Tuesday, Jan. 13, 2009

GM touts battery research, lays out need for more cash

DETROIT -- General Motors Corp., a wounded company living on cash borrowed from the government, didn't behave like one Monday.

It unveiled ambitious plans to research and assemble lithium-ion batteries in Michigan and picked a Korean company to supply the cells to power the Chevrolet Volt electric car.

But a top executive raised the prospect that GM will need more federal loans later in the year if the U.S. auto market doesn't improve, saying the company presented a worst-case scenario to the government last year that would require $18 billion in loans, $4.6 billion more than the Bush administration has granted.

The battery factory, to be opened near Detroit, will employ more than 100 people and be highly automated as it takes cutting-edge lithium-ion cells imported from LG Chem Ltd. of South Korea and welds them into battery packs for the Volt and other next-generation vehicles from GM.

GM also announced the creation of a 31,000-square-foot battery lab, the largest in the country run by an automaker, at its Warren technical center. It said it has joined with the University of Michigan to test batteries at the Ann Arbor campus and train future engineers to design components for electric cars.

No one would say how many jobs would be created, but the news was welcomed by Michigan officials who are trying to bring down the state's 9.6 percent unemployment rate, the highest in the nation.

The Volt is designed to plug into a standard wall outlet and travel 40 miles on battery power alone. After that, a small internal-combustion engine kicks in to generate power for the car.

The car is set to go on sale late next year at a price expected to range from $30,000 to $40,000.

Monday's announcement at the North American International Auto Show in Detroit was fresh evidence that GM expects to survive the recession and thrive, even as Chief Operating Officer Fritz Henderson raised the prospect of federal loans beyond the $13.4 billion granted to the company.

Toyota improves Prius

The battery announcement was among the biggest news from the show Monday, where Toyota Motor Corp. ramped up the competition in hybrid gas-electric vehicles by showing off the next-generation Prius, the top-selling hybrid in the United States.

The 2010 Prius gets an average 50 mpg, four more than the current model, which is the most fuel-efficient vehicle ranked by the Environmental Protection Agency.

The third generation of the hybrid has a more aerodynamic design, but its exterior is easily recognizable as a Prius. Toyota said pricing will be released before the midsized sedan goes on sale in late spring.

Ford Motor Co.'s luxury Lincoln line debuted a concept car, the Lincoln C.

In a switch for Lincoln, the C is a small car designed to attract customers in urban centers, who are looking for luxury in a compact package.

The Lincoln C sports a 1.6-liter EcoBoost engine. Combined with a dual-clutch six-speed transmission, the car averages 43 mpg on the highway.

Honda Motor Co. unveiled a new version of the Insight to compete directly with the Prius, and Ford Motor Co. has a hybrid Fusion due out this spring.

Volkswagen AG said it plans to offer hybrid and diesel versions of four vehicles being developed for the U.S. market, including a successor to the Jetta sedan.

Despite the push by automakers to bring more fuel- efficient vehicles to the marketplace, AutoNation Inc. CEO Mike Jackson said orders for trucks are up as gas prices decline from their 2008 highs.

"The vehicles we are reordering are more on the truck side than the fuel-efficient side," he said at the show.

"With gas prices declining to $1.75 we are overstocked with fuel-efficient vehicles with consumers beginning to migrate back to vehicles that have higher performance and more towing capacity."

Fort Lauderdale, Fla.- based AutoNation is the largest auto retailer in the United States with about 245 used and new car dealerships across 16 states, representing both U.S. and foreign automakers.