Last time General Motors revised its turnaround plan — after Congress soundly rejected draft No. 1 — the company said $7.7 billion in low-interest loans from the Department of Energy would help it make headway on cleaner cars. That’s how much the beleaguered automaker was planning to get from the agency’s $25 billion loan program for fuel-efficient vehicles. But now, according to a Reuters report, GM has issued an updated business plan that includes a request for an additional $2.6 billion in federal loans to support development of three new hybrids using technology developed for the extended-range electric Chevy Volt.
The idea behind GM’s latest request is that it will help the company ramp up production volumes, lowering costs across all four vehicles. GM unveiled a luxury plug-in hybrid concept car — the Cadillac Converj (pictured) — with the so-called Voltec plug-in hybrid propulsion system at the Detroit Auto Show earlier this year. And earlier this month, the company revealed in a call with reporters that it is already working on second- and third-generation battery technology.
So why has GM only now realized it needs another $2.6 billion to get these vehicles rolling off assembly lines at reasonable cost? GM faces growing pressure to cut costs on the Volt, which had a central role in the turnaround plan rejected by President Barack Obama’s auto task force earlier this week. The task force shared our skepticism that a vehicle priced on the high end for mass-market cars — but not high enough to cover production costs for at least the first generation — would be enough to make GM competitive in a tough market.
Photo courtesy General Motors