After 40 years in the car business, including stints at all of the Big Three, Bob Lutz, at 79, is still standing. Finally retired from General Motors (as vice chairman) he churned out a second book (the first one was called Guts) and became a board member of Via Motors, which is converting full-sized GM SUVs, vans and pickups to 100-mpg plug-in hybrids.
In Car Guys vs. Bean Counters, Lutz hammers his thesis on the Big Three’s wall: Quality rules, consumers notice when the aforementioned “bean counters” de-content cars to save money, and styling really matters to auto shoppers. Lutz has great credibility on these topics, but he also offers his environmental theories, which (despite his advocacy of electric cars) are guaranteed to make any Sierra Club or NRDC member’s blood boil. They probably wouldn’t make it in the door at Car Talk Plaza, either.
Lutz is the car guy’s car guy, having been an insider since his first General Motors job in 1962. He’s consistently campaigned for more exciting, performance-oriented cars that are also—a consistent problem for the Big Three—well built. At BMW in the early 70s, he says he helped develop the first 3- and 6-Series cars. At Ford in the 1980s, the Swiss-born, multilingual Lutz shepherded the Ford Explorer to a major hit, but also championed the miserable flop that was the Euro-sourced Merkur division.
Former Marine pilot Lutz (who now owns his own fighter plane) moved around a lot, and Chrysler was next—he signed on in 1986, and promptly helped deliver the well-regarded, beautifully styled LH cars (including the Dodge Intrepid and Chrysler Concorde). Does anyone remember the Eagle Vision? I do! The beefy Dodge Ram and equally testosterone-filled Viper were also in his column, and it typifies his undying conviction that Americans love horsepower and can’t be separated from huge SUVs and pickups, the more macho the better. The Ram made a lot more money than the Viper.
After a stint at battery maker Exide, Lutz was recruited to join GM, where—despite famously saying that global warming is “a crock of *&$%#@”—he became the champion and main cheerleader for the Chevrolet Volt.
(GM’s Jon Lauckner actually came up with the range-extender concept, but it was Lutz who could make it happen.) For more on that, see my book High Voltage, or Chris Paine’s excellent documentary Revenge of the Electric Car, which has Lutz as a main character (along with Carlos Ghosn of Nissan and Elon Musk of Tesla).
I talked to Lutz at the Detroit Auto Show after the Via Motors press conference, and he told me that he’s championing electric cars for reasons completely divorced from concern about climate change. Instead, he’s worried about foreign oil dependence, and plainly the regulatory winds are blowing toward electrics. We agreed then to have a longer talk, and this is it. I started by asking about the Car Guys book, which chastises a generation of GM execs for churning out cars based on business school spreadsheets, rather than red-blooded passion.
Bob Lutz: It was favorably received at General Motors—everyone has read it. And the people who were described as being maybe part of the problem—these highly analytical, business school, everything quantified and all the i’s dotted and t’s crossed people, producing lackluster or mundane cars—they were fed into retirement at the time of the Obama refinancing of the company. So you have a pretty new cast of characters, a lot of young people with great business backgrounds but no automotive experience, which in this case is a good thing. They haven’t learned how to do the wrong thing over 30 years. So all in all the reaction has been very favorable. At the Detroit Auto Show a lot of people from auto companies came up to me and said I read your book.
Car Talk: Your book is about how GM reinvented itself, with your help, of course. But did Ford and Chrysler go through the same process?
Yes, at Ford you had Alan Mulally coming from a non-automotive background. He came in and said, “At Boeing we concentrated on making great airplanes that the industry wanted. And we charged for them. What is it about the auto business that people are just worried about cost, cost, cost?” He introduced a new mentality at Ford, saying that obviously we have to watch cost and investment, but first we have to make great automobiles. Chrysler was late to the party, but Sergio Marchionne has the same sort of attitude. I think that with all the publicity about the renewal of GM, with a new sheriff in town, it was a wake-up call for Ford and Chrysler.
Now if you look at Honda and Toyota vehicles, they’re not as attractive and don’t have the styling or the level of appointments that the Big Three do. In the old days it was rational to default to Japanese automakers—people said that the cars looked nice, they’re well put together, have nice interiors, good fuel economy—I want to buy one of those. But now it’s a foolish thing to do because they’re not as nice, don’t look as good, the fuel economy is no better, and they’re no more reliable—and in some cases less so. If you want a truly attractive car that looks good inside and out, you have to shop the Big Three now.
But when a car is as big and powerful and has as many customers as Camry and Accord, it can cruise for a long time on momentum. If customers had a satisfactory experience, eight times out of ten they’re going to shop for the same car again—there is a degree of owner loyalty in the business, especially in that category. So it’s very hard to dethrone a car. The media says, “Now the Camry is in big trouble because we have the new Ford Fusion and Chevy Malibu.” Well, yeah, Camry and Accord may continue to go down, and the Chevy Malibu and Ford Fusion go up, but it takes several generations. This is one of the arguments of the bean counters—they say, ‘We took a lot of cost out, the car is a lot cheaper to make, sales haven’t suffered much, and look at the money we’re making.” But there’s a lag effect before people abandon the brand—it doesn’t kick in with one generation of car.
Car Talk: The Camry is still the bestselling sedan in America.
It has a long way to fall, but it’s not as elevated as it used to be. One reason Toyota is doing more business is that it started pursuing fleet sales. In the old days, it was almost all retail. Analysts used to say, “Some of the American stuff is also selling well,” and the Japanese companies would say, “Yes, but it’s not much retail and is mostly fleet and daily rental.” Now they don’t point that out so much.
