car_guy

Cash-For-Clunkers Reveals Weakness Among Detroit Brands

You conveniently avoided mentioning California, which was awarded the lions share of the funding, $322,677,500 or 11.3% (almost twice runner up Texas). Over 72% of their purchases with the program were for Asian OEMs. They also had the highest percentage of Toyota sales in the nation with 28% of total purchases being Toyota's. They also had the 2nd highest percentage of Honda sales, after Hawaii, with 19%.

Gee, California buys Asian OEM vehicles, and the mid-west buys US OEM vehicles. What amazing insight. This is hardly a useful picture of the US car market.

Chevy Volt: How It Stacks Up

Rick,

Good article. Accurate and factual and objective. Rather rare traits for Auto articles on Seeking Alpha. I strongly agree with the thesis that cost/mile is a superior rating to mpg for consumers to use. This should be one of a number of possible metrics for rating performance/efficiency based on a person's objectives/expectations. A web calculator for carbon/mile would be straight forward to develop based on the location of the user. A calculator for petroleum used/mile would also be useful if we are still interested in reducing dependence on foreign oil.

Chevy Volt: How It Stacks Up

The article's assumption of 20mpg under the gas engine is the crux of the argument and obviously calculated backward to support the thesis that the Volt will be no better than the Prius. 20mpg from a 1.4 L gas engine is ridiculously low and the Volt will easily achieve more than that, likely 40-50mpg running on gas. GM's statement that they expect the combined mileage to be 'triple digit' means they expect 100mpg combined which would mean 40-50mpg highway.


On Aug 23 01:55 AM John Petersen wrote:

> There's a good article in Friday's Economist that talks about how
> the Volt's mileage was calculated and the factors that will likely
> impair mileage.
>
> www.economist.com/scie...

Cash for Clunkers: A Wildly Expensive Way to Cut Emissions

Your understanding is very wrong. The average buyer increased the fuel economy of their vehicle by over 60% and top selling vehicles have been the Ford Focus and Toyota Corolla. To qualify for the $4500 you have to increase mpg by 10 which which is a minimum of 26-28 mpg. Increasing the requirement to 32 mpg eliminates all of the vehicles at 30 mpg combined, including the Corolla and Focus, and leaves only 1 vehicle, the Ford Fusion hybrid, that is manufactured in the US. Eliminates the incentive to preserve remaining jobs at US plants (Toyota, Honda, Hyundai, Ford, GM, Chrysler, Nissan, etc) and destroys the payback in taxes and reduced unemployment comp.


On Aug 16 10:43 AM Kodi wrote:

> Let's face it, CFC is an expensive vote buying program that should
> have been applied to electric or alternative energy vehicles. Don't
> forget, that to produce a new vehicle, there are environmental costs
> as well. Add up the carbon footprint required to produce a new car
> in steel production, petroleum based plastics, electrical components,
> tires, paint, commuting workers, shipment of a new vehicle, visiting
> showrooms, waste produced, etc. It appears that no one considered
> all the ancillary activities associated with the production of a
> new product. This whole thing stinks of political pandering that
> those of us who did not participate, get stuck with the tab. <br/>
>
> Additionally, my guess is that those who could truly afford a new
> car loan, are not the needy, but likely the son or daughter driving
> the old clunker back and forth to college or work. I see a lot
> of truly poor people still driving clunkers who are unable to purchase
> even a worthy used vehicle. So what does our government do, increase
> personal debt load to satiate a chosen few and increase the prices
> in the used car market.
>
> My understanding is that pick up trucks have been the major purchase
> through this program. What kind of incremental improvement is that?
> It seems to me to truly make an improvement in the environment, the
> minimum mpg for a new vehicle should be set at 32 mpg.

Is the Chevy Volt Only a Fair Weather Car?

Jack,

You also seem to convienently drop the term City mileage from your discussions of the 230mpg discussion. GM has not released any highway mileage estimates but has said they expect combined mileage to be 100mpg or above. This means that highway will be well under 100mpg which is logical because the vehicle will be using the ICE for power, not the batteries, much sooner in the cycle.

The city cycle keeps speeds at 45 mph and under and is limited to approx 50 miles. This maximizes the Volt's electric only distance. If the Volt gets 50mpg when using the ICE and only uses it for the last 10 miles of the test it would use 0.2 gallons of gas. For the 50 mile cycle using 0.2 gallons of gas would result in a 250mpg rating. Adding full loads for a/c and more aggressive driving makes the 230 mpg rating reasonable.

