Green Tech

Updated at 12:20 p.m. PDT with information from president's auto industry task force report on GM.

Following a review of the ailing U.S. automakers, the Obama administration has ousted General Motors CEO Rick Wagoner and has withheld more loans to Chrysler, according to reports.

On Monday, General Motors put out a statement that Wagoner was asked to "step aside" as CEO of GM. Chief Operating Officer Frederick "Fritz" Henderson is now CEO, and changes to GM's board of directors are expected.

(Credit: Martin LaMonica/CNET)

The restructuring plan for GM has four elements: sustainable profit, healthy balance sheet, more aggressive operational restructuring, and technology leadership, according to the GMBlogs Twitter account, which is run by GM communications professionals.

Obama administration officials are expected to provide an update on the auto industry rescue plan on Monday but are demanding concessions before releasing any of the $21.6 billion that GM and Chrysler are requesting in additional loans, according to an article in the The Wall Street Journal.

The federal government could recommend that GM enter into bankruptcy, according to the article. Chrysler is considered more precarious financially: $6 billion in additional loans are contingent on the automaker forging an alliance with Fiat in 30 days.

For GM, it's not clear how a more dramatic restructuring program will influence the company's technology development programs, including investments in fuel-efficient cars and plug-in electric vehicles.

At a recent briefing on GM's Chevy Volt electric sedan, executives said the program continues to be on track and that the company continues to devote resources to it.

The Chevy Volt, which runs 40 miles on a battery pack and draws on a gasoline engine for longer trips, is still scheduled for delivery in late 2010. But the sedan will have lots of competition from an anticipated wave of all-electric and gas-electric sedans coming from large automakers and start-ups in the next two years.

In its assessment of GM, the president's auto industry task force said that the company was at least one generation behind Toyota in "green" powertrain development.

"In an attempt to leapfrog Toyota, GM has devoted significant resources to the Chevy Volt. While the Volt holds promise, it is currently projected to be much more expensive than its gasoline-fueled peers and will likely need substantial reductions in manufacturing cost in order to become commercially viable," according to the report. (Click for PDF).

The report also concluded that GM relies too heavily on high-margin SUV and truck sales and that the company is more vulnerable than competitors to increases in the CAFE fleet fuel-efficiency standards.

"Many of its products fail to meet the minimum threshold on fuel economy and rank in the bottom quartile of fuel economy achievement," according to the report.

A federal assistance package to forestall a deeper financial crisis at U.S. auto giants ran out of gas in the Senate late on Thursday, giving the stock market a downward shock.

After passing the House and getting White House agreement, the Senate failed to get the 60 necessary votes to continue debate on the auto rescue bill.

General Motors and Chrysler, which have said they need billions of dollars in federal aid to continue operations, released statements saying they were disappointed with the Senate's vote. Ford lobbied for the aid because it said it would suffer damage from the failure of the other large manufacturers or suppliers. All are suffering from a sharp drop in sales.

Automakers are expected to lobby the White House to tap the Troubled Asset Relief Program (TARP) emergency aid, which was established to shore up U.S. financial institutions.

The talks in the Senate broke down at the last minute over Republican Senators' insistence to have labor rates put on "parity pay" with non-labor employees at foreign car makers, according to reports.

"We are about three words away from a deal," said Senator Bob Corker, who had proposed that wages be brought in line in 2009.

Impact on tech investment?
Apart from questions over the size of the loans and oversight, U.S. automakers were expected to invest in technologies to improve fuel efficiency, such as plug-in electric cars.

In its business plan presented to Congress, GM pledged to "substantially change its product mix over the next four years, and launch predominately high-mileage, energy-efficient cars and crossovers."

It also said that GM's car fleet efficiency would be 37.3 miles per gallon by 2012--apparently higher than the mandated standards--and would invest heavily in electric car powertrains.

Similarly, Ford said that it would accelerate delivery of a line of battery-powered cars.

