General Motors' response to Thomas Friedman's column, June 15

Detriot Free Press
STEVEN J. HARRIS
June 16, 2006

Although we have disputed the factual accuracy and reasoning of Thomas Friedman's recent columns on GM, this debate has given us the opportunity to better inform the world what GM is all about.

First, it's worth noting that we and Mr. Friedman are really not in disagreement on the fundamental issue here: that the United States needs to reduce its fuel consumption and dependence on oil. Enhancing energy security is an appropriate national goal.

Unfortunately, many of his assumptions and the way he proposes to meet that goal are incorrect. He is correct, however, that consumers will increasingly make different vehicle choices, embrace new technologies and adjust the amount of fuel they use as its cost rises.

In other words, consumers are rational and markets do work.

We find it particularly curious that Mr. Friedman dismisses GM's leadership in producing E85 vehicles as the result of a "shameful federal loophole." In fact, the federal legislation that encouraged automakers to produce these vehicles is an example of a public policy incentive that actually did what it was supposed to do. It essentially broke the "chicken-and-egg" syndrome inherent to any introduction of an alternative fuel: Which comes first, the vehicles or the fuel?

There are over 5 million E85-capable cars and trucks on the road today; more than 2 million of those are GM vehicles. The issue now is getting more E85 fuel produced and distributed, and that's happening. It's the market, driven by higher gasoline prices, that's suddenly helping to build a consensus and momentum for E85.

Granted, E85 is not the complete solution. But it's an important start -- and something we can do right now to reduce our oil consumption.

We believe that fuel cell-powered vehicles ultimately will be the answer to ending our oil dependence, and we're investing billions and making progress in driving the cost of this technology down to make it practical. In the meantime, E85 offers an immediate way to begin our transition away from oil.

GM's strategy is to invest in many technologies with potential, including hybrid powertrains. In fact, over the past few years, we have put 449 GM hybrid public transit buses on the streets of 38 cities in the United States and Canada and they are saving thousands of gallons of fuel every week.

We will introduce the Saturn VUE Green Line hybrid this summer, which will offer the best highway fuel economy of any SUV (EPA estimated 32 m.p.g.) at a price significantly below its hybrid competitors. The Chevy Tahoe and GMC Yukon SUVs with our high-tech, two-mode hybrid system will arrive in showrooms next year. BMW and DaimlerChrysler have joined GM to produce this hybrid powertrain for their large cars and trucks, and thereby lower the overall cost.

Mr. Friedman questioned how we can compete in a world of $3.99-per-gallon gasoline. The fact is, we can and we do here and around the world.

So far this year, GM has sold more than 491,000 cars that get 30 m.p.g. or better.

Mr. Friedman was dismissive about the fact that our full-size SUVs have the highest EPA fuel-economy numbers. He cites one magazine that rates Toyota and Honda SUVs better overall on other criteria.

Of course, Honda doesn't make a full-size SUV (Mr. Friedman admits, "I'm not a car expert"). And actual consumers overwhelmingly rate GM's full-size SUVs better than Toyota's. This year through May, GM's full-size SUVs are commanding 68.3% of the segment; Toyota's Sequoia and Land Cruiser combined account for only 7.7%.

We've been improving the internal-combustion engine for close to 100 years, and we have a tremendous record of innovation. We continue to invest in future technology that promises to get the car out of the debates on oil dependence and the environment.

I again invite Mr. Friedman to come to Detroit and learn more about our research, to speak with our engineers and get a firsthand look at what we're doing to reach the goal that we both agree is desirable.