GM didn't design the test. Toyota gamed the test for years and the incredibly high mpg numbers for the early Prius vehicles led to the redesign of the test cycle. At $2.50 gas no hybrid, including the Prius makes any econonmic sense.

Lies, Damned Lies and MPG Claims for the Volt

Jack,

No matter how cute or sarcastic you say it, doesn't make it true. The Volt has a range of 300 miles. The 40 mile range is for electric only.

Do some research, you'd be surprised what you learn.


On Aug 13 11:00 AM Jack Lifton wrote:

> John,
>
> This "controversy" makes me think of the World War II American admiral
> who while retreating from superior Japanese forces radioed "I am
> retiring before the enemy with all deliberate speed." I don't think
> the EPA or DOT is "actively complicit" in any deception of anyone
> other than themselves.
>
> I did the same calculation as you have done and came to the same
> conclusion.
>
> I have a new marketing approach for GM for the Volt:
>
> "The Chevrolet Volt, the car that makes decisons on travel distance
> for you. Never again worry about getting anywhere more distant than
> 40 miles in a reasonable amount of time. Let your car make the decison
> for you. Admire the scenery as you wait hours for a recharge, or,
> better yet, admire the neighborhood as you walk looking for a recharging
> capability in an area with which you are not familiar.
>
> See America the Volt Way
> In your Chevrolet
> Walking

Is the Chevy Volt Only a Fair Weather Car?

The Volt does not work in the way you describe. Instead the car runs off battery power for the first 40 miles and then the ICE drives a generator that produces the power needed to run the car for the next 240 miles (300 mile range).

See below for the mileage explanation.


On Aug 13 03:00 PM Advill wrote:

> Perhaps I´m wrong but the basic difference between Prius (or alike)
> and Volt IS THE WAY IN WHICH ELECTRICITY IS USED.
> In Prius you have a battery drive meanwhile you have power on them,
> after that point the ICE takes the total workload.
>
> In VOlt as far as I know the ICE (a Sterling or similar) is always
> moving (at a regular RPM) producing electricity in a similiar fashion
> the service turbine in jets that supplies electricity to AC water
> etc. when the plane is not flying.
> SO you have a electric generator feeding batts in a continuos way...a
> small no reciprocate engine producing a electric charge could get
> the 230 miles.....maybe.
> I do not want to believe in GM doing an official number if they are
> not able to get it, they were working at the beginning with a 100
> MPG number and now is 230.
>
> Insulating and refrigeration now days is a matter of cost is not
> a technical issue.
>
> Regards

Is the Chevy Volt Only a Fair Weather Car?

Jack,

Taking you at your word, that "I want General Motors to succeed", your poor impression of the Volt comes from a complete lack of understanding of how the vehicle actually works. You are confusing the marketing terms and language with the actual engineering concepts used for these vehicles.

A hybrid vehicle is one that has both an ICE and electric motor used to propel the vehicle and that has the ability to run in electric only mode. A hybrid does not need the ICE to mechanically drive the wheels. Feel free to show me any 3rd party definition for hybrid that requires this.

The Volt is a serial hybrid vehicle. It has a gas ICE that runs an electric generator and electric motors at the drive wheels. There is no mechanical connection between the ICE and the wheels. The Prius is a parallel hybrid where either the ICE or electric motor can directly power the wheels. It has a very complicated software package and transmission that switches between the 2 engines based at low speeds. There are also 2 mode hybrids which are parallel hybrids that use electric motors in the transmission to proivde all electric drive at low speeds and electric assist at high speeds. The Prius does not provide significant assist above approx 45 mph which is why the city and hwy mpg numbers are almost the same.

Serial hybrids are much more efficient designs because they avoid all of the mechanical linkage to the wheels including the transmission. However, they require very high energy density batteries to work. These did not exist in the mid '90s when Toyota began development on the Prius so they invented the parallel system to enable low speed electric driving with lower energy density batteries. A brillant piece of engineering that solved that mid '90s battery problem.

Just because the Volt's ICE is not mechanically connected to the wheels does not mean that it cannot drive the wheels. The Volt has a 1.4L ICE which is much bigger than it would need to only charge and condition the battery. This engine produces enough electricity thru the generator to fully power the car w/o the batteries. In this mode the Volt runs the same way all train locomotives have run for the last 50+ years. When the engine comes on it's lowest priority will be recharging the battery because that would put excessive load on the engine and is not very efficient or necessary. The battery is meant to be recharged with the plug when the owner returns home, assuming they drive less than 300 miles in a single day.