Car Talk: What kind of year will 2012 be for the U.S. auto industry?
The elephant in the room is the European debt crisis, because that could trigger a second major American recession. Barring that, I think the U.S. economy bottomed out in September or October. Car sales are a terrific leading economic indicator. Sales have been going up steadily on a seasonally adjusted rate, and I wouldn’t be at all surprised to see, barring Europe washing up on our shores, a 14.5 million year in 2012.
Car Talk: What percentage of those cars will be electric?
I’m sanguine about electric, but for the next five to ten years it will be small numbers. For instance, in 2012, if Via gets its extended-range electric pickups and full-sized vans on the market, we’re looking at selling 3,000 units to fleets. The plan is to eventually get to 30,000. But in context, the full-sized pickup market for the Big Three is almost a million units a year. Thirty thousand is a lot of units, but out of a million it’s not many, and that’s the way it is for most electrics.
Car Talk: When you survey the EV field, are there any green cars you particularly like?
The Tesla Model S is a beautiful car, nicely styled by the guy [Fritz von Holzhausen] who designed the Pontiac Solstice—in my view, one of the all-time great designs. Sometimes I ask myself if I don’t want one. Although if you want 300-mile range and all the extras, the Model S could be expensive.
I think the Model S looks very promising. Elon Musk and his team realize that people buy cars based on style. No one will buy an electric car that looks like a Dorkmobile. If it’s beautiful and it does what people say it’s going to do, they’ll pay the price. I predict the Tesla Model S will be hugely successful with wealthier Americans.
I’m a little bit less enamored of the Nissan Leaf, because it has all the normal electric car limitations—on a good day it has a range of 80 miles, which means that a lot of commuters will experience what they call “range anxiety.”
Car Talk: Do you listen to Tom and Ray at Car Talk?
Those are the Magliozzi brothers, right? They’re old friends of mine. When I was president of Chrysler, in the late 1980s or very early ‘90s, the company had the alleged problem in its minivans of liftgates popping open in crashes. Remember that? In fact, the statistical incidence of rear hatches popping open in a rollover was the lowest of any rear-hatch vehicle sold in the United States. It’s just that there were millions of them on the road, so the absolute number was high. There was nothing wrong with the design. Anyway, Tom and Ray had a guy call in and say he’d been reading about Chrysler liftgates. That just sent those two guys off on a tear—they said, “If I had a Chrysler minivan the only person I’d put in the back seat is my mother-in-law to get rid of her. If you have legitimate family members in the car I recommend that you get out a welding torch, weld the rear hatch shut, and access the vehicle through the side doors.” It was outrageous. They said on a later show, “Well, you know how we are, we have a lot of fun with things, and it’s possible we exaggerated a bit.”
Car Talk: Did you like the way you were portrayed in Chris Paine’s film Revenge of the Electric Car?
I don’t like the politics all that much, but Elon Music of Tesla, Carlos Ghosn of Nissan, that gadget guy, we all came across as reasonably intelligent and motivated people working toward the electrification of the automobile.
Car Talk: A lot of people seeing your involvement in the Chevrolet Volt and Via Motors might conclude that your views on the environment had evolved since you said that global warming was “a crock of *$%*#@.”
I don’t pursue the electrification of the automobile out of any fear I might have of planetary meltdown. First of all, you have to realize that carbon dioxide is a trace gas, one of most minimal gases in atmosphere. If you believe in the greenhouse effect, you should realize that methane, also known as bovine flatulence, has more than 20 times the power of CO2, and yet nobody talks about it. More than 98 percent of CO2 is from natural causes—just two percent is from humans, and mostly from stationary sources. And just a fifth of the human-caused emissions are from the global automotive sector. You could plug up the spark plug holes of every car and truck on the planet with cement and it would be a rounding error as far as CO2 production is concerned.
The whole thing [blaming cars for global warming] is outrageous, and the purpose is to create an artificial scarcity of fossil fuel to raise prices and get alternative fuels, which cost way more, to start paying off.
So what’s my motivation for the electrification of the automobile? Well, as a businessman I recognize the environment we’re operating in. So if you don’t agree with the goals and the philosophy, hey, it doesn’t matter. I can’t change it because I’m not the emperor of the universe. The second thing is I don’t like the U.S.’s strategic dependence on foreign oil, much of it from sources hostile to us. It’s a huge drain on our balance of payments. And, frankly, we may be heading into a naval conflict in the Straits of Hormuz. Well, if we didn’t need Iranian oil that whole point would be moot. I’d like to see the U.S. be energy independent with natural gas for the stationary sources, because we have unbelievable quantities of domestic natural gas. And for the mobile sector, I’d like to see a gradual transition to electrification. When we get to the point where we actually reduce our oil consumption, we can tell the hostile nations, “You guys can do what you want, because we don’t need you.”
Car Talk: By 2030, what percentage of new cars will be electric, hybrid or plug-in hybrid?
I’d say in the 20- to 25-percent range, merely because of government regulations—by 2025, American auto fleets will have to achieve 54.5 mpg. In Europe, the regulations are expressed in grams of CO2 per kilometer, but it’s basically the same thing and the regulations are as onerous as the American ones. No one knows how to meet these regulations without massive hybridization and vehicles such as the Chevy Volt. If you look at the Escalades, Yukons and other big vehicles Americans love—and, with $3.50 a gallon gas, why shouldn’t they love them?—they cannot survive in this future regulatory environment without extensive hybridization or electrification.