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Rick Wagoner puts GM's tech chops to the test

The company's CEO unveiled an ambitious small-vehicle push as part of a wide-ranging shift that will test General Motors' technology prowess in coming years.

BusinessWeekselected the perfect headline to sum up General Motors' about-face: "Small is the new big."

CEO Rick Wagoner: Tech will be the difference General Motors

In recent months, CEO Rick Wagoner has signaled that change was in the offing and that the company's future depended upon more fuel-efficient vehicles. (Check out this interview we did with him at the Consumer Electronics Show in January.) With the stock approaching a 26-year low, there's more than the usual urgency to shake things up.

So it was that today GM announced reversed its years-old strategy in what likely was a surrender to $4-plus gasoline prices at the pump for many Americans these days. Among the highlights:

•&nbsp A possible sale of GM's Hummer brand

•&nbsp The closing of four truck plants

•&nbsp Board approval to fund the Colt, GM's extended-range electric vehicle.

"The Chevy Volt is a go," said Wagoner, adding that GM expects to have a production version of the Volt ready "in the very near future" with the vehicle being ready for sale at the end of 2010. "We believe this is the biggest step yet in our industry's move away from our historic, virtually complete reliance on petroleum to power vehicles."

If GM hits the 2010 deadline, it means a lot of pressure from this point. When we spoke with Wagoner earlier in the year, he said that the technology challenges getting a vehicle from concept car to market usually take about four years to resolve.

You'll say, "Why can't you do it in two years?" and that's vehicle development. In this case we're basically doing kind of three things simultaneously: the vehicle side, which I have a high degree of confidence we can do; the battery side, which is progressing very well, but this is--we're basically pushing the technology needle to do everything that we want out of a battery technology. I would categorize that as emerging as opposed to highly developed; then just the electronic interface of all that is different, it's doable but it's different. We learned a lot back when we did the EV1, but there's a whole lot more electronics on a vehicle today than it was then. Going for 2010 was a stretch. It's still a stretch, but we're putting resources like crazy on it and we haven't seen anything to date which says that we've hit a glitch on it.

In interviews over the last year, Wagoner has often pointed to the increased importance of electronics in delivering vehicles consumers will want. That's no longer an academic observation. What with the skyrocketing cost of fuel, GM's ability to prove it has the necessary tech chops could very well be the margin of difference between success and failure.