GM expects losses but remains committed to hybrid vehicles,
‘ It is early stage technology and the volume is low:’ CEO
General Motors Corp. expects its new hybrid fuel-saving vehicles to incur losses but is pushing ahead with development because it believes they will help its image, the U.S. carmaker’s top executive says.
Rick Wagoner, chairman and chief executive, said in an interview that no manufacturer was able to make money on hybrid gasoline-electric vehicles, sales of which are booming in the United States.
But he said his company was pushing ahead with hybrids to improve its environmental credentials in the same way that rival Toyota Corp., the secondbiggest carmaker after General Motors, benefited from the success of its Prius hybrid hatchback.
“Our hybrids will lose money,” he said. “It is early stage technology and the volume is low.”
GM is planning to launch hybrid versions of its Chevrolet Tahoe and GMC Yukon large sport utility vehicles in late 2007, followed by hybrid pick-up trucks, using technology developed jointly with Daimler- Chrysler and BMW of Germany.
But Mr. Wagoner said unless gasoline prices hit US$8 a gallon — triple the current level — it would be hard to persuade customers to pay enough to cover the extra costs of building hybrid vehicles, which require an electric motor and battery as well as an engine.
Financial analysts are concerned that the increased focus on fuel efficiency could hurt GM’s U. S. launch early next year of its new range of large SUVs and pick-ups.
The automaker is under pressure from rising health- care costs and slowing sales of its existing big SUVs, and its North American automotive division lost US$ 2.5billion in the first half of the year.
GM will make hybrids visually distinct from their gasoline-only counterparts, the approach Toyota took with its Prius.