By on September 18, 2008

GM has a long history of offering second rate products that are “nearly as good” as the industry standard, and then telling people to buy them because they’re made in America. The CTS may not be the best RWD sedan on the market, but it’s made in America. The Aveo falls flat compared to say, the Fit, but dammit, you love your country, right? Needless to say, the Volt’s “made in  America” badge is going to be a big selling point as GM searches for those willing to justify dropping $40k on the EREV. Well, the WaPo (a nest of America haters if ever there was one) reports that GM’s Rick Wagoner “refuses to promise” that Volt batteries would be built stateside. “As we sit here today I can’t give you a guarantee that it will be made in the U.S.,” Wagoner said. “If we want to get the Volt in the market, as we do by the end of 2010, we’ve got to make some relatively near-term decisions about how we are going to do all that.” But wait, isn’t the proposed bailout (which will certainly benefit Volt production) supposed to address America’s emerging dependence on foreign batteries? Didn’t Chrysler’s Jim Press frame the bailout in those very terms just a short week ago, saying “right now, the major sources of batteries are other countries. So are we trading our dependence on foreign oil, which is a natural resource, for a dependence on other countries to produce something in a factory? We need to stimulate that development here — here in Michigan.”? By putting the hype before the cars, Detroit is either damnably stupid or wickedly cunning. There’s no doubt that there’ll be some egg on GM’s face for increasing our dependence on foreign batteries, but once they actually build the cars (with help from Uncle Sam) they can bring back the battery independence talking point. Then it will be time for bailout round 2.

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20 Comments on “Volt Birth Watch 96: Energy Independence...”


  • avatar
    faster_than_rabbit

    There’s no doubt that there’ll be some egg on GM’s face for increasing our dependence on foreign batteries

    Nobody will notice unless they explicitly sell the car with a patriotic theme. If they do that, there will be considerable analysis and controversy.

  • avatar
    mdf

    increasing our dependence on foreign batteries

    The more I hear it, the more ridiculous this “foreign battery dependence” stuff sounds.

    The battery is bought. Right now, foreign, because current US Li sources are not economical to develop. But let’s say they will _never_ be economical.

    The battery is then used and abused.

    Then it is recycled. Why not? You’ve already bought the lithium (see above).

    Over time, given a lithium core to energy storage, the USA will develop a titanic pile of the stuff. All yours, to do with as you see fit.

    Only gotta buy it once.

    Now try recycling the burned oil.

    If only.

  • avatar
    tommy!

    faster_than_rabbit: Nobody will notice unless they explicitly sell the car with a patriotic theme. If they do that, there will be considerable analysis and controversy.

    Or… no one will care. Chevy touts itself as “America’s brand” yet it pimps the Aveo (South Korea) and Malibu (German), to name the most obvious. And Saturn begged us (sorta) to “Rethink American” with its West German All-stars. Does that matter? Does the public know (or care)?

    The dependence on foreign components only highlights the question marks and what-if’s that seem to be built into the foundation of GM’s lineup.

    2010 can’t come soon enough, now can it?

  • avatar
    psarhjinian

    I’m reminded of George C. Scott’s character in Dr. Strangelove.

    “We must not allow a mine shaft gap!”

  • avatar
    Edward Niedermeyer

    Nobody will notice unless they explicitly sell the car with a patriotic theme. If they do that, there will be considerable analysis and controversy.

    C’mon faster_than… you don’t really expect them not to, do ya?

  • avatar
    Edward Niedermeyer

    http://www.youtube.com/watch?v=R_J2Jx51XZs

    http://www.youtube.com/watch?v=I0yedpD8YH8

    Just sayin’…

  • avatar
    Geotpf

    I don’t think it will matter much, unless they go all “American Revolution” on us. I mean, the Prius is made in Japan and nobody (other than a few UAW reps) gives a shit, right?

  • avatar

    As an aside, I learned through CNBC that GM is suspeding production of the Chevy Traverse. I’m just throwing that out, I didn’t catch details. B&B, I leave it to you guys to fill out the details.

  • avatar
    Redbarchetta

    Chrysler’s Jim Press frame the bailout in those very terms just a short week ago, saying “right now, the major sources of batteries are other countries. So are we trading our dependence on foreign oil, which is a natural resource, for a dependence on other countries to produce something in a factory? We need to stimulate that development here — here in Michigan.”?

    That really came from the guy who works for the company working to outsource every aspect of their business to other countries. And wont the EV be coming from Nissan, you know from Japan. Are they goingot to a Tesla and just put the batteries and tiny motor in in Michigan and call them American made. Jim Press is seriously an idiot, I’m starting to wonder about Toyota for keeping him around for 30 years.

    If we are not going to be dependant on foreign factories does that mean Ford and GM are going to stop bringing parts, engines, transmissions and whole cars from Mexico, South Africa, Koreo, Japan, Australia, Belgium and China! I’ll let Canada slide on that one.

  • avatar
    frizzlefry

    The prius is made in Japan. But, as I learned from Top Gear, the materials are mined in Canada, transported to China via air freight where the battery is made and then the battery is back on a jet and flown to Japan where the car is then put together. So the Prius is not a made in Japan solution really…like japan really cares though.

  • avatar
    Steve_S

    Well if you can’t get what you need in the US because the US battery manufacturers can’t cut the mustard what is GM supposed to do?

  • avatar
    joeaverage

    Use NiMH batteries instead? At least it would be a Canadian solution…

    Oh, that’s right. Chevron won’t let anybody build batteries like that…

  • avatar
    Landcrusher

    Joe,

    We already have a Canadian solution – oil.

