This from David:

Who would have thought an article on the future of the automobile would have roused so many skeptics and naysayers from their winter hibernation? Certainly not me.

But the one I wrote a few weeks ago on Plug-in Hybrid Electric Vehicles (PHEVs) has kept our Customer Service department working overtime… fielding the firestorm of responses, both positive and negative.

Clearly Americans feel this is a hot topic and, being the glutton for punishment that I am, I decided to move from the frying pan into the fire and revisit it.In my first article, I dismissed an investment in General Motors – or any other car company for that matter – as financial suicide. However, I’m going to eat a little crow for breakfast.

The Death of the Combustion Engine

Let’s cut to the chase, and I’ll drive a stake in the ground right away: The internal combustion engine is dead.

I know that’s a bold statement. Perhaps shocking to those among us who have rebuilt one – all the while marveling at its internal workings – or have driven a pocket-rocket powered by one, reveling in the raw power.

But I think time will prove me correct. And oddly enough, it’s a car company – General Motors (NYSE: GM) – that’s helping to hasten its demise.

It’s going to be a slow death, to be sure. After all, gasoline and diesel engines have been around for over 100 years, powering ships, cars, trucks, motorcycles, battle tanks, generators, bulldozers and weed whackers.

Engineers will continue to redesign it, tweak it, shrink it… and attempt to squeeze every last drop of efficiency and power out of it. But it’s as good as dead.

Just ask Tony Posawatz, General Motors’ PHEV Vehicle Line Manager. It’s his responsibility to bring the Chevy Volt into production – and more importantly, into dealers’ showrooms – by the end of 2010.

The irony is that as his employer struggles for survival, it’s betting the farm – and its future – on a segment of the industry that it all but ignored for nearly a decade: Energy-efficient cars, led by the game-changing Chevrolet Volt.

The Volt represents a paradigm shift in automobile technology. It’s the result of desperation – combined with stark reality – that finally overcame business as usual.

Unfortunately for Tony, the odds are stacked against him. It’s an almost perfect storm of roadblocks designed to keep PHEVs from gaining traction (no pun intended).

Just consider:

• Car buyers have been running for the exits… making do with what they currently drive.

• Dealers are laden with gas-guzzling SUVs that they’re having trouble selling regardless of the price.

• Credit markets – an essential element in the car-buying process for most customers – are still very tight, making it difficult for many would-be car buyers to get a loan.

• Gas prices have been cut in half in the last six months, wreaking havoc on the economic argument for going green.

• Battery technology needs to improve to make the economics more viable, regardless of the price of oil.

All these issues aside – and that’s not to trivialize them – the Volt will be the very first, widely available car powered by plug-in technology. And while there are other manufacturers not too far behind them, it’s clearly a leadership opportunity for GM.

In order for the world’s largest car company to make it happen, Tony’s engineers, designers and mangers had to think outside the box – way outside. And they had to do it faster than they ever did before.

Starting with battery technology: Lithium is the current technology that holds the most promise. And after GM evaluated dozens of potential battery manufacturers, it decided the best solution was to get into the battery business itself.

Why? Because in Tony’s words, “When we get a battery pack delivered to the car line, it has to be the absolute best battery pack available anywhere… and it has to work.”

So what about the doubting Thomas’ and the naysayers that don’t think GM will ever be able to pull this off?

Tony’s not worried: “Certainly there is the element of gasoline savings associated with the car, but when prospective buyers get in and drive it, they will find it to be such a unique and pleasing experience, we’ll hook them right then and there.”

And based on the provisions contained in the recent Economic Recovery and Reinvestment Act of 2009, you better get in line fast if you want a tax break for purchasing one of these pump-passing beauties. After any one manufacturer first sells 200,000 PHEVs, the $5,000 individual tax credits will disappear.

Of course, by then, the prices will likely be comparable to their fossil-fuel gulping cousins, and the oil lobbyists will be redeployed schmoozing politicians for battery-technology improvement money, or something else associated with the electric car business.

Bottom-line: GM, if it can survive, could quickly find itself at the top of an automotive heap that will be shedding the internal combustion engine faster than anyone thinks is possible today.

And at $2 a share, investors could find themselves sitting on a 10- or 20-bagger just as quick (and I would be eating crow for the rest of my life).

Here’s to American ingenuity and GM’s survival. And to the vision of Middle East oil sheiks, scrambling to sell their oil to some other country… for peanuts.

Source: Is General Motors the Buy of the Decade? PHEVs Part Two…

The taxpayer-funded check has barely cleared the bank and GM’s chief is hinting that Congress’ recent gift of $9.4 billion may not be enough. Not only is Wagoner saying the company may need more money, he is telling us that bankruptcy is still an option.

Just last month, however, he vowed it is absolutely not an option. Which is it?

It is the same old story in Detroit. General Motors is running around touting cars that nobody wants and the UAW is squeezing every drop of remaining blood from the company’s cancer-ridden body.

If you