20 April 1998

Jon Bereisa, General Motors Corp. Director, General Motors Global Alternative Propulsion Centre

Talking to The Millennium Debate

General Motors is known in the UK as Vauxhall. Also, we have an activity known as the General Motors Global Alternative Propulsion Centre. That is the organisation I represent, and I am the director there of technology assessment acquisition.

To start with fuel cells, why even be interested? They do offer up to twice the efficiency of fuel usage, and with the more efficient usage of fuel you do get another benefit – in this case up to one half or even less of carbon dioxide emissions, in other words greenhouse gas. And also with this particular technology – the traditional emissions that we associate with today’s internal combustion engines, of the so-called tail-pipe – essentially there are trace amounts if we reform the fuel on board. In other words, take the fuel on board and make hydrogen. If we were to go directly to hydrogen, then there would be no emissions whatsoever, other than heat and water – drinkable water – that comes out of the tail-pipe.

So it has a lot of attractive features: from efficiency; from emissions; just from the amount of natural resources required to run a vehicle from point A to point B.

Fundamentally, if you look at electric vehicles – which is also where General Motors is very much a leader in introducing, in 1996, the first modern electric vehicle so far in the United States market – the electric traction enables you to use the output of a fuel cell, which is electricity, and basically turn the wheels with it; but now with the addition of a fuel cell it is ultimately set upon the pathway to a hydrogen economy, and sooner or later we’re going to get there. General Motor’s position is that, to be a major auto company and to thrive and prosper in the 21st century, you cannot just rely on the internal combustion engine technology alone.

How close is GM to producing a car that we can go out and buy?

I will give you just off the top of the head comparisons. We consider that when the technology works, you have to make it commercially viable. By that I mean you have to get the costs down; you have to make the vehicle – the product – affordable. And that is not enough, even if it works technically – technical feasibility that is. If you have commercial viability, it is at a price, and performs on a ratio that "I think I want one". Then the third piece has to come into place, and that is the whole infrastructure, fuel availability, and fuel price. Can I find the fuel? Is it easy to find? And, is it an attractive price, with attractive taxing, on top of that price? All three of those have to be in place.

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The original gasolene automobile, to reach over 25% of the population in the US, took over 56 years. I think electricity was something like forty, fifty years; the microwave shockingly took some 18 or 20 years to get up to 25% of the population. Even the web you have here, that your site is on, to reach 25% of the US population looks like about seven years, and a PC itself was even more than double that, some fourteen years. So we intend to have a production-ready design for a 2004 time frame, but all of those three pieces have to be there, especially the pacing infrastructure. So having it available and having it widespread are two different questions.

So is government help needed?

Government already has helped, in a way, at least in the United States. We have had quite a few programmes jointly with the Department of Energy, a Government agency in the US, and basically they provided funds, and then we provide matching funds. In addition to that, about nine years ago we had researial relationships between big companies such as GM, and the US Government had changed. We even had laws up to that time for anti-trust reasons, that prevented us from co-operating company to company and company to Government.

Basically, the Federal Government modified its position and its legal statutes so it would allow an entity called US Car to exist, which basically is an umbrella set of rules and procedures which GM, Ford, Chrysler and the Government can collaborate in, as collaborators to develop new technologies. Inside of that, there are some thirteen, fourteen consortia from advanced batteries for electric vehicles to how do you make vehicles light and yet safe and strong. And it is this history of collaboration that has been very positive, and in fact some of the early fuel cell work was teamed with the Department of Energy, as an enabler. Those have been extremely beneficial.

Furthermore, tax incentives, in other words not additional taxes but rebates of existing taxes at the Federal level and at the state level and local level, are very beneficial. An electric vehicle, for example, between the Federal and the State of California, and the South Coast Air quality District, within the Los Angeles environment region, has up to some $9,000 to help early adopters of technology afford the beginnings of the new market.

What does not work with the Government is to mandate certain production of a certain quality at a certain date. You know, you can pass a law that will force companies such as GM and other auto companies to produce a product, but there is no way you can mandate that a customer is going to go ahead and buy one. So there’s a big difference between incentives and mandates. We know that mandates don’t work and incentives do.

