Why Is GM Trying To Develop An Unproven Technology. Lithium, While Its Chief Rival Ramps Up Production Of A Proven Technology That GM Was The First To See And Rejected, Nickel Metal Hydride?

Implications: General Motors may not actually have a plan to compete with Toyota in the hybrid market. General Motors engineering and purchasing was disastrously shortsighted in the late 1990s and early 2000s, and its product planning group remains so even now. All of GM's product planning and sourcing errors were made under the rule of Rick Wagoner. GM's board of directors either doesn't understand carmaking or fears for its own reputation and job, or that it has no one to turn to,  if it now jettisons Wagoner and his team. GM is thus doomed to fail and the money being wasted chasing the short term lithium rainbow is just accelerating GM's demise.

Analysis: It seems odd that GM has invested between one and two billion of its dwindling store of dollars to develop a car that has hardly any market.

In fact this only makes sense when you realize that GM cannot admit that it first rejected and then was unable to develop for mass production the nickel metal hydride battery that is the core component of the wildly successful Toyota Prius hybrid.

The very profitable oil company, Chevron, has, without anyone even noticing simply decided to write off its 350 million dollar investment in developing a mass produced nickel metal hydride battery with Energy Conversion Devices, Inc., the company that originally invented the nickel metal hydride battery. Fittingly the now moribund Cobasys was forced to recall its entire 2007 model year production run of NiMH batteries produced for GM, which had to recall all of its 2007 hybrids on account of a failure by Cobasys to choose the correct plastic for the body of the battery. The plastic cracked and the electrolyte leaked from the batteries causing them to fail catastrophically.

This Chevron pullout and Cobasys failure advertises GM's inability to manage a program to produce batteries that another company, a licensee originally of the battery technology, Toyota is now not only able to produce at the rate of 1,000 a day, seven days a week, but is also ramping up the production of which to 3,000  a day to try and meet the growing demand for its NiMH utilizing Prius hybrid, which gets between 45 and 50 miles to the gallon.

We are supposed to believe that GM is working on the next generation of hybrids, which will utilize a not now existing lithium battery to power a hybrid which will use an onboard gasoline engine only as a generator and back up battery charger. We are supposed to believe that this car will have a range on a fully charged battery of 40 miles and that it will be able to be recharged from a household outlet and that this somehow makes it superior to the Toyota NiMH Prius with its 500 miles range and 825 lb cargo capacity. The Volt, by the way, will sell for nearly twice as much as the Prius.

At the same time we are also supposed to believe that the so far unchosen lithium battery technology will have a lifetime of 150,000 miles and ten years even though no such testing has even yet begun. In the mean time the NiMH batteries delivered by Toyota have a lifetime originally guaranteed for 8 years and 80,000 miles, but in fact have now routinely exceeded that lifetime and that range.

Honda like Toyota is now introducing NiMH using hybrid cars which it advertises will sell for less than the Toyota Prius and have the same or better performance, range, and lifetime.

Honda and Toyota have both opted to continue research on and limited production of lithium batteries but both state that such batteries are not ready for mass production.

Neither Honda nor Toyota feels that the lithium based plug-in hybrid with a 40 mile range on a full charge, upon which GM is betting its future, is more than a niche product.

GM mismanaged its oversight of Cobasys and allowed Chevron to waste 350 million dollars to develop nothing. Now we are told that GM may buy out both Chevron and Energy Conversion from Cobasys and use the company to quality control the lithium batteries GM is receiving in ones and twos from its so-called suppliers, research laboratories with pilot production like A123 or development labs of large makers of small lithium batteries for laptops and entertainment devices like SAFT.  It sounds like the kind of joke Jay Leno would tell.

Energy Conversion Devices' revenues from its patents for NiMH batteries come from the process patent it holds for any use of NiMH batteries for vehicles, not from the technology, in which it long ago lost its position. Energy Conversion Devices, in fact, is now a solar panel producer only and no longer works on NiMH batteries.

GM's NiMH battery producer, Cobasys, like GM, was an engineering failure due to mismanagement. Toyota and now Honda have both made the NiMH battery the core component for a successful hybrid system and are expanding their production of batteries and hybrids. the only constraint either of them have is the limited amounts of rare earths available.

General Motors only constraint on competing with Toyota and Honda is that it does not have the ability to produce NiMH batteries or the ability to purchase the critical raw materials for others to make them for it. Therefore GM has chosen to use its considerable lack of judgement to go down a blind alley towards a halo car, the Chevrolet Volt, which even if it were to be delivered on time and perform as advertised would be constrained by the fact that no one could predict how long it would work. Ford has even figured this out and is staying away from playing follow the leader.

The NiMH hybrid may never, due to raw material limitations, exceed 10% of the US market or 3% of the global market but every one manufactured will be sold at a profit by a Japanese (or Chinese) car company.

If and when a lithium battery is developed that meets the safety, reliability, and longevity requirements that it must have then that battery will be used to make and sell Japanese, Korean, and Chinese cars, because only the car companies in those countries have the capability to survive long enough for such cars to come into mass production.