TORONTO AND WASHINGTON -- Mark LaNeve, chief salesman for General Motors Corp., strode to the microphone in Detroit in January and pointed to his company's newest green vehicle. It was, of all things, a Hummer, one powered by biofuels, a feature that would be available on all Hummer models by 2010.
Engines were being downsized, too, with the first Hummer powered by a V6 engine on its way, Mr. LaNeve told an assembled throng at the North American International Auto Show.
"It does make sense," he declared. Less than five months later, that incremental step of making more fuel-efficient Hummers became a full-fledged retreat.
GM decided that the symbol of conspicuous gas consumption no longer made sense. It will be sold off, killed off or remade into a home for smaller vehicles.
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Smaller Hummers? No Hummers? What's hit GM? A tsunami of high oil prices and sales of pickup trucks and sport utility vehicles falling off a cliff, and the realization that getting back in the black for a sustained period means going green.
GM and its Detroit rivals, Ford Motor Co. and Chrysler LLC, are entering uncharted waters on their way to a new world. It is possible - perhaps even probable - that one or two of them will not survive.
Going green is going to take more than a change in mindset. That, in itself, was monumental for GM, but it will likely end up being the easy part. Going green can save the Detroit Three only if they can quickly change their business model to one that generates profits from the sale of cars, instead of trucks and SUVs. And even then, only if they can develop the right environmental technologies that drivers - and North American governments - are demanding in an era of expensive gasoline.
Of course, even if they do all that right, they'll still face Toyota and Honda on the other side, ready to steal even more market share. In fact, their Japanese rivals have already pulled ahead in the race to go green.
Unfortunately, the Detroit Three seem to take decisive action only when a gun is pointed at their heads.
"Sometimes the gun is at their temple and it takes three or four homicidal events for them to move," a former GM executive quips.
Gasoline at $4 (U.S.) a gallon looks like the gun that is prompting them to try to save themselves. Whether they will won't be known for several years.
High-risk gambles
The immediate concern is energizing companies that move at a glacial pace to respond more quickly to consumers who have reacted to gas prices - at lightning speed, in recent months - by abandoning the pickup trucks and sport utility vehicles that the companies have relied on for more than a decade to generate profits.
It involves quick thinking now, but it also demands a longer-term strategy that starts looking beyond oil, says GM's major green visionary.
Larry Burns, GM's vice-president of research and development, summed it up like this in a recent interview with The Globe and Mail: "I think the issue is the auto industry and our world's dependence on petroleum as a single commodity for automotive energy."
One of the daunting challenges facing GM and its rivals is that they must lay down several expensive bets at the same time. One wager is already being played out - hybrids. Another growing quickly is the use of ethanol and other biofuels as a replacement for gasoline.
Then there are the really high-risk gambles. There are so-called plug-in hybrids, also known as extended-range electric vehicles, and, finally, the technology that is ultimately the holy grail to wean the industry off gasoline - hydrogen-powered fuel cells.
Development of hybrids, plug-ins and fuel cells by GM and global rivals such as Toyota are part of a race against the clock to transform the industry to meet new U.S. fuel economy standards set to take effect in 2017. With the surge in U.S. gasoline prices to around $4 a gallon, this now has also become a race to satisfy consumers who demand more fuel-efficient vehicles, but are not willing to drive subcompacts.
This is perhaps the most expensive proposition Detroit has ever faced. There are estimates that the total bill may come to more than $100-billion. That's an enormous tab for a healthy sector, never mind for three struggling companies.
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