Wagoner on Wheels

by Kabir Sehgal | 5/9/03 5:00am

Sniff, sniff. Something stinks. America's skies are more polluted than Chi Gam's basement. Driving accounts for 30 percent of the total air pollution in America. Detroit, we have a problem. I wanted to see what the top carmaker in Detroit thought about the future of fuel-efficient cars, namely hybrid cars. Mr. Rick Wagoner, Chairman and CEO of General Motors (the largest auto manufacturer and second largest company in America), was kind enough to sit down with me and answer a few questions about the future of cars.

Hybrid cars combine two or more sources of power, gasoline and electricity. Hybrid cars will allow America's cars to reach an average of 60 miles and higher per gallon by the end of the decade. So, when will we start to see massive numbers of hybrids on the highways? Mr. Wagoner says, "I can't tell you when you will see mass numbers. We made a big announcement in the Detroit Motor Show. To state it simply, think of the time horizon where today is really the Internal Combustion Engine -- and in the U.S. that's gas powered and in Europe they do diesels. And then a future vision, we would say is the hydrogen fuel cell. We are basically moving to a hydrogen economy. There are a lot of great things that will happen when we get to that, and a lot of hard work and invention that needs to go on." Known for his astute business sense and tenderhearted demeanor, Wagoner raised some legitimate questions that General Motors must answer in order for hybrids to go mainstream: "Can you ever make it economically viable? Can you find ways to transport hydrogen safely? We think the answers to all of those are yes, but we don't know at this point."

It's business 101. GM must make sure hybrids will have a market. Will customers pay the toll? "We announced we are going to have three levels of hybrid systems. We will begin to introduce them at the end of this year on a full time pickup, and then gradually, over about the next three or four years -- on a broad range of 12 different vehicles," says Wagoner. "And if everybody who bought those vehicles took the hybrid option, we would be selling up to a million vehicles. I suspect today that some people would take that option, but not a million. And the reason is because the hybrid performance costs more than a pure internal combustion engine. And the economics of it, because gas prices in the United States are so low, you don't save enough fuel to really pay for the higher cost of the vehicle. So as long as that situation persists, I think we will see both -- improved hybrid sales versus today's levels, which is around .1 percent of the market; its miniscule."

Mr. Wagoner looks at three criteria with hybrids. First, the consumers. If GM produces a car that is fuel efficient, cheap, but looks ugly, customers won't buy. Second, regulatory needs. Third, business. If the car is $100,000 and GM can't subsidize it, then nobody will buy the car. "We think [hybrid] has the chance to actually meet all three criteria. But, is that going to be tomorrow? No. So what we are doing is what every smart business does -- hedge our bets, continuing to improve the internal combustion engine."

You will hear more about hybrids and fuel economy as more research and development is completed. You will also hear about this issue as the presidential elections approach as the Department of Homeland Security considers domestic fuel efficiency a priority. Hybrid cars could very well be the key to the whole debate. You might even hear more about this debate at Dartmouth. Recycle this. Recycle that. Compost this. Compost that. Switch off the lights. Dartmouth's environmentalists are a loud and nettlesome group. Why the Dartmouth environmental emphasis? In 1995, Environmental Studies Professor Carol Goldburg said, "I think the students on campus today are quite aware of environmental issues. Their backyard is essentially this incredible landscape."

Hybrid cars or its cousin, the fuel cell, might be the future but not the immediate future. "Absent government subsidies, government mandates, some unexpected long term increase in fuel prices -- I suspect it is going to be a relatively slow growth in hybrids, and we think, ultimately, that the fuel cell has the best probability of actually being as economic as the internal combustion engine," says Wagoner. Whatever the future has in store, Mr. Wagoner will be in the driver's seat, steering clear of the roadblocks.