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Detroit Gets a Buzz From Electric Cars

Reuters
Sunday, 7 Jan 2007 | 11:39 PM ET

They're going electric in the Motor City -- well, maybe not just yet.

But it made for a nice "buzz" as the world auto industry gathered on Sunday at one of its premier events, the North American International Auto Show, with gas-electric hybrids and even "plug-in" electric cars all the rage.

It was almost enough to make one think, in the age of global warming worries and $60 per barrel oil, that the gasoline combustion engine was on the way out.

Japanese auto giant Toyota Motor, the leader in hybrids, said it expects to sell up to 300,000 of the environmentally friendly cars this year in the U.S., up from 191,000 in 2006. The models, mainly the wildly popular Prius but also now a few Camrys -- the top-selling car in America nine of the last ten years -- have only added to Toyota's luster with American consumers as the source of quality and innovation.

The reputation reached a new high at the end of 2006, with Toyota's U.S. vehicle sales passing Chrysler for the first time and knocking it out of the long-time Big Three -- General Motors, Ford and DaimlerChrysler's Chrysler Group.

Toyota now expects to pass Ford in the U.S. sales this year and also General Motors in global sales, ending GM's reign of more than 80 years as the world's top carmaker.

But GM may not be dead yet -- if electric shock treatments have anything to do with it. At the Detroit show, GM revived its once-failed idea of a mass-market electric car, unveiling a new "concept" car called the Volt designed to use little or no gasoline.

GM had killed an earlier model, the EV1, in 2003, drawing the ire of "greens" and brickbats in a 2006 film, "Who Killed the Electric Car?" But on Sunday GM executives said the Chevrolet Volt will draw power exclusively from a next-generation battery pack recharged by a small onboard
engine -- if the technology is ready in two or three years.

"We have a thoroughly studied concept," said Jon Lauckner, a GM vice president for product development. "It will create a buzz," said Mike Jackson, Chief Executive of AutoNation, the largest public auto dealership group. "A thing like Volt shocks people who say 'I really didn't expect this from General Motors.'"

Jackson said a product like Volt would also make consumers take a second look at other vehicles in GM's line-up. GM product chief Bob Lutz said critics would have to revise their thinking about GM's commitment to environmental concerns and U.S. dependence on oil
imports after seeing the Volt. "An electric vehicle coming from General Motors, I am shocked, truly shocked," Lutz told reporters at the show.

"The GM electric vehicle is an inconvenient truth," Lutz quipped, an allusion to former U.S. Vice President Al Gore's crusading film against global warming. "This is not a PR exercise or a pure show car," Lutz told reporters at the auto show. "This is a real program with real money behind it that is heading for production."

Reality Check

Such optimism abounded at embattled GM on the first day of the show after a year when it survived daunting threats of bankruptcy, sliding market share, soaring costs and sharp outside pressure from a big-money shareholder.

GM got an extra boost on Sunday when it swept the 2007 North American Car and Truck of the Year awards on Sunday, with top honors going to the new Aura produced by its Saturn division and the redesigned Chevrolet Silverado pickup.

The Aura beat out the other two finalists for the car award, the Honda Fit and the Toyota Camry. The Silverado bested the Ford Edge and the Mazda CX-7. The sweep represents the first time in the award's 14-year history that a single U.S. automaker has won both awards. Last year, Japan's Honda Motors won both.

But if hope springs eternal, reality awaits.

"Domestic manufacturers continue to close the quality gap, although consumer perception has lagged this process," bond rating agency Fitch said in its 2007 autos outlook last month.

Outside of pickups, Ford, GM and Chrysler will continue to suffer from product mix imbalances as they remain overexposed to the mid-size and and large SUV markets," Fitch said. "Demand in these segments continues to decline."

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