As the grim sales figures coming out of GM predict a collapse of massive proportions,the management,always the last to know pretends that things will be better if they announce a “revolutionary” product.This time it is the so called battery powered car called the Volt.

Even this announcement was a loaded lie.The car has a battery which, when fully charged, has a range of 40 miles when it is run entirely with battery power.The car also has additional power available from an engine that can be run with gasoline, gasoline-ethanol mixtures and biofuel.

Unfortunately for GM, Toyota’s Prius precedes GM’s own by more than ten years.That car which cannot be kept on the dealers lot for than 24 hours as it flies off because of enormous demand,is going to be made into a plug-in hybrid version which promises to do everyting GM promises to do in  some unstated future date.What is remarkable is that Prius was developed from Toyota’s own internal funding when there was no market for a hybrid car and gasoline was at about $1 a gallon.After the development Toyota introduced the car to the US market which ridiculed it.Yet, year after year, the car built up its market by demonstrating its reliability and its fuel efficiency.That performance has brought its sales figure to close to one million automobiles and even a company of Toyota’s impressive resources is now finding itself hard to keep up with the burgeoning demand.

In recent months, as the price of petroleum has surged past $135 per barrel, Toyota says it is developing Lithium-ion batteries that can give a longer range than the current Nickel-Metal Hydride batteries and intends to go past petroleum to pure electric propulsion.

The reason GM finds itself in this unenviable situation is that sometime in the 70’s GM gave up on making cars its central business and squandered the opportunity to build a car company that can be proud of its technical accomplishments.Instead it thought it could use money to replace innovation and compete with others because of its sheer size.That mindset was predictable when GM’s board,in a palace coup,rid itself of an engineer CEO,Robert Stempel,and replaced him with an accountant/finance guy who was better at reading financial statements than be comfortable with product development.

This is also the theme of Kevin Phillips’s book BAD MONEY where he shows how the relentless financialization of our businesses has undermined our competitive position in many industries and led to the hollowing of our manufacturing base.

Let us not delude ourselves.A car like the Prius could never have been allowed to be developed at GM because the accountants in charge would never have appreciated what the car could do and would have even less appreciation for the fact that it provided fuel efficiency when the price of fuel was only $1 a gallon.
This was highlighted by a comment by GM’s Car Czar ( ha,ha,ha!) Bob Lutz, who said hybrid cars were crap.

There is no way for GM to recover from its present sad state unless the accountants are fired and engineers and scientists are put in charge.Because that is not likely to happen,GM is facing its demise,fast or slow.

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