The failure of the deal now raises the possibility of financial breakdown at GM and Chrysler, which have said that they need "bridge loans" to get through the end of the year.

Public opinion, meanwhile, shows wariness of any financial assistance to the auto companies. A poll from the nonpartisan Pew Research Center found that only 39 percent of people surveyed said that it would be right to spend billions to keep the Big Three in business, according to news reports.

Some economist have argued that allowing the auto companies to collapse would cause far greater economic damage than the size of the bailout.

President-elect Barack Obama on Saturday said that building energy efficiency is central to his administration's economic recovery plan and outlined the conditions he intends to impose on ailing U.S. automakers.

In his weekly radio address, which is broadcast on YouTube, Obama laid out the planks a government-led spending program meant to revitalize the U.S. economy and create jobs.

"First, we will launch a massive effort to make public buildings more energy-efficient. Our government now pays the highest energy bill in the world. We need to change that. We need to upgrade our federal buildings by replacing old heating systems and installing efficient light bulbs," he said in his radio address.

He also pledged to make federal money available to rebuild roads, upgrade schools to be energy efficient, and expand broadband access to schoolchildren.

The energy plan is expected to include a commitment to upgrade the electricity distribution infrastructure. By equipping the grid with communications network--the essence of smart grid technology--utilities can run the power grid more efficiently and consumers can get information to help lower energy usage.

An aide told the The New York Times that the green collar portion of the stimulus plan could be $100 billion over two years.

Following his radio address, Obama taped an interview which aired on Sunday's edition of Meet the Press.

In response to questions about the plight of U.S. automakers, Obama said that he does not want to allow the financially strapped corporations to collapse because they are the backbone of the manufacturing industry.

However, he said that any federal assistance will come at the price of "significant adjustments from all their stakeholders." He said his advisers are devising ways to keep automakers "feet to the fire," as a bankruptcy court does, to reflect the urgency of change.

"You have seen some progress made incrementally in many of these companies...They are making some investments in the kind of green technologies and new batteries that will let them make plug-in hybrids," Obama said. "What we haven't seen is the sense of urgency and willingness to make tough decisions."

Ford Motor made electric vehicles a centerpiece of a turnaround plan presented to Congress on Tuesday, saying that it will introduce an all-electric van for fleet use in 2010 and a sedan in 2011.

The Big Three U.S. automakers are scheduled to return to Washington, D.C., this week with the hopes of negotiating loans to forestall a collapse from lack of cash.

All three companies are seeing a continued dip in sales, but Ford is considered far better off financially than General Motors and Chrysler. Ford on Tuesday said it could be cash-flow positive from operations by 2011, but it is still requesting up to $9 billion in loans, which CEO Alan Mulally said will act as a "critical backstop or safeguard against worsening conditions, as we drive transformational change in our company."

The business plan lists cost reductions--including plant closings and the sale of its much-criticized corporate aircraft--and investments in smaller, fuel-efficient cars and a line of electric vehicles.

Its product plans calls for:

• A commitment to improve fuel efficiency across its fleet: 14 percent for 2009, 26 percent for 2012, and 36 percent for 2015--all compared with 2005 overall fleet mileage.

• At the North American International Auto Show, Ford will discuss its "vehicle electrification plan." That will include a family of hybrids, plug-in hybrids, and all-electric, or "battery electric," vehicles scheduled to debut in 2012.

Its first product will be a van-type vehicle for commercial fleets in 2010 and a sedan in 2011 with a goal of making battery-powered cars cost-effective. The cost of batteries make plug-in hybrid or all-electric vehicles significantly more expensive than gasoline engine cars.

Ford said that it will work with unnamed battery and electric-vehicle powertrain providers to bring its electric cars to market.

The company said that it intends to invest $14 billion in efficiency and it will introduce in cars its EcoBoost technology, which it unveiled at last year's North American International Auto Show.

The company also said that it is exploring the sale of its Volvo car division.