” Turner told me, when I asked if the battery was likely to sink or swim. This was during a visit in December to GM’s mile-square technical center in Warren, Michigan, just outside Detroit. Volt development is going on both here and in Germany, allowing for around-the-clock testing. The battery lab, an expansive but otherwise unimpressive room containing test chambers and consoles with digital readouts, clearly had not been dressed up for visiting journalists, of whom I was only the latest. “Before I’d even started the project, we’d opened up the lab to 50 reporters that came in,” Turner told me, sounding bemused. “You’re not allowed to bring a camera or a cell phone into this building. Here we were with a TV crew.”
During this visit, I found the technical center brimming with optimism, and the battery lab was no exception. One of two suppliers, a company called Compact Power (a subsidiary of a big South Korean chemical and advanced-materials company, LG Chem), had delivered two copies of its version of the battery, and on the bench they were testing brilliantly. “They may not look beautiful,” Turner said—the battery was a six-foot-long T-shaped object from which wires, clamps, and circuit boards protruded—“but as far as the data goes, they’re the best I’ve worked with.” Heat is a problem with lithium-ion batteries, but this one was staying cool even when run hard—and the cooling system had yet to be attached.
Moreover, improvements were being incorporated as fast as they could be conceived; the battery would be on its second generation in January, its third in June. “It’s incredible,” Turner said. “The design they’ve come up with for thermal changed 10 times before they delivered the first battery.” And all of this was before the arrival of a competing battery that might be as good or even better, designed jointly by the Massachusetts-based company A123 Systems and the German company Continental A.G. “We’re inventing and creating on the critical path,” Turner said. He was using the industry jargon for the countdown to production, when time is money and delays can cost millions. “I’ve got guys trying to release things before they’re actually invented.”
As I got ready to go, Turner pointed to a laptop wired to the battery. “I’m testing as I’m talking to you,” he said. “It’s working great. I’m all giddy.”
The news was just as good in the Volt’s design studio, a repurposed auditorium. Designers sat in cubicles on the stage, an aptly theatrical touch for so publicity-conscious a car. A mural proclaimed the program’s goals, one of which was “Radically Shifts GM’s Public Perceptions.” On the main floor was a full-size model of the car, hidden under a blue tarp. As a rule, car companies go to great lengths to hide their developmental designs, and so I was surprised when my handler ordered the model disrobed: even by Volt standards, this was exceptional access. The model looked rounder and smoother than the aggressively sporty show car, and for good reason: to squeeze 40 miles out of its battery, the Volt will need to be the most aerodynamically efficient car GM has ever built.
Here, as in the battery lab, work was proceeding rapidly. The design, though still evolving, was already 98 percent there, Bob Boniface, the Volt’s design director, told me. “We’ve taken more than half a year out of the schedule,” he said. Ordinarily, if you had a problem with a taillight, you might schedule a meeting for the next week. “With this, there is no next week.”
Early on, word had come down from Bob Lutz and Jon Lauckner that standard procedure was suspended where the Volt was concerned. “You guys are not going to be held to the normal GM bureaucracy,” Lutz recalls saying. “You guys spend money when you need to spend it. You have a problem, call us on the phone.” Engineers, designers, and executives were told to trust their instincts and make decisions on the spot. If a larger issue crops up, it is taken to a special Volt steering committee, and Lutz, Lauckner, and the key company vice presidents settle it before leaving the room.
“Whenever I have a problem, it is resolved within days,” Frank Weber, who manages the Volt project, told me. “Within days! One call, and things happen immediately.” Weber, a 41-year-old German import from GM’s Opel division in Europe, is precise, organized, unflappable, as if German-engineered himself. One morning, when the steering group heard that the battery was running behind schedule, a senior production executive said to Weber, “Tell us what you need.” By early that afternoon, the two of them were enlisting more engineers.
At the end of February, when I returned to the technical center, the picture looked different. December’s ebullience had given way to a sense of strain that was evident even to a tourist. “We currently are at the limit of our stretch,” one senior battery engineer told me. He was just back from a week’s skiing in Colorado, where he had sought escape, but where for three nights the battery had intruded on his dreams. “Three nights, and I could only think about that battery!”
The Volt had moved from the late stages of conception to the early stages of execution. The personnel count had more than doubled, to 500 or so. They were now out of the sunny foothills and beginning the craggy ascent. Unpleasant surprises and resource limitations and aggressive deadlines and the laws of physics were biting. “Suddenly,” Weber told me, “playtime is over.”
In the battery lab, I found Lance Turner visibly exhausted. As we talked in a cluttered office, where he sat in front of a blackboard covered with scribbled graphs and equations as if out of a mad-scientist cartoon, he kept removing his glasses to massage his eyes. When I asked if he was having any fun, perhaps not the most delicate of questions, he said, “There’s a fair amount of camaraderie in the misery of being tired.” Had he had a vacation? He couldn’t remember just then. “I’m going to take one,” he said, not all that convincingly.
And how was the project going? “I’d had nothing but phenomenal testing experiences last time you were here,” he replied. “This time I’m more humbled.” He led me into a temperature-controlled chamber, where one of the batteries was hooked up to a tangle of tubes filled with clear orange fluid. It looked like an intensive-care patient. The cooling system was being tested. The engineers had expected this to be a challenge, and it was. The system was leaking both fluid and electricity, which meant it could not yet be installed in a test car. Nor was the competing battery robust enough to drive around. Originally expected by Easter, test cars, the crucial proof, would not be on the road before May.
“We’re counting on home runs every single time, and quite frankly, we’re hitting doubles right now,” Turner said, as I watched diodes on the battery’s control circuits flash green. It seemed, he added wearily, that there were not enough hours in the day.
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.
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.”
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.