Auto bailout demands 'tech leadership' from GM

Issuing conclusions on the U.S. auto rescue plan, the Obama administration asks that General Motors' CEO step aside and that tech leadership be part of restructuring.

Updated at 12:20 p.m. PDT with information from president's auto industry task force report on GM.

Following a review of the ailing U.S. automakers, the Obama administration has ousted General Motors CEO Rick Wagoner and has withheld more loans to Chrysler, according to reports.

On Monday, General Motors put out a statement that Wagoner was asked to "step aside" as CEO of GM. Chief Operating Officer Frederick "Fritz" Henderson is now CEO, and changes to GM's board of directors are expected.

Martin LaMonica/CNET

The restructuring plan for GM has four elements: sustainable profit, healthy balance sheet, more aggressive operational restructuring, and technology leadership, according to the GMBlogs Twitter account, which is run by GM communications professionals.

Obama administration officials are expected to provide an update on the auto industry rescue plan on Monday but are demanding concessions before releasing any of the $21.6 billion that GM and Chrysler are requesting in additional loans, according to an article in the The Wall Street Journal.

The federal government could recommend that GM enter into bankruptcy, according to the article. Chrysler is considered more precarious financially: $6 billion in additional loans are contingent on the automaker forging an alliance with Fiat in 30 days.

For GM, it's not clear how a more dramatic restructuring program will influence the company's technology development programs, including investments in fuel-efficient cars and plug-in electric vehicles.

At a recent briefing on GM's Chevy Volt electric sedan, executives said the program continues to be on track and that the company continues to devote resources to it.

The Chevy Volt, which runs 40 miles on a battery pack and draws on a gasoline engine for longer trips, is still scheduled for delivery in late 2010. But the sedan will have lots of competition from an anticipated wave of all-electric and gas-electric sedans coming from large automakers and start-ups in the next two years.

In its assessment of GM, the president's auto industry task force said that the company was at least one generation behind Toyota in "green" powertrain development.

"In an attempt to leapfrog Toyota, GM has devoted significant resources to the Chevy Volt. While the Volt holds promise, it is currently projected to be much more expensive than its gasoline-fueled peers and will likely need substantial reductions in manufacturing cost in order to become commercially viable," according to the report. (Click for PDF).

The report also concluded that GM relies too heavily on high-margin SUV and truck sales and that the company is more vulnerable than competitors to increases in the CAFE fleet fuel-efficiency standards.

"Many of its products fail to meet the minimum threshold on fuel economy and rank in the bottom quartile of fuel economy achievement," according to the report.

 

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