Electric and hybrid car enthusiasts who were just beginning to warm up to General Motors (s GM) for its recent work on the plug-in hybrid Chevy Volt, and who years after the film “Who Killed the Electric Car?” skewered the automaker for pulling the plug on its electric EV-1 model, may now see another reason to turn a cold shoulder: The automaker has just hit the brakes on production of the hybrid version of its Chevy Malibu for 2010. But don’t get ready for combat just yet.
GM started notifying dealers earlier today about the Malibu Hybrid plans, telling them that “they cannot order 2010 Malibu hybrids because of a glut of 2009 models,” according to the Detroit News, although some remaining fleet orders will still be filled.
Under pressure from the Obama administration to demonstrate innovation and commitment to cleaner cars, and facing a compressed time frame for boosting the average fuel economy of its lineup, GM can’t have taken lightly the decision to halt a model that could bolster those credentials. After all, GM had enough faith in the image-boosting power of the Malibu Hybrid that then-CEO Rick Wagoner rode in the model most of the way to Capitol Hill last year as part of a quest for bailout funds. So why did GM pull the Malibu Hybrid from its 2010 lineup?
Simply put, the Malibu Hybrid didn’t “pay rent” (i.e., generate meaningful profit) — a new requirement for all vehicles in the GM lineup, as CEO Fritz Henderson put it on his first day on the job, after the Obama administration asked Wagoner to step down. The company can no longer afford to rely on higher-margin SUVs and trucks for profit — even smaller, more fuel-efficient and historically lower-margin cars have to earn their keep with healthy margins. According to a Wall Street Journal report today, GM says the 2009 Malibu hybrids have basically been dead weight, with poor sales and a significant backlog on dealership lots.
Problem is, the so-called “mild hybrid” system in the 2009 Malibu Hybrid adds extra cost (about $4,000), without doing much for the fuel economy. A four-cylinder model that runs on gas only is rated at 22 MPG for city driving and 33 MPG for highway driving, while the hybrid model gets only 26 MPG city and 34 MPG highway ratings. By comparison, the 2010 Ford Fusion Hybrid is rated at 41 MPG city, 36 MPG highway, and the third-generation Toyota Prius gets a whopping 50 MPG city and 49 MPG highway.
In the $20,000 to $30,000 price range where GM is competing with both the regular Malibu and the hybrid version, that extra $4,000 just isn’t buying enough efficiency to make it worth it. As the Car Connection blog put it this morning, “The mild nature of the mild-hybrid system was its undoing.”
At this point, spokeswoman Kristin Rogers tells us, GM is working on a “next-generation GM Hybrid system that will be more cost-effective, more powerful, and have a broader vehicle application,” to debut in new models starting in 2011 in North America.
“As we get into the next generation of technologies,” Henderson said in late March, noting the Volt and GM’s lineup of flex-fuel and hybrid vehicles as examples, “that requires money. That requires investment.” At the time, we wrote that this suggested awareness that GM will need to buckle down and boost margins across its entire lineup in order to finance continued development of the Volt.
With the suspension of the 2010 Malibu Hybrid and the ongoing revamp of the hybrid system, what we’re seeing is possibly that buckling down and investment in next-gen tech in action. Time will tell if GM can reinvent itself fast enough to really compete for meaningful market share — and avoid making any more road trips to Capitol Hill.
Chevy Malibu image credit General Motors