You also cannot rely on incentives for ever. There is our technology to co-develop the perennial R & D, and it is up to the infrastructure energy companies. It is up to the auto companies to basically bring it the rest of the way to the market place. That again means there has got to be customer value. We cannot give you something that is green, yet is not affordable. And we cannot give you something affordable but not very drivable, even if it is nice, clean and green. You still want to feel good, safe and secure in your vehicle when travelling.

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Can we put things into perspective in terms of investment. Anything up to $500 million can be invested into the development of a new (conventional) model. What kind of investment would go into the development of a fuel cell car?

Well, I will give you a perspective.The kind of investment you mention is not appropriate. Sometimes it is even double or triple that for an existing technology, new, and radically new, model or design. That is not an unusual number. There is technology development and there is tooling and everything for the new plant, and you know, you have got to make the new parts. Now that is the stuff we know how to do. There is a precursor ahead of that, of about equal magnitude, that says we will make the technology feasible, and then let’s work on it some more, through innovative design processes, before we even attempt any market-place introduction – to keep redesigning it, to get the the simplicity and to get the costs down. You can have those kinds of numbers of millions and many hundreds of millions, without revealing exact numbers, for competitive reasons. It is a big stakes game. In fact that is why you find government support being very helpful. In the United States a consortia between the Government and the auto and electric utility partners there is a $306 million investment, and that is for just one car part, the battery.

I will give you some historic perspective, and again just from GM standpoint. When we started becoming aware of emissions and economy, we basically had the oil crisis problems. We had the Arab oil embargo's. We finally appointed a GM senior scientist, and figured out how smog works in LA. And when we started that - let’s call it the late 60s, early 70s, all the way through now, till 1998 - 99% of the emissions have been removed. In other words we have got a hundred part better clean-up, and we are still trying to cut those down by a factor of four, maybe two to four. Add to the conventional technology that we’re driving in the streets today, and the fuel economy has almost tripled.

It is not unusual to find a high performance vehicle like a Chevrolet Caravette, you drive it on the highway and it achieves 28 miles per gallon. And add to that electronics and engine controls and microprocessors. In1981 GM put that across every one of its gasolene engines, 3.4 million of them that year. That was a pretty big gamble, it is called "bet the company", because if it did not work, we would have. We would have had nothing to sell. Then right behind that, in about 1986, we had to keep them running, keep them serviced, as vehicles they were better, with stainless steel exhausts, better tyres, they lasted longer. We have engines today that don’t require tuning for 100,000 miles, but when they need something, we had to also invent because they did not exist: computer diagnostic equipment, and modern service networks. We did that, starting in 1986, and across all our dealers world-wide by 1990.

And then we set the early stage, the very first stage, with the shift to alternative fuels with development of the electric traction drive. In other words, the motor power semi-conductor computers, that electrically spin the wheels of an automobile. We launched that into selected markets in the California zone in 1996 – that is known as the General Motors EV1. And of course once we did that, we started working for the electric traction. As I pointed out, that is the enabler to fuel cells or hybrid vehicles. If you can solve the electric traction economically, and feasibility and drivability and affordable for the customer, you have at least got the first big problem solved easily. And that is where the fuel cell is a logical extension on top of that.

Do you rely upon there being a demand in the market place before you go into production?

This is not actually a case of people beating you over the head for a clean and green product. I wish it were the case. Maybe it would be easier for us to make a separation of one feature of the vehicle versus another. What we do have is an abundance of petroleum-based fuels – in the US in particular – which you can still buy for less than a dollar a US gallon. And people do want their air clean.

