GM Boss Boosts Ethanol, Hybrids, and Hydrogen

DETROIT, May 11, 2006; Jui Chakravorty writing for Reuters reported that General Motors Corp. plans to stay in the hybrid vehicle business for the favorable image it projects, Chief Executive Rick Wagoner said in an interview this week, adding that the United States also needs to focus on ethanol to reduce foreign-oil dependency.

Wagoner said automakers should focus more on ethanol as an alternative fuel and that GM is focused on increasing the distribution system for fueling vehicles with E85 -- a blend of 85 percent ethanol and 15 percent gasoline.

"It will reduce our dependence on foreign oil," Wagoner said, adding that the fueling infrastructure needs to grow "very, very rapidly."

Wagoner also said he planned to discuss it with President George W. Bush in an upcoming meeting, where he will ask Washington to focus on energy policy questions, such as how to produce and distribute more ethanol.

Bush earlier this year raised the corporate average fuel economy -- or CAFE -- requirements for pickup trucks and sport utility vehicles. The CAFE for cars has been 27.5 miles per gallon since 1990.

Wagoner would not say whether he supports Bush's request to Congress to allow the White House to develop new fuel economy standards for passenger cars, but said the concept of a mandatory requirement was not the best solution.

"We continue to think it's a misguided policy with literally nothing to show for 30 years, and built around the false premise that one can regulate energy policy changes without having anyone make any changes or sacrifices," he said.

GM has built 1.7 million E85-equipped vehicles so far and plans to make another 400,000 this year.

HYBRIDS AND HYDROGEN

Wagoner said he has no regrets about not being first to launch a hybrid vehicle, but that being a part of that market is important. "I like our emerging position," he said.

Hybrid vehicles run on a combination of gasoline and electricity.

GM, which started its hybrid line with two pickups -- the Chevrolet Silverado and GMC Sierra -- will launch its third hybrid, the Saturn Vue, later this year. The Vue will be its first vehicle powered by a new, more affordable hybrid system.

Wagoner said GM needs to compete on hybrid technology for "image reasons" and that it was too early to tell if demand for hybrid vehicles will wane, but there will be "a natural limit" to them.

Speaking of vehicles powered by hydrogen fuel cells, Wagoner said the first ones will be "massive money losers," but he added that the technology would further reduce U.S. dependence on foreign oil.

GM is working on bringing hydrogen technology to the market by 2010.

Despite rising gasoline prices this summer, Wagoner said he intends to stick with developing alternate fuel sources and has no plans to stray from GM's new strategy of low sticker prices and fewer incentives.

While GM does not plan any massive blowouts like its employee-discounts-for-all promotion last year, there will be some small programs this year, Wagoner said.

"You'll see some interesting model-year close-out initiatives."