Elizabeth Lowery and Bob Lutz. Click image to enlarge
by Paul Williams
Ottawa, Ontario – In Ottawa visiting Iogen Corporation, GM Vice Chairman of Global Product Development, Bob Lutz says he is big on ethanol, and big on the Internet as a way to spread the word about it, and GM’s future technology directions.
The influential and candid Mr. Lutz is an industry luminary, who has five-decades of experience with GM, Ford and Chrysler in the U.S. and Europe. Accompanying him, Vice President, Environment and Energy, Elizabeth Lowery is a specialist in environmental law for GM, chair of the World Environment Center, and was chosen as one of the 100 Most Influential Women in U.S. business.
So what does Canada’s Iogen Corporation have that would interest these two high-powered executives? The answer is a demonstration plant that makes ethanol out of plant cellulose (the non-food portion of the plants), as opposed to grain-based ethanol that uses sugar cane, sugar beets or corn. According to Mr. Lutz, Ms. Lowery and Iogen, cellulose ethanol requires comparatively less overall energy to produce, and like grain-based ethanol, reduces dependence on imported oil, while revitalizing rural economies.
Boosting the visibility of companies like Iogen, therefore, is important for GM because of the company’s commitment to E-85 (85% ethanol) “flex-fuel” vehicles. Among others in the GM line-up, you can buy a flex-fuel Chevrolet Impala or GMC Yukon right now for no extra cost, but the problem is where to buy the fuel. Ethanol production, as you might suspect, is an emerging energy sector that’s not actively supported by the U.S. petroleum industry.
“We’re certainly not giving up on hybrids, advanced diesels and fuel cells,” emphasized Mr. Lutz, “All of that is still ongoing, but we think that investing only in vehicle technology is not the way to go. We definitely see E-85 as the intelligent solution, and GM as the E-85 company.”
Ms. Lowery added that there are about two million E-85 vehicles registered in the U.S., and suggested that as more are purchased, the demand for E-85 will increase. With demand, they figure, supply will follow.
While GM is not directly investing in ethanol companies (“We’re not in the fuel business,” both Mr. Lutz and Ms. Lowery stated emphatically), the company is attempting to support, promote, educate, market and build consumer awareness about ethanol and flex-fuel vehicles. Part of that initiative was the visit to Iogen (a company with which GM has had a continuing relationship) and ongoing media interviews. Mr. Lutz explained that the appeal of ethanol is that existing gasoline engines can be easily converted to run on E-85, so you don’t need to invent and develop all-new technology. Likewise, pumps at filling stations can also be easily adapted.
“One of the key concerns,” cautioned Mr. Lutz, “is that in the U.S., some retailers are pricing ethanol as high or higher than regular fuel. Given that mileage is about 20% less, people will do the numbers and realize that you have to be really patriotic or very environmentally conscious to purchase it. We were discussing that with Iogen; that the fuel has to be priced no more than the break-even point for the customer: if you’re going to get 20% less miles per gallon (litres per 100 kilometres), then the fuel has to cost 20% less.”
A future application (perhaps not too distant) is adding a flex-fuel engine to a hybrid drivetrain. Mr. Lutz says this would add very little cost, and that the company’s Ecotec engine (used in the Cobalt, HHR, G6) is slated to become a flex-fuel powerplant. No actual flex-fuel/hybrid applications were revealed during the interview, although Mr. Lutz directed our attention to the upcoming auto shows for announcements concerning GM’s multi-pronged fuel efficiency strategy. (www.Autos.ca will fully cover the Detroit auto show in January, and will watch for announcements from GM concerning fuel efficiency).
“We want to re-establish our reputation in advanced technology,” said Mr. Lutz convincingly of GM. “We used to be the kings of advanced technology in the 1950s and 1960s; I can show you a 1986 GM Parade of Progress binder, in which we’re describing our electric vehicles, fuel cell vehicles (primitive..), gas-electric vehicles. We were so far ahead of everyone else. Now, arguably, we’ve sunk to second or third place, and we don’t like being there.”
What has stolen GM’s technical thunder, according to Mr. Lutz, is a classic American business model whereby every product has to make money, or it doesn’t go forward.
“For instance,” he says, “We got mad because we were outmanoeuvred by Toyota on the original Prius hybrid. It was a lesson on business management for us. We looked at producing a hybrid that was to be launched at the same time as the Prius, but the first generation would probably lose money, so we didn’t do it. Toyota looked at it a different way – yes, for the first while they’d lose money, but look at the impact this will have on their image for advanced technology, and at a few hundred mill dollars it’s a cheap price to pay and it beats conventional advertising. The lesson for us is that sometimes you can use the vehicle program itself, like a Prius or Dodge Viper, as promotion, and it will do more for you than ten times the amounts in advertising.
In short, suggested Mr. Lutz, GM wants to be the world’s automotive technology leader again. “Now that we’re in the process of drastically reducing our structural costs in the US, this gives us the breathing room where we can really pick up the pace on advanced technology and fuel efficient technology.”
Both Mr. Lutz and Ms. Lowery are well aware that consumers will need convincing, which is partly why Mr. Lutz is actively blogging on GM’s website.
“People ask if it’s really me on the website and yes, I’m regularly following and contributing to the blog. I think it’s great. It gives corporations and individuals in corporations a way to be heard.”
At 74,the last thing Mr. Lutz is afraid of is new technology.