Every time we run a survey, and every time we go to a focus group, they want the green product, but they want it to perform as good or better. They want it to be priced the same, if not lower. They want the concept of value, in other words, just to pay for it to be green, that is the other guy’s job - "it ain’t my job to pay for it with my wallet". I am not saying that people are callous, they are not, but also you cannot ask them to pay double the price, or even 20% more than a comparable product. We have this concept, in fact one of our vice-presidents coined it, it is called "economic gravity". And like it or not, you have to develop products with the right kind of features and with the right kind of performance. In this case with the right amount of green, at a good price. And customers know that. They shop with calculators. They use hand-held calculators in focus groups; they run their own assessment of what they would be willing to pay and why. And so, is there a clamour out there? No. Does anyone say they do not want it? Absolutely not.

Make no mistake about it. People know the value of a cleaner environment. They are more health-conscious than ever, they want to have a better planet for them and their children, but they also do not want to pay a lot for that. That is maybe a little selfish side that does not come out often. But then that is our job. Our job is to get that value. That is why I keep repeating, every chance I get, that technical feasibility is not enough. We ran our first fuel cell vehicle in 1968, we used parts, you know, that NASA used – just not affordable. So the second thing has got to be this commercial viability – the price; the underlying cost.

Thirdly, you have to have the right kind of fuels. And we are going to need clean fuels for this, by the way. These fuels can be methanols, that largely do not exist in the infrastructure. We can also chemically separate and make hydrogen from gasolene. But we cannot tolerate high sulphur content in fuel, and today you get a lot of sulphur when you use gasolene. So this is going to take unprecedented collaboration. Even with the electric vehicle, we found out that the last ten feet of connecting the vehicle to the grid – plugging it in so to speak – was one formidable barrier that took us quite a bit of money and time and engineering for us to solve correctly and safely, and at affordable price. And we needed the electric utility companies with us side by side.

Can incentives, based on parking restrictions for instance, help create a market?

No, it does not create it, but helps support it. Like, if you have high-speed lanes on a freeway for two or more people in a car. Electric vehicles even with one person, just the driver, having access to high occupancy vehicle lanes, can be a very big supporting function. The thing that helps create the market, at least early, but you cannot depend on it, because it is not a long-term solution, are these tax incentives – as opposed to a proposal to tax other vehicles. In other words, you want to give people a positive incentive rather than a disincentive.

To have a government position that would tax vehicles that were not very efficient or very green would tend to drive down the market in general, as opposed to shift people into the greener market. It would do that but the whole market would collapse. You would have a smaller entire pie while you are creating the wedge for green vehicles.

Instead of taxing the not-so-good product, what we should do is provide tax incentives, rebates of sales taxes and use taxes. Reduction of your income tax, if you can prove you bought one of these greener friendly vehicles – a positive statement to the new wedge that we are trying to create in this pie, and it does not affect the whole pie.What you want to do is to create a market pull, with whatever policy the Government follows, or whatever pricing a car company applies, as opposed to push it down on the consumer – because consumers are darned clever. They can delay their purchase, they can buy a used vehicle, they can stay out of the market place for several years until it all sorts out. I mean, we are very powerful people, not just with our votes but with our pocket-books. And we tend to have a protectionist attitude on our family well-being and our wealth, to keep that well-being. And any time you create a pull situation, it will help the market. Any time you try to push it or abuse it or penalise it – maybe going back to an analogy between Britain and the United States, you can only buy your tea here, and the tax on it is this, and so forth, and if you want tea you are not going to get it anywhere else. And you know, we had a revolution over that. And that was a very dramatic example of taxation without representation or value. And you do not want to do that.

Likewise, these manufacturing quotas – when California first started out they had a mandate in 1998 for 2001, that basically certain percentages had to be manufactured. Well, thank goodness that through a memorandum of understanding the auto sector showed the Californian government that they were already building vehicles and trying to understand the market. California dropped the mandate and backed it off to 2003. But to say that you have to build so many – we can certainly do that, we can go ahead and put them on a lot, but if it is not an economic value proposition to the customer, priced right and performs well and it is green, they’re not going to buy it.

I do not know what the numbers are in the UK, but in the US the consumer has a staggering amount of choice. Over 750 models of cars, light duty trucks and sport utilities. Think about that. You and I do not have that much choice with shirts and shoes. There are not that many selections for probably any other consumer product. Even electronics equipment, I do not think, comes close to 750 models of choice.

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