Lastly, let me break down the marketing term "extended range plug-in hybrid". Plug-in hybrid simply means that the battery pack can be charged using the grid instead of the ICE, which is much more cost effective and possibly cleaner depending on where you live. Extended Range is in reference to the fact that the vehicle works exactly like an electric car for a period of time/distance but the ICE provide EXTENDS the range another 240 miles.

GM already has 60 prototypes built off of production tools and is busy performing final validation testing. They are also letting journalists drive the prototypes which is almost unheard of because fit, finish, and even performance of prototypes can be very rough depending on how well the program is going.

Typically side by side test are done with actual production vehicles. Auto makers, including Toyota build and test prototypes to validate and refine their designs. Since software has a significant impact on hybrid performance, production vehicles should exceed the performance of the prototypes. Your demand for an immediate face off simply reflects your lack of knowledge of the process. Unless you were suggesting a face off between the Volt and the plug-in Lion Prius....

Is the Chevy Volt Only a Fair Weather Car?

The ICE actually powers a generator, there is no mechanical connection between the ICE and the wheels. This is a big deal because this not been done before in volume production vehicle and combines the benefits of an electric vehicle with the range of a gas/diesel fueled vehicle. Second, the Volt operates 100% on battery for the first 40 miles at all speeds. This gives the eco-minded the opportunity to run the Volt as a pure electric and not use any 'nasty' gas, yet still have the capability to travel long distances if desired. The Prius engages the gas engine above 25 mph and even the new Fusion engages the gas engine above 40 mph so these vehicles do not offer the option to go 'pure electric' for normal driving around town. The 40 miles assumes a 'normal' driving style, I am sure a lead foot will get you less than 40 miles and hyper-mileage driving will get you more.

The batteries are always a big deal with these types of vehicles. The Volt will initially have separate heating and cooling systems to manage the battery pack and it will operate within a range of 50%-80% charge to maximize pack life. Battery life and cost is the #1 issue with this car so it reasonable to assume that in the extreme weather conditions described in this thread that the vehicle will use the ICE/generator for propulsion until the battery pack is at proper temperature and charge. GM is planning to put a 10 year 150,000 mile warrenty on the battery pack and powertrain so they need to make it last.

On Aug 13 02:08 PM MRTTF wrote:

> My concern, from a technical standpoint, isn't the Volt data. It
> is strictly from a battery standpoint. I am pretty sure that my knowledge
> of the Volt is not entirely right. However, if the ICE is powering
> the vehicle, than why all the hype about how the ICE only is there
> to recharge the battery?
>
> My interest is purely in the battery side, since that is the area
> that I work in. As I previously stated, commercial cells will not
> operate with any meaningful perfomrance at such low temperatures.
> And conditioning the battery "for a few minutes" as Weber states,
> will do very little for a thermal mass of that size.
>
> I have no problem admitting that my knowledge of the Volt is seriously
> lacking. What I do have a problem with is the lack of fundamental
> understanding of the everyday problems associated with a 16kWh battery
> pack.
>
> On Aug 13 12:45 PM car_guy wrote:

Is the Chevy Volt Only a Fair Weather Car?

The range for the Volt is 300 miles. The 40 mile range is for electric only running off the batteries. The next 260 miles is with the ICE driving a generator that provide electricity instead of the batteries. If you commute less than 40 miles/day you will not need to use any gas. For your 80 mile commute you would do the first 40 off batteries and the next 40 off gas, assuming you did not charge up at the office.


On Aug 13 01:36 PM billddrummer wrote:

> My problem with the Volt is its range. In my experience, very few
> people commute less than 40 miles/day. It's more like 75-80.
>
> I see limited appeal for people who don't live in major cities.

Is the Chevy Volt Only a Fair Weather Car?

This would be true if the Volt operated the way that Jack keeps insisting it operates. However, contrary to Jack's repeated statements, the Volt's ICE powers a generator which powers the vehicle first, keeps the battery conditioned second, and then recharge the batter with any residual remaining power. In the article referenced by Purdone the GM engineer clearly states that if started in very cold conditions or even after sitting for a long period of time, the car will NOT start in electric mode but will instead start the ICE which will power the car and then condition the battery. For decades GM's durability testing program has included cold start after 24hr cold soak in their proving ground in Kapuskasing, ON on Hudson Bay. Rest assured that a number of the 80+ Volt prototypes will be spending the winter there.

