Jeremy Gutsche (Trendhunter.com): I'll kick it off with something that's fairly new in cars. You've been in everywhere from flying a jet to now heading a – the global development design of one of the coolest companies. Are you the Richard Branson of GM?
Lutz: I wish I had his money. Uh, no, I don't think I am, but I need to correct a misperception. I am not head of design. The head of design is one of my direct reports. I'm afraid I am not sufficiently artistically gifted to act as a designer, but as a kid I wanted to be a car designer. One evening my father said let me see your drawings. No, that's not gonna make it. Why don't you get a business degree instead? But I took a great interest in the design and I see it as my role to enable and encourage design.
Jeremy Gutsche: And how to do you explain innovation?
For the answer to this and more questions follow the jump.
Lutz: I think by first of all, expecting it, and two, creating an atmosphere where people feel that they can take a risk and if they don't make it, they're not going to be cruelly punished. It will be seen as a noble attempt that didn't work. But we don't want people to play it safe because if people play it safe, if you want a sure outcome, you are never, ever going to get any innovation because any and all innovation involves risk. If you want to eliminate risk, you will never do anything bigger, and I would argue that there was a time in GM's recent history where we did try to play it too safe and consequently we didn't innovate, but now you know, we're really leading with our chins on showing something like the Volt - an electric vehicle, with a piston engine range extender. We have committed to developing that vehicle and working with battery companies to make that possible. Are we 100 percent sure we can get it done? No. We're 90 percent sure, but in the old days GM would not have dared show a prototype like that until we had absolutely all questions answered, at which case somebody else would have already done it. So, it's something of a risk here, and three years from now maybe we'll have to tell somebody, guess what, we showed you something in January 2007. We thought it was going to work, turns out it didn't work, and here are the reasons. Very embarrassing for us. Let's move on.
Hank Green: I'm Hank, from EcoGeek. I was wondering if you expect the other companies in the industry to pick up on this idea of the E-Flex system
Lutz: I think they will because it's such a logical thing to do and you get rid of so many parts. And assuming that when the lithium ion battery technology really becomes stable, and it doesn't have a lot of reliability problems, and it becomes affordable, ... once the lithium battery technology is perfected, there is no reason that other companies can't ultimately do this. I don't expect it to remain a GM exclusive, and there is nothing about the concept of having a battery driven vehicle with an auxiliary emergency recharger or an emergency generator. There is nothing novel about that concept. In 1968, General Motors did some hybrids in what GM used to call Parade of Progress, and we demonstrated a battery powered vehicle where you actually got in and recharged the battery. Where we have intellectual property that nobody else has is in all of the control technology. How to control the battery, when to discharge how do you put the regenerative braking back in, how do you measure the state of charge of the battery so that you know when the internal combustion engine has to kick in. That's the part where we have more expertise than anybody else, and it will take the whole control strategy. That's the part where it would take other people a while to catch up. Other companies also having smart people who will obviously ultimately solve it and there's nothing patentable about this. There may be portions of the solution that are patentable, but the idea of having a separate emergency generator to kick in if your batteries are too low, that is not fundamentally a new idea. That's recycled, or post consumer ideas.
Hank Green: Talking about the technology of lithium batteries. Why is it taking so long and why are we not seeing more attempts to develop this, not just on a concept car?
Lutz: Well, what is really surprising to me was the – the rapid advancement of the lithium ion technology, and trying to do it with nickel metal hydride batteries is really tough. You never really can get the range and it's the same thing with nickel cadmium batteries. They're also really toxic. Lithium shows the promise because lithium is plentiful, it's cheap and it's environmentally safe and is beneficial for anybody who is bipolar who needs to stabilize themselves, they can eat the batteries. But I think it's the rapid advances in lithium ion technology that certainly got me excited about it and that's why everybody started talking about plug-in hybrids. If you're going to do a plug-in hybrid where you've got all of this mechanical complexity of our two-mode system that are very advanced, an automatic transmission with two electric motors in it, differentials, all of this crap, plus the battery factor, somehow it occurred to me that we the wrong way. With a plug-in hybrid you might get 10 or 12 miles fully electrically, and then the rest of the time your internal combustion engine is part of the process. Whereas here if you drive less than 40 miles a day, you almost never use the IC engine. I would say two years ago this whole thing was unheard of.
Next Speaker: You had this technology in the patents in intellectual properties ...
Lutz: But not the batteries.
Next Speaker: But you also own properties that make batteries..
Lutz: No, we don't. No, we don't.
Next Speaker: No, you own portions. You own stock. You own ...
Lutz: I don't think so.
Next Speaker: I beg to differ. Anyways, that's not my question. You diversify so much, in biodiesel, in others, why not invest in one – it seems like you're over diversifying.
Lutz: You know why, the reason is hydrogen looked like the only solution for EVs before this rapid development of the lithium battery. If you wanted to run 200 miles or 300 miles electrically, looked like the fuel cell was the the only answer. But now, the batteries are an alternative, but in some parts of the world, you may want to use biodiesel. Europe has a massive biodiesel program and – and Latin America, especially Brazil, they're running on 100 percent domestically produced energy, much lower CO2 content and obviously doesn't need to be imported. I could tell you that there is not now, nor has there ever been a GM in opposition of electric automobiles, because we don't make the fuel. We don't care whether a fuel is powdered rice dust or, bioethenol or biodiesel or used chicken fat. Or electricity, because we're fuel neutral. We don't make fuel. We make cars and a lot of the hate mail that I got from the EV1 fanatics was, "You rotten SOB, you killed the electric car because you're getting money from the oil companies." I said, "I am?" Well, the oil companies don't want you to do this and that. It's simply not true. We will use any fuel that's available. If batteries are a better fuel than anything else, we'll use it. But right now, I'm personally convinced that batteries are on the way to be a good source. A few years ago, I would have said you're nuts.
ABG: Given the emphasis on environmental issues and developing greener cars, this is sort of a tangential question. With Chrysler announcing an updated version of the Viper with 600 horsepower, is GM going to get into a horsepower race with Chrysler?
Lutz: Yeah, probably. Because you say, well, we're schizophrenic. Well, so's the American market, and you've got a portion of the American market that is extremely safety oriented. They say I don't want to hear about anything else except the number of airbags and 5 star rating. Then you've got a whole other part of the population that says 5 star, 5 star, I could care less. I'm not going to have an accident. If it'll give 550 horsepower and 3 second 0 to 60 times. Fuel – I don't use my sports car that much. I don't care if it gets 10 miles per gallon. On a monthly basis, I only use it in the summer on nice days, maybe throughout the whole year, it'll cost me an extra $100.00 in fuel. What do I care? And then you've got, I would say a growing portion of the population that is extremely environmentally conscious, very worried about dependence on foreign oil, very concerned about longer term fuel availability, and those people are a completely different category of customer. But we make a serious intellectual mistake when we oversimplify the situation and say the days of the big sport utilities are over. No, they're not. We're selling as many as we ever did. Now maybe Ford and Chrysler aren't, but we are. The days of the V-8 engine are over. No, they're not. Chrysler's selling more Hemis than they ever sold V-8s in their life, but at the same time it's true that the market is really fragmenting in terms of what people want, and since we try to sell between 4 and 4½ million vehicles a year in the United States, we can't really say, Well, we're not gonna serve you guys because we prefer to do V-8 engines or we're no longer going to serve you Camaro fanatics because we're gonna do everything with batteries or everything small car. What you pose is a very interesting question because a lot of times I do get asked, well are you guys schizophrenic? I mean, on the one hand you've got the Camaro here or the Corvette Z06, but then at the same time you're showing a battery operated vehicle. All I can say is different strokes for different folks, and we do what the market wants.
ABG: Thank you.