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GM’s Green Gambit, Decoded

Posted on October 13, 2008
Filed Under Chevrolet Volt, Industry News | Leave a Comment

The Playmaker’s Standard, a Washington, DC-based communications firm, released an analysis on Friday of General Motors’ chess-like strategy for trying to gain a footing in the hybrid car market. The Playmaker’s Standard used its “classification framework of 25 irreducibly unique stratagems or plays” to map GM’s high-stakes tit-for-tat match against critics, including skeptical environmental groups, financial analysts, and industry watchers.

The principal findings of the study show GM using a classic gambit move: the company takes a risky step about a green initiative, waits for criticism, and then allows a company executive, most notably product chief Bob Lutz, to “freely admit failure and fault.” Critics are unaccustomed to GM admitting fault and are somewhat neutralized as the company returns to claims about green car programs that could take several years to produce results.

Playmaker’s Standard uses colorful-sounding names to describe various specific moves—such as the Disco, Bear Hug, and Lantern. But they are all ultimately designed to help “the car giant buy time in the hybrid electric market and re-earn the public’s trust,” according to the summary of the Playmaker’s Standard “Play Action Strategy Map.” Highlights include:

February 2006

GM’s Move – “Screen and Partner”

GM debuts its “Live Green, Go Yellow” campaign to promote the use of homegrown biofuels and its commitment to manufacturing flex-fuel vehicles. GM partners with Chevron to expand distribution of E85 ethanol in the US.

Critics Response – “Call Out”

Environmental groups question the benefits of corn-based ethanol, and The Sierra Club calls the “Live Green” campaign an “unmitigated, total fraud,” stating the only reason GM is making flex-fuel vehicles is because of the government fuel efficiency credits it receives.

GM’s Countermove – “Disco and Fiat”

GM admits that fuel credits have been an important driver of its flex-fuel car production in the past, but insists that the company is willing to make the ethanol-burning cars without them.

January 2007

GM’s Move – “Preempt and Peacock”

At the North American International Auto Show, GM debuts the Chevrolet Volt concept car, a plug-in hybrid that delivers 40 miles of all-electric range with an E85-based engine to extend the range up to 640 miles.

Critics Response – “Bear Hug and Challenge”

Auto analysts commend GM for starting the “Great Plug-In Car Race of 2007,” but question its ability to manufacture the car. Analysts challenge GM to issue a production timetable. Wired magazine reports that industry experts doubt the underlying required battery technology.

GM’s countermove – “Lantern”

Bob Lutz, GM product chief, says, “There is still a 10 percent chance the Volt could fail.” CEO Rick Wagoner says the Volt may not be ready by 2010.

August 2008

Critics Move – “Mirror and Ping”

CNBC airs hour-long feature titled “Saving GM” and suggests that GM needs a smash hit vehicle to restore the GM brand and make more people consider GM cars.

GM’s response – “Bear Hug”

Lutz embraces CNBC’s quality of reporting and repeats challenges GM faces as a company.

Critics Move – “Ping and Call Out”

Volt supporters begin to worry that the cars’ style is veering away from original concept design, and is starting to look like the Chevy Malibu.

GM’s countermove – “Deflect”

Bob Boniface, director of design for the Volt, says stylistic changes will improve the car’s fuel range. One month later, in a “Call out and Preempt,” Lutz calls the Volt program “nothing less than the first step in the reinvention of the automobile.”

Buying Time, But Enough?

If the purpose of the cat and mouse game is to buy time for GM to catch up on hybrids, as Playmaker’s Standard asserts, then it may be case of too little and too late. GM’s cash reserves stand right around $20 billion—and the company is burning through about $1 billion per month.

In recent days, reports have emerged that GM may be trying to merge with Chrysler to more directly and literally buy more time. Unfortunately, many industry experts say there is little to be gained, because Chrysler sales have fallen further than any other carmaker and its most popular vehicles are pickups, minivans and SUVs—the same segments that GM is having a hard time selling.

If GM losses continue—$18 billion so far this year—then the company will be out of cash before the time that the Chevy Volt is scheduled to hit the market. At that point, the description of GM communiques as peacocks, callouts, lanterns, and bear hugs—as poetic as it may be—will seem misplaced. The more accurate metaphor will be rearranging deck chairs on the Titanic.

Source: Hybrid Cars

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