Your battery facts are accurate, but your Volt information is totally wrong.


On Aug 13 11:23 AM MRTTF wrote:

> Jack, I loved this article when you instablogged it, and seeing those
> who are bowing down before the almighty Volt come out of the woodwork
> gave me a good laugh before work today. As I have said previously,
> commercial Li-ion cellshave an optimum operating temperature range
> of 0 to 40degC (32 to 104degF for those so inclined). The "extreme"
> operating conditions, such as those published by Sanyo are -20 to
> +60degC (-4 to 140degF). Operating at those extreme conditions can
> greatly shorten the battery life and could cause a safety issue at
> the high end. The low temperature performance of commerical cells
> below -20degC is often laughable, and charging at low temperatures
> is near impossible and WILL permanantly damage the cells. All the
> insulation around a pack in the world is not going to change the
> fact that in large parts of the country, this car will be unuseable
> for 3-5 months of the year.

Chrysler: Reshuffle the Corporate Capital Structure?

Many of Chrysler's plants are brand new and loaded with advanced automation technology. GM/Ford/Chrysler plants tend to have higher levels of advanced automation because they are compensating for much higher labor rates. In the '80s and '90s the US 3 were closing very old outdated plants that nobody wanted. The remaining plants have modern layouts and it would be much cheaper to buy one of these than to spend $1-2B building a new one. Also, Honda has multiple plants in heavily union Ohio and has had them there for over 30 years.

That said, these plants still have very little value because of the overcapacity that exists, especially in a 10-13M vehicle market (down from 16 in 2007). Also, the only plants built by the import OEMs in the last 10-15 years have been truck plants to support that uniquely US vehicle the SUV. With the SUV dying or dead, the existing plants will likely be converted to build other vehicles, but there is no reason to build a new plant. I doubt there will be a new auto assembly plant built in the US for next 10-20 years if not longer. Remember, Toyota has a brand new plant sitting empty with no plans to fill it.


On May 03 12:22 PM PastTense wrote:

> I don't agree.
>
> 32% debt recovery in cash is better than 100% of nothing. Lots of
> us think that Chrysler is going to fail shortly and I see it as having
> negligible liquidation value: What would auto companies buy? The
> distribution network and brands are probably salable (I think the
> Chinese might be interested). But who would want the factories? Any
> auto company would prefer to build a high-tech automated factory
> in a non-union state. And since manufacturing is moving overseas
> anyway I don't see much demand from other industries who would have
> to spend a fortune to refurbish the sites. I suppose Chrysler has
> some general real estate which is salable. But the manufacturing
> equipment is so specialized it probably has little more than scrap
> value.
>
> And the whole bankruptcy process bleeds value--so much of the money
> goes to lawyers...
>
> As far as the federal government note the government is paid not
> only returns from the company (which as stated are very poor)--but
> also the government collects taxes and avoids paying benefits to
> laid-off workers and retirees (underfunded pension plans). So I think
> the risk is worth taking for the government.
>
> As to the UAW, I think it will decide to kill the goose who lays
> the golden egg (via greedy collective bargaining demands)--so will
> end up with nothing.

Chrysler: Reshuffle the Corporate Capital Structure?

You have a number of items incorrect, but you do make some interesting points.

