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Volt launch carries hopes of Michigan's high-tech industry


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Volt launch carries hopes of Michigan's high-tech industry

BY CHRISSIE THOMPSON

FREE PRESS BUSINESS WRITER

As the Chevrolet Volt launches at General Motors' Detroit-Hamtramck plant, so does one of Michigan's biggest hopes for high-tech industry.

GM announced the Volt in 2007. But the company kept hurtling toward its 2009 bankruptcy, bringing on the negativity North American President Mark Reuss said fell on all of Detroit.

Still, Volt development continued. And as GM restructured, so did Michigan.

Today, the state has 17 companies that help make batteries for electric vehicles, projected to create 63,000 Michigan jobs in the next decade, Gov. Jennifer Granholm said Tuesday at a Volt celebration at the Detroit-Hamtramck plant, which builds the car.

More jobs are now on their way to an industry carving a path for a greener auto industry.

On Tuesday, GM and Chrysler announced plans to each hire 1,000 new workers, mostly engineers, as they ramp up production of new models. Michigan's manufacturing-related jobs already are increasing, with 467,000 jobs in October, up 33,000 jobs from a low of 434,000 in June 2009.

"I want GM to be in the forefront of these efforts, as the Volt demonstrates," CEO Dan Akerson told hundreds of workers and visitors gathered at the Detroit-Hamtramck plant. "It would have been easy, given everything that General Motors has been through in the last couple of years, to let the Volt die, but you didn't let that happen."

The first Volt off the line will be a gift to posterity: GM plans to put it in its Heritage Center in Sterling Heights. The second will be a gift to Detroit's future: GM is auctioning it off at www.bidonthevolt.com, with proceeds to benefit math and science education at Detroit Public Schools. Late Tuesday, the highest bid was already $180,000.

Next Volt challenge is cutting costs

With the first Chevrolet Volts built and awaiting shipment, General Motors is looking to its next challenges: cost-cutting and meeting customer demand.

GM's intent is to make the Volt profitable by the end of its first generation -- usually five or six years, said Doug Parks, Volt vehicle line executive and chief engineer. To do so, GM's electric-vehicle engineers -- soon to be 1,000 members, or 50%, stronger -- will embark on a process that involves more intense cost-cutting with each model year than on typical vehicles, Parks said.

"Ten bucks here, 20 bucks there, 200 bucks there," Parks said. "We can make a lot of hay there."

Steve Rattner, former head of the Obama administration's auto task force, said in his recent book that each Volt costs $40,000 to build -- not including development costs. The car's suggested retail price is $41,000, minus at least $7,500 in federal and state tax credits.

GM CEO Dan Akerson on Tuesday called the Volt "close to cost" and said reducing the cost of its components while keeping quality was a priority.

GM typically accounts for initial development costs in the first generation of sales, breaking them down per vehicle, Parks said. The only difference for the Volt is that it won't break even in its first generation when including development costs.

So engineers will work to redesign parts, seeking to move the Volt toward profitable future generations to make up for the current Volt's losses.

Changes could include recalibrating the Volt to use more than the currently allowable 65% of its battery capacity before switching to generator power, Parks said. Electric vehicle enthusiasts have estimated that the Nissan Leaf pure electric car uses up to 95% of its battery capacity, but GM has shied away from using that much until it's more sure of the battery's performance.

"If we can squeak another 5 or 10% more, we'll do it," Parks told the Free Press on Tuesday on the sidelines of a Volt launch celebration at the Detroit-Hamtramck plant, where GM builds the Volt.

In the second generation, cost-saving changes could include a smaller engine, Parks said. Today's Volt has a 1.4-liter four cylinder to generate power when its battery runs out of power after 25 to 50 miles.

Volt production started early this month, as reported by the Free Press -- nearly four years after GM announced development of the Volt, following the urging of former Vice Chairman Bob Lutz to create a car to help GM's image as the Prius did for Toyota.

Akerson gave Detroit-Hamtramck workers "V" for "Volt" signs when he arrived in the first Volt to come off the line.

Lutz made a cameo appearance at the celebration, arriving in the second Volt to one of the day's biggest cheers. Collecting himself as he exited the car, he playfully stuck his tongue out.

He said he had an uphill battle selling the Volt after GM lost $1 billion on the EV1 pure electric vehicle a decade ago.

That's why his upcoming book, "Car Guys Versus Bean Counters," has a Volt chapter titled, "I'll let you explain it to the board."

GM plans to build 10,000 Volts by the end of 2011 and at least 45,000 in 2012. Akerson said he has a gut feeling that demand will require additional Volts in 2012, so the company is studying ways to double or triple production. The plant is currently running on only one shift, when many of GM's North American plants are using three shifts.

"I have a sense that this is going to be ... a game-changer," Akerson said.

Initially, the Volt will sell in California, New York City, Washington, D.C., and Austin, Texas. Next spring, those markets will expand to include Michigan, New Jersey, Connecticut and the rest of New York and Texas. Within a year and a half, GM plans to sell the Volt nationwide.

Dealers are in charge of choosing the order in which customers can buy the store's allotted Volts. Many use a first-come, first-serve waiting list.

GM has declined to release the number of Volt orders, but more than 240,000 people already have indicated their interest in buying a vehicle by registering to receive production information on the Web, North American President Mark Reuss said.

The company also plans to start exporting the Volt late next year to China, and Europe will get it as the Opel Ampera. But Reuss said vehicles sold overseas would not hurt North American supply.

The biggest constraint on Volt production is battery cell production, he said. GM gets its battery cells from LG Chem in South Korea. Compact Power, LG Chem's Troy-based subsidiary, will start making the cells in Holland, Mich., when it opens its plant there in 2012.

By 2013, the plant will be able to make enough battery cells for 50,000 to 60,000 Volts annually, Compact Power CEO Prabhakar Patil said, but it will also supply upcoming vehicles such as the electric Ford Focus. With about a year's notice, the plant would at least be able to double capacity, he said.

LG Chem is also doing its own part in cutting the Volt's cost. Patil said he thinks the company will be able to cut the cost of its cells at least in half in five to 10 years.

GM's new engineers also will work to cut costs. Before Tuesday's announcement, GM had hired at least 200 electrification engineers since mid-January, said Micky Bly, who heads GM's electric vehicle, hybrid and battery development.

Their median age is 27, Bly said in September. The median age of all vehicle engineers is 47, he said.

link:

http://www.freep.com/apps/pbcs.dll/article?AID=/20101201/BUSINESS01/12010384/1331/Volt-launch-carries-hopes-of-Michigans-high-tech-industry&template=fullarticle

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