    If you cut off every non-NAFTA source, we would likely be just fine. It would hurt, but it wouldn’t be a show stopper.

  • avatar
    mdf

    Landcrusher: If you cut off every non-NAFTA source, we would likely be just fine. It would hurt, but it wouldn’t be a show stopper.

    Current US imports are about 2/3rd of consumption. non-NAFTA (presumably, everything except Canada and Mexico) is about 2/3rd of that, or about 40% of consumption.

    What would happen is an instant, and dramatic, price increase in the USA for oil … and a decrease everywhere else.

    Would the average American be able to tolerate the fact he would be paying much more or gas, while everyone else pays less?

    This kind of thing would breed arbitrageurs like cockroaches. Gas stations within 10-50km of the borders would be out of of business, since everyone would just drive into Canada for fuel.

    More importantly, not even OPEC could sustain their supply-side 1973/1974 embargo in the end; the likelihood the USA could impose one on themselves is almost as laughable as the idea they can drill themselves into oil independence, or even significant price control.

    Advice: work on some energy efficiency options first. NiMH batteried hybrids sound reasonable. Lithium-ion PHEV’s are another. Canada has lots of nickel, you already have plenty of lithium.

  • avatar
    Landcrusher

    mdf,

    sorry, but your scenario is just wrong.

    Why would prices in Canada not rise along with those of the US?

    Why would prices around the world suddenly drop?

    Perhaps you need to think about how the cutoff might occur, and then think about the oil market.

  • avatar
    oldyak

    once again….lets BASH them before we see what the final product is.
    That takes a lot of guts!!!

  • avatar
    mdf

    Landcrusher: Why would prices in Canada not rise along with those of the US? [and so on]

    In order to keep Canada and Mexico from selling their oil elsewhere — the USA would need every last drop of it — the US would have to offer more money to them.

    How much more? Looking at various numbers (with various dates), the US currently imports ~12 Mbpd, Canada and Mexico (combined) produce about ~7 Mbpd. So when a “NAFTA oil only” rule is imposed, the US would be left with a ~5 Mbpd supply crunch.

    To get this kind of drop on the current world market, with the US consuming 1/4 of it, global oil production would have to drop by 20 Mbpd, or a quarter.

    Can you imagine it?

    Now Canada and Mexico, thinking the USA had gone completely batpooh nuts, would be happy to oblige — actually they would insist! Who wouldn’t? Captive market!

    Naturally, neither of these countries would be laboring under stupid “NAFTA oil only” rules, so they would simply buy their own domestic needs elsewhere, for a lot less.

    How much less? The 5Mbpd drop in supply to the US would appear to the outside world as a sudden glut of oil of the same magnitude.

    What would be the price of oil on Monday if Saudi Arabia suddenly announced it could increase production, empty tankers are waiting, by 5 million barrels per day?

    Anyways, an interesting experiment in economic insanity; I doubt it could be sustained for any period of time. Certainly not long enough for the inside-US/outside-US price of oil to equilibrate. Airlines would take their planes and flee, probably to Canada and Mexico. Arbitrageurs would start smuggling inexpensive non-NAFTA oil into the US via Mexico and Canada, the nasty dependency reasserting itself. Citizens with AR-50’s would be actively hunting the politicians and regulators which created the situation. A kind of Prohibition, but raised to the N’th power. The usual unique American drama.

    Perhaps you need to think about how the cutoff might occur, and then think about the oil market.

    Well, remember that this is your idea, so I’m not really inclined to conjure various ways “how the cutoff might occur”. I’m not even sure if how it occurs would be especially important.

    Mind you, if the USA could cut its oil imports comfortably by 5 Mbpd, that would go a huge way to its oil independence. I think efficiency and alternative sources would be the easiest, fastest and safest route. Future-proof one too.

  • avatar
    Landcrusher

    mdf,

    You miss understood my whole point. I was not suggesting a NAFTA oil only rule. I was pointing out that if we were unable to get oil from other sources for whatever reason, we could actually run our country just fine on NAFTA oil.

    All your scenarios are still backwards.

    I think it is safe to assume that Canada and Mexico would continue to sell us oil at the prevailing world price so long as they were producing it.

  • avatar
    mdf

    Landcrusher: I was not suggesting a NAFTA oil only rule. I was pointing out that if we were unable to get oil from other sources for whatever reason, we could actually run our country just fine on NAFTA oil.

    If I misunderstood, then here is why: I don’t see a difference between “NAFTA only oil rule” and “unable to get oil from other sources for whatever reason”.

    I think it is safe to assume that Canada and Mexico would continue to sell us oil at the prevailing world price so long as they were producing it.

    In a normal, competitive, market the producer will sell to the consumer offering the higher price. If prices are, “for whatever reason” higher in the USA, then that’s the price the USA will be be paying.

    Would the price of oil in the USA would remain the same as the rest of the world if ~5 Mbpd of its supply disappeared? Until demand came down to meet the supply, I don’t think so.

  • avatar
    Landcrusher

    Here is the difference, on one hand, the US could declare that we won’t buy outside oil. In this event, it would be possible for prices in the US to go up substantially beyond the world price. There really isn’t any other reason for that to happen. None.

    It doesn’t matter whose supply dissappears, that supply comes out of the world market. Thus, the world price changes. Everyone who is am importer pays approximately the same price if they don’t have some sort of contract agreed to in advance. Those contracts have ways of working in favor of the supplier though, so if they get too out of whack, they end up getting renegotiated by negotiators or generals.


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