GM Customers Better Positioned for Rising Fuel Prices

(3BL Media) Detroit, MI – March 16, 2012 – Analysts predict gasoline prices will increase by 60 cents or more by May, with higher seasonal demand driving prices north of $4 per gallon, reported to USA Today.

Even so, General Motors, the automotive industry and its customers are better positioned than ever to weather both short-term fluctuations in fuel prices and the long-term climb in energy prices that most analysts expect to accompany global growth.

The following report summarizes these recent changes in the U.S. auto market and GM’s initiatives to improve the efficiency of its vehicles. It is intended to help put current headlines into perspective.

GM offers high-efficiency products in high-volume segments

GM’s product lineup is significantly more fuel efficient than it was even a few years ago.  GM offers high-efficiency products in most high-volume vehicle segments, and more are coming to the market each year. (All fuel economy ratings below are 2012 model year EPA Estimates except where noted.)

• Chevrolet Volt’s revolutionary technology offers an average of 35 miles of all-electric driving per full charge (the precise range could be higher or lower depending on terrain, driving techniques and temperature), with a range extender providing an additional 340-plus miles of gasoline-powered driving once the battery is discharged. The Volt is EPA rated for 94 MPGe (EV only), 37 MPG (gasoline only) and 60 MPG (combined), which is better than any hybrid or diesel available today.
• Chevrolet Cruze Eco, with its 42 mpg EPA highway estimate, offers the best highway fuel economy of any gasoline engine (non-hybrid) car in America.
• Chevrolet Sonic with the Ecotec 1.4L turbo delivers an EPA-estimated 40 mpg on the highway with a six-speed manual transmission and city fuel economy of 29 mpg.
• Chevrolet Equinox and GMC Terrain crossovers offer space for the family and a 32 mpg highway estimate when equipped with the standard Ecotec 2.4L direct-injected engine.
• Chevrolet Malibu has EPA mileage estimates of 22 mpg city, 33 mpg highway.
• Chevrolet Traverse, Buick Enclave, and GMC Acadia crossovers offer the power and space of a traditional SUV with V6 fuel economy (17 mpg city, 24 mpg highway).
• Chevrolet Silverado and GMC Sierra V8 pickups offer highly competitive fuel economy (up to 22 mpg highway), and offer hybrid models for the ultimate in full-size truck fuel efficiency (20 mpg city, 23 mpg highway).
• The Chevrolet Tahoe, GMC Yukon, Cadillac Escalade, and GMC Yukon Denali lead the full-size SUV segment in fuel efficiency with the optional Two-Mode hybrid system (20 mpg city, 23 mpg highway).
• Over the next year, eAssist-powered 2013 Chevrolet Malibu Eco (25 mpg city, 37 mpg highway), 2012 Buick LaCrosse and Regal models (both 25 mpg city, 36 mpg highway) will provide additional high-efficiency offerings.

Top five U.S. vehicle segments, by sales

     Source:  GM Data.  Other analyses may vary slightly depending on segmentation.

Several trends stand out:

• Small car share has increased, not only because drivers anticipate higher fuel prices, but because small cars have gotten better.  They now come in an almost infinite variety of brands and body styles, and have performance, comfort, and safety features once found only in larger, more expensive vehicles.

• Crossovers such as the Chevrolet Equinox (22 mpg city, 32 mpg highway) and Buick Enclave (17 mpg city, 24 mpg highway) have largely displaced traditional SUVs, with a significant increase in overall fuel efficiency.

• Midsize cars continue to sell well. With space for a family and new fuel-saving technologies like eAssist, cars like the 2013 Chevrolet Malibu Eco (37 mpg highway) and 2012 Buick Regal eAssist (36 mpg highway) will continue to attract many consumers.

• Full-size pickups remain an important part of the U.S. vehicle market, and today’s truck buyers are primarily those who truly need the capability of a truck.  As a result, many truck buyers in a recent GM survey said they would drive less, drive more slowly, or make other adjustments rather than move to a different type of vehicles.

Segment shifts have brought significant fuel savings

As the examples in the following table show, these segment shifts have already reduced weekly gas bills for many new-vehicle buyers.  This has left many drivers less vulnerable to moderate increases in prices at the pump, though it also makes it tougher to achieve additional fuel savings by moving to a vehicle that is more efficient still.

The biggest gains come in the initial moves up the fuel efficiency ladder. The improvement from moving from a traditional midsized SUV to a four-cylinder crossover like an Equinox is significant.  However, moving to something still more efficient brings diminishing financial returns.

Also, within a given class of vehicles, small changes in relative fuel economy make less difference in fuel costs.  In the example below, choosing an automatic instead of a manual in a Chevrolet Cruze Eco adds less than 50 cents a day.

 Source: EPA fueleconomy.gov. Based on 6,000 city and 6,000 highway miles/year, $4.00/gal. gas.

