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GM to rush development of plug-in electric car

From Associated Press| June 06,2007

General Motors Corp. has awarded two contracts to companies that will help speed up development of its plug-in electric car called the Chevrolet Volt, GM Chairman Rick Wagoner said Tuesday.

Wagoner, speaking Tuesday at the company’s annual shareholders meeting, also said GM would introduce four new hybrid models this year.

A company spokesman said the four new hybrids, all previously announced, are the two-mode gas-electric systems in the Chevrolet Tahoe and GMC Yukon large sport utility vehicles, and hybrid systems for the Saturn Aura and new Chevrolet Malibu sedans.

The contracts to design and test lithium-ion batteries went to Michigan-based Compact Power Inc. and to Continental Automotive systems, Wagoner said.

“Given the huge potential that the Volt and its E-flex system offers to lower oil consumption, lower oil imports and reduce carbon gas emissions, this is for sure a top priority program for GM,” said Wagoner, who added that the company is trying to produce the Volt as soon as it can.

The Volt, unveiled in January at the Detroit auto show, has a battery-powered electric motor that can run the car for up to 40 city miles on a single charge. Beyond that, a gasoline-powered, one-liter, three-cylinder engine can generate electricity to replenish the battery, giving the car a range of up to 640 miles, GM said.

The battery system can be plugged into a home outlet for recharging, and the gasoline engine can recharge the batteries while it is moving.

GM’s announcement came as Honda Motor Co., Japan’s second biggest automaker, said it will discontinue the hybrid version of its Accord sedans, conceding Toyota Motor Corp.’s dominance with the hit Prius hybrid.

Honda said Tuesday it will continue to make gas-and-electric models of its Civic sedan, but stop offering the hybrid Accord with the new model expected to go on sale later this year, company spokesman Yoshiyuki Kuroda said in Tokyo.

The Accord hybrid, which is sold only in North America, sold just 25,000 since going on sale in 2004, and just 6,100 last year.

Toyota’s Prius hybrid is the market leader, with 729,800 units sold since December 1997.

Wagoner also said during his opening remarks that the company’s turnaround plan is working, but some shareholders were not convinced.

John Lauve of Holly, Mich., said time is running out for the company to turn things around.

“The board has not demanded the necessary changes now,” he said, pointing out that GM has lost 10 percentage points of market share in the past 10 years.

“This is a crisis. What would Toyota do?” Lauve asked. “It’s very simple. They would not have allowed this to happen.”

GM has cut more than $7 billion in annual costs, shed more than 34,000 hourly workers and rolled out more than 20 new models since November 2005 in an effort to regain sales lost to Asian competitors.

Although it made a $62 million net profit in the first quarter, the company still lost an adjusted $85 million on its North American operations. Last year it lost $2 billion, a vast improvement over a restated loss of $10.4 billion in 2005.

GM shareholders voted down a series of stockholder initiatives, including a bylaws change proposed by the Community of the Sisters of St. Dominic of Caldwell, N.J., that the company set goals to reduce greenhouse gas emissions and improve fuel efficiency.

Proponents argued that GM needs to set the goals to show investors that it is serious about curbing global warming, and that it needs to produce more fuel-efficient vehicles to survive as a company and stem its market share loss.

Just less than 26 percent of the voters were in favor of the proposal, which GM said was unnecessary because it has been working diligently to reduce emissions and improve fuel economy.

During questioning by shareholders, Wagoner confirmed that the company is entertaining the possibility of restructuring and selling its medium-duty truck business. Its Allison Transmission division also is up for sale, he said. The company has said it is selling Allison to strengthen its liquidity.

Other shareholder initiatives voted down were measures preventing board members from serving on more than two other boards of publicly traded companies; requiring a detailed reporting of political contributions made by the company; allowing shareholders with 10 percent or more of GM stock to call a special shareholders’ meeting; creating a policy that 75 percent of future stock compensation given to senior executives be performance-based; and requiring executives to repay bonuses if the company later determines through an earnings restatement or other means that they did not reach their performance goals.

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