First, Fiat is not "paying" $2B for 20% of Chrysler. Fiat is receiving their equity stake for specific commitments to share technology, distribution network, and to make specific investments to build product in the US. Fiat estimates it will spend $2-3B, however, Chrysler estimates that it will save $8-10B it would have to spend to develop the same technology. This is one of the many things the Cerberus bankers learned about the Auto industry AFTER they bought the company from Daimler. Chrysler will replace all of their mid-size & small cars & trucks (B, C, D platforms) with models based on Fiat designs and produce new very small cars (A platform) from Fiat designs & engines. Chrysler must have these platforms & engines to meet new US CAFE standards, even if gas stays cheap for the long term. Daimler would have provided this technology with the DCX model. With Cerberus Chrysler tried to farm it out to partners (Chery, Nissan, etc) and was unsuccessful (only Nissan came to fruition and the strong Yen broke that model). Chrysler's only options were outright aquisition, which the credit crisis made impossible, or a Renault/Nissan style alliance which is what they accomplish w/Fiat.
The terms for Fiat earning the additional 15% are defined in the press release and are the result of specific milestone achievement (build 40mpg car in US, build new small engine for Chrysler in US, sell Chrysler vehicles w/global network). Tooling plants to produce the car & engine will require cash from Fiat, at least $1-2B. What Fiat gets from Chrysler is hardly mutual. Aside from the US sales distribution network, which is really cost avoidance on their part, they get access to Chrysler's new V6 engine and SUV platforms which are helpful, but not mission critical. Chrysler can't survive w/o Fiat because they can't meet the 2020 CAFE standards without the $8-10B investment even if gas stays cheap in the long run. Fiat wants the Chrysler alliance because Marchione believes that a global Auto OEM will need to produce over 5 million vehicles/year to survive in the future. While this is logical, only Toyota, GM, VW, Ford, and Renault/Nissan achieved this goal in 2007 which would provide Fiat with plenty of partners if this theory becomes more real.
Cerberus gets to keep Chrysler Financial (which they admit they ran into the ground in WSJ) and Chrysler Real Estate which has value, but how much is not clear. Cerberus is also using Chrysler to be GMAC's (not GMCC) captive Auto OEM since, due to more brilliance on their part, GMAC is no longer tied to GM and suddenly needs to compete for business. They don't walk away empty handed, but this obviously was not the ending they intended. I agree, no tears for them.
The US taxpayer gets 8% (Canadian get 2%) for their initial $4.5B loan ($1B from Canada). The return is more like 20%. The DIP funding and approx $11B to get out of C11 will be loans that will have to be repaid.
The UAW is not really getting 55%. Classifying them as an unsecured debtor may be legally accurate, but is not an accurate description of the liability they hold for Chrysler. When Cerberus bought their 80.1% of Chrysler from Daimler, they took on $18B of health care liability. The UAW took over this liability for approx 0.70/$1 when the VEBA was created in 2007. The $10B was the remaining cash owed to the VEBA to fund the $18B liability. Counting the approx $2.5B in cash already deposited into the VEBA, the UAW's liability is around $15.5B so using your numbers they recover approx 30%. Same as the bond holders, but they can't simply write off their losses. The UAW is still on the hook for the health care costs and is going to be struggling with this for years to come.
You are right on the money with your assessment of how this situation was impacted by CDS. Based on their actions, it is reasonable to assume the hold outs were fully hedged and drove the C11 to cash out their positions. This is no different than buying a building and burning it down for the insurance money. You would think that the companies issuing the CDS would be smart enough to protect against this behavior or at least void the claim. You propose that the hedged owner transfers their voting rights to the insurer, which makes sense. I propose that a simpler solution is to simply call this what it is, insurance fraud, and prosecute accordingly.

Ten Cars Detroit Should Copy

Actually CR does look at long term reliability and their statement is about reliability of all systems not just fit and finish. The JD Powers 3 YEAR reliability study which I reference also obviously looks at 'engineering', using your definition. You are mistakenly referencing the JD Powers 90 day quality study, which I agree provides minimal value. GM still beat Lexus for the reliability study.


On Mar 29 06:32 PM TinyTim wrote:

> "small, luxury domestic crossover" like my Pontiac Vibe; may not
> be total luxury &amp; it is based on a Corolla platform
>
> "Consumers Reports states that Ford's quality equals Toyota and Honda
> and that many GM vehicles, but not all, are also world class for
> quality."
> There's a big misunderstanding between quality and engineering.
> Consumers looks at fit and finish and obvious defects for about 2
> weeks. My 88 Civic has 285K miles on it, only cost me $7K new in
> Oct 87 and my teenager is driving the piss out of it. That kind
> of reliability is engineered in. Toyota used to call it life-cycle
> cost before they fell victim to US mktg and started with Tundras,
> etc.
> Even Honda caught the Detroit disease as the new Civics look like
> the original Accords. The Fit is just their recognition that there
> is a place for a cheap, sporty econobox, unlike the Yaris which
> is just a cheap econobox.
> What's always been missing from the Big3 is any appreciation for
> engineered reliability. After all, these guys invented planned obsolescence.

The Administration Doesn't Like What GM and Chrysler Have to Sell

The administration is walking the fine line between destroying consumer confidence in the company (what is left of it) and putting enough pressure on the bondholders to get them to move. The 'quick rinse' terminology should scare the heck out of them since I assume they would be rinsed. The tone for Chrysler is expected since the administration doesn't want to be seen bailing out Cerberus.