This presents something of a dilemma for consumers, whose first reaction to rising gas prices can be to shop for a more efficient vehicle.  As the table above shows, moving out of a newer midsize car or compact crossover may not save too much money, unless fuel prices go extremely high or the driver’s annual mileage is far above average.

One final observation – although most customers say fuel economy is important, they still balance fuel cost with other attributes, including functionality, comfort, performance, style, and safety.  Also, some customers are pragmatic about calculating fuel cost and weighing it against other needs.  Others get excited by the prospect of squeezing every last mile out of a gallon of gas, or about owning a vehicle with the latest energy-saving technologies.

In short, one size does not fit all – there is no vehicle or technology that can meet the needs of every driver.

The promise of electricity

Although electrically driven cars such as the new Chevrolet Volt are relatively new to the market, they point the way toward significant reductions in the weekly fuel bill of urban and suburban drivers. Volt gets an EPA-estimated 94 mpg equivalent when running on electricity and 35 mpg city or 40 mpg highway when using its gas generator. The EPA fuel economy site estimates that for the scenario above, a regularly charged Chevrolet Volt running only on electricity from the grid would cost about $10.25 per week to operate, about a third of the cost of fueling a Cruze Eco.

Of course, electrically driven cars are in limited supply and more expensive to buy than current compact or midsize sedans, so for now their greatest appeal may be concentrated among committed environmentalists and early adopters.  But as the cost of the technology comes down, production volume increases, and charging stations become more common, these vehicles are expected to offer another cost-saving option for many drivers.

It is that potential to reduce fuel costs – along with the potential to diversify energy supplies away from petroleum – that keeps carmakers and governments interested in electric vehicles.

Global companies need a broad range of energy-saving technologies

Most energy-saving technologies have their own cheering sections, made up of entrepreneurs, investors, media, and plain old fans, all loudly proclaiming that “Technology X” is the answer to all the world’s energy ills.  Global auto companies, however, understand that there is no single solution that meets the needs of all customers in all markets.

As one of the world’s largest carmakers, GM has a broad range of fuel-efficient vehicles and technologies under development, already offers a number of high-efficiency vehicles in the U.S., and is introducing more each year. (All numbers are EPA estimates.)

• For customers looking for hybrid-like fuel efficiency at an affordable price, the new Chevrolet Cruze Eco offers a 42 mpg highway estimate, the highest for any gasoline powered (non-hybrid) car sold in the U.S.  Other Cruze models also offer excellent highway fuel economy, (35 or 36 mpg highway) along with a spacious cabin and safety and convenience features once found only on larger cars.
• Chevrolet Equinox and GMC Terrain continue to set sales records, in part because of their excellent fuel economy estimates of 22 mpg city, 32 mpg highway.  Equinox and Terrain have higher highway fuel economy estimates than Honda CR-V (31 mpg) or Toyota RAV4 (28 mpg), and Ford Escape Hybrid (31 mpg).
• Chevrolet Malibu, with its 22 mpg city, 33 mpg highway estimate, is right in the thick of the midsize sedan segment. For 2013, Chevrolet will introduce Malibu Eco, which will use GM’s eAssist battery electric/gas propulsion system to deliver even higher mileage (25 mpg city, 37 mpg highway).
• Buick LaCrosse and Regal, when equipped with eAssist technology, deliver an estimated 36 mpg on the highway.
• Chevrolet Traverse, with its advanced V6 with direct injection and continuously variable valve timing and a six-speed transmission, offers the best fuel economy estimates of any eight-seat crossover, 17 mpg city, 24 mpg highway.
• Chevrolet and GMC have several options for truck buyers looking for better fuel economy.  The Chevrolet Silverado XFE and GMC Sierra XFE have the highest EPA estimates (15/22) for a full-size pickup with a V8 engine and automatic transmission, the combination overwhelmingly preferred by truck buyers.  Silverado and Sierra also offer the only hybrids in the full-size truck segment, with EPA estimates of 20 mpg city, 23 mpg highway. 
• Cadillac ATS will deliver highway fuel economy of more than 30 mpg (based on the latest GM testing) thanks in part to four-cylinder engines that use direct injection and lighter weight components.
• GM and Teijin Limited will co-develop advanced carbon fiber composite technologies for potential high-volume use globally in cars, trucks and crossovers, dramatically reducing vehicle weight, resulting in better fuel economy.

Improving internal-combustion engines

Because most U.S. vehicles, large and small, will continue to be powered by gasoline fueled internal-combustion engines, GM is working hard to further improve the efficiency of these engines and the vehicles they power.  Some examples include:

• Direct Fuel Injection – General Motors was one of the first automakers to widely use direct fuel injection, and GM currently offers 17 models with direct injection, including many of the passenger cars and crossovers in its lineup.  Direct injection facilitates more precise fuel delivery and better control of the combustion process for lower consumption and emissions.  A new direct-injection fuel system will help GM’s Gen-V small-block engine deliver greater fuel efficiency compared with the current generation.
• Active Fuel Management – Active Fuel Management allows V8 engines to shut off four cylinders under light load conditions while still providing full performance instantly when needed.  Most of GM’s full-size trucks have AFM on their V8 engines.
• Continuously Variable Valve Timing – By adjusting the timing of valve opening based on speed and load, powertrain engineers are able to maximize efficiencies when operating an engine over the full range of performance. This can reduce both fuel consumption and emissions.  Variable valve timing has been enabled on both overhead cam four cylinder and V6 engines and on some V8s.
• Diesels – The revamped Duramax 6.6-liter diesel V8 that debuted in the 2011 GMC Sierra HD and Chevrolet Silverado HD achieves 20 percent better fuel efficiency than the earlier version thanks to a new high pressure common-rail fuel injection system

In Europe, where diesels power more than half of new cars, GM builds four-cylinder turbocharged diesels ranging from 1.3- to 2.2-liters in displacement.  These engines also are used in other global markets where diesels are important.  Because of this expertise, GM plans to be the first domestic manufacturer to offer an advanced small-displacement diesel engine for the North American small car market in 2013 with the Chevrolet Cruze.

• New gasoline engines – GM continues to make significant investments in new generations of fuel-efficient gasoline engines.  The company has invested more than $494 million in three U.S. plants to build the next generation of the Ecotec four-cylinder engines, and more than $890 million to build a new generation of cleaner, more efficient small-block engines.  In China, Shanghai Automotive Industry Corp. and GM are expanding their partnership to build a new generation of advanced engines and transmissions that will provide enhanced fuel efficiency and performance.

• Six-speed transmissions – With a few exceptions, almost every car and truck in the Chevrolet, Buick, GMC, and Cadillac lineups now have six-speed transmissions (both manual and automatic) available, with most of them now standard.  A six-speed can provide significant fuel efficiency improvement over a four-speed.

A range of advanced technology solutions

GM uses an array of advanced powertrain technologies to help reduce fuel consumption.  For the U.S. market, eAssist, Two-Mode hybrids, and extended-range electric drive are near-term solutions.

• EAssist – eAssist combines a 15 kW electric motor, a 115 volt lithium-ion battery, and GM’s fuel-efficient 2.4-liter direct injection Ecotec engine, and other technologies to provide a significant boost in efficiency (up to 25 percent depending on the application).  The electric motor acts as a generator to recapture energy when the vehicle decelerates or brakes, and automatically stops and restarts then engine in stop-and-go driving.  The electric motor also provides an electric boost when the vehicle is accelerating, and allows the fuel to be completely shut off during deceleration.  EAssist technology will enable the LaCrosse and Regal to achieve up to an EPA estimated 36 mpg (highway), and enable the Malibu Eco to achieve an EPA estimated 37 mpg (highway).
• Two-Mode Hybrid – The Two-Mode hybrid system on the Chevrolet Tahoe and Silverado, GMC Yukon, Yukon Denali and Sierra, and Cadillac Escalade enables the best overall fuel economy of any full-size light duty trucks, with two-wheel-drives estimated at 20 mpg city and 23 mpg highway.  The Two-Mode hybrid system saves fuel by providing all-electric launch, low-speed electric-only propulsion, and electric assist during demanding driving, acceleration, and towing.  It also recaptures energy normally lost during braking, and allows the engine to be shut off during deceleration and when the vehicle is stopped.
• Voltec Extended-Range Electric Drive – The Chevrolet Volt is an electric vehicle with extended-range capability.  When its 16-kWh lithium-ion battery is fully charged from the grid, the Volt can travel approximately 35 miles (EPA estimate) depending on temperature, terrain, driving technique, and battery age.  When the Volt’s battery runs low, a gas-powered engine generator seamlessly engages to extend the driving range an additional 340-plus miles. The Volt and Opel Ampera are on sale in Europe, and shipment of Volts to China has begun and will be available in dealer showrooms soon.

• Battery Electric Vehicles – Chevrolet announced last fall it will produce a battery-electric version of its Spark mini car in 2013.  The Spark EV will be available in limited quantities for select U.S. and global markets. 
• Deep experience and expertise in batteries, electric motors, and power controls will ensure GM provides the best possible choices when it comes to vehicle electrification technologies.  At the same time, GM is investing in start-up companies with innovative ideas to accelerate next-generation electrification technologies. 

As recent events so clearly demonstrate, it can be very difficult for policy makers, auto companies, and consumers to predict the near-term future.  But over time, we expect to see an ongoing shift in industry mix towards more fuel efficient vehicles.  In the United States and around the world, GM is making the right portfolio decisions for its long-term success.

About General Motors – General Motors Co. (NYSE:GM, TSX: GMM) and its partners produce vehicles in 30 countries, and the company has leadership positions in the world's largest and fastest-growing automotive markets.  GM’s brands include Chevrolet and Cadillac, as well as Baojun, Buick, GMC, Holden, Isuzu, Jiefang, Opel, Vauxhall and Wuling. More information on the company and its subsidiaries, including OnStar, a global leader in vehicle safety, security and information services, can be found at http://www.gm.com.