Whenever I'm asked what the future of the automobile and the automotive industry will be like, which is increasingly often, I always say the same thing. I quote Yogi Berra. The ultra-quotable American baseball legend once said, and quite rightly, I think: "It's tough to make predictions, especially about the future." And then, despite how tough it is, I will typically go on and try to answer the question anyway. So since NEWSWEEK asked, I'll bite. One thing is certain: the landscape of automotive transportation will be markedly different decades from now than it is today. You won't even recognize it. And the key components driving the differences are proportion and propulsion.
I'll start with proportion, because that is the theme of this issue, "Small Is Big." But I'm not going to join the chorus of voices shouting that small cars are taking over the world. Most surely, the market for small cars is growing globally, because of fuel prices, congested urban driving and the advent of automobiles in mass quantities in developing countries, what the industry calls "opportunity markets."
The truth is that a dichotomy is developing in the global small-car market. In developed, mature markets such as Europe, Japan, Australia and North America, customers expect and will pay a premium for a certain level of safety, efficiency, emission control and technological sophistication in their vehicles, even the smallest ones. The market demands features like multiple airbags, antilock braking systems, traction control, entertainment and power everything.
In other parts of the world, including markets where some people are buying cars for the first time, a different type of small car is developed, one lacking many of those aforementioned features. And that explains the very low costs of some of these vehicles.
To be successful, a company has to be prepared to address both types of market, and at GM we are. Our partners around the world such as Wuling in China, and our own global brands like Chevrolet, will help us do just that. We plan to compete aggressively in the brave new small car world.
But that doesn't mean there will be a small-car craze that will envelop a market like the United States. Certainly, impending Corporate Average Fuel Economy (CAFE) regulatory changes will affect the composition of the U.S. fleet. I'm a believer, however, in research that suggests the U.S. fleet won't come to resemble what's on European roads until fuel prices climb well above $10 per gallon. Until then, there will be a place for all types of vehicles in the market, even as the volumes change.
People still have a need for trucks in America and, to a lesser extent, elsewhere. People still buy them for work. People still want them to haul boats and horse trailers. Not everyone is suddenly going to switch to very small cars, or tiny little pickup trucks, unless they suddenly decide to haul tiny little horse trailers carrying tiny little horses.
And there will still be a desire for high-performance vehicles like the Chevrolet Corvette ZR1. The global automotive market is a big place, after all. There is and will be room for green and mean. Just because a grocery store is greatly expanding its line of organically grown vegetables, that doesn't mean it shuts down the meat counter.
Another area that this grocery store will be expanding in the future is the battery aisle. That's where propulsion comes in.
I am quoted in these pages saying, "The electrification of the automobile is inevitable." I stand by that, and believe it more every day. Regardless of global location, the ultimate goal is to have vehicles that do not use petroleum, for a number of reasons, including energy independence, energy security, energy efficiency and emissions concerns.
That's why at GM we're pouring engineering resources into developing our E-Flex system, which will underpin a generation of electrically driven vehicles like the Chevrolet Volt. The Volt is not a hybrid. It's an extended-range electric vehicle. Hybrids have an internal-combustion engine driving the wheels, aided by an electric motor. The Volt's wheels are driven by electricity, solely. An internal-combustion engine is there only to help recharge battery power if necessary. And that secondary source of energy could be powered by anything—petroleum, E85 ethanol, diesel, biodiesel or even a hydrogen fuel cell. All our future extended-range electric vehicles will be driven by electricity.
This system allows a driver to travel 65 kilometers on electric power alone. And given that 78 percent of people in North America have a daily commute that's 65 kilometers or less, and the percentage is even higher in other parts of the world, all those people could drive a car like the Volt to and from work every day without ever using a drop of gasoline.
When the lithium-ion-battery technology required for this system is ready—and we have agreements in place with battery partners to speed development—we will bring this vehicle to market. We'll be testing running prototypes this summer. And then you're going to see, gradually but emphatically, this vision of the future of the automobile turn into the present.
Lutz is General Motors’ vice chairman of global product development.