Green cars pay price for lack of greenby Multiple Authors on Nov. 20, 2008, under Edge
LOS ANGELES — The arrival of more fuel-efficient cars and trucks promising cleaner air and more energy independence is being set back as automakers worldwide scramble to hoard cash in an industry meltdown.
Carlos Ghosn, CEO of Japan’s Nissan Motor and France’s Renault, on Wednesday warned that automakers “can’t find the financing” for aggressive development of so-called green cars.
In a keynote speech at the L.A. Auto Show media preview, Ghosn said companies must husband cash to survive an auto recession expected to last until 2010.
He said they can’t afford now to divert money to electric and other alternative vehicles, which are expensive to develop. Among recent examples:
— General Motors, which says it’s almost broke, confirmed this week that it’s delayed an advanced Saturn Vue gas-electric hybrid to save money.
The crossover using a sophisticated two-mode system developed with Daimler, Chrysler and BMW was to have gone on sale in December. It now is planned for some time in the first quarter of 2009.
“It will help save some costs, and it dominoes down the line,” says Saturn spokesman Steve Janisse.
In addition to postponing costs for distribution to dealers and marketing, Janisse says, “We can put off the expense of dealer training, and the dealers can put off buying special equipment to service the vehicle. It helps everybody right now.”
— Chrysler will halt production of its well-reviewed Dodge Durango and Chrysler Aspen hybrid SUVs on Dec. 23, after just a few months on the market. Chrysler says it can’t afford to keep the Delaware plant where they are built open and will shut it on Dec. 31.
— As part of a review of all product plans, Toyota is considering a delay in opening a factory it’s building in Mississippi to manufacture more Prius hybrids. Japanese news reports say the delay is certain. Toyota U.S. spokesman Irv Miller won’t go that far, but says, “In this environment, we’re considering everything.”
New hybrids and other advanced technologies usually are small-volume vehicles and far costlier to produce than high-volume products. They typically produce lower profits and may lose money at first.
“All (the automakers) are struggling with cash flow. They have to decide what products to deliver,” says Brett Smith, assistant director for technology at the Center for Automotive Research. U.S. automakers General Motors, Ford Motor and Chrysler are pleading for federal money to survive the downturn.
Ghosn said Nissan earnings in the fiscal half ending next March 31 will “not be zero, but very far from it, and by the way, most of our competitors are in the same conditions — except the ones in denial.”
Ghosn sees a role for governments, citing the U.S. $25 billion loan plan for automakers to develop more fuel-efficient vehicles, “I think the U.S. is being taken as a kind of benchmark, and you will see other programs (in Europe and Asia). Financing for these kind of products is absolutely essential, and only states can do it.”
Still, companies showed here that they haven’t abandoned alternatives. Ford announced more hybrid cars. GM said its Chevrolet Volt electric car is still on track for in 2010, while Nissan promised to sell pure electric vehicles in the U.S. in 2010. And Honda’s said its a hybrid-only Insight to rival Prius will arrive next year.
Eli Hopson, spokesman for he Union of Concerned Scientists, says he hopes automakers think twice about pulling back on hybrids. Currently lower gas prices are expected to rise again once global oil demand recovers. That, he says, will refuel strong hybrid demand.
“It’s important the companies be ready to make the kids of cars and trucks consumers want to buy when the economy rebounds,” he says. “We don’t want to be cutting off our nose to spite our face.”
By James R. Healey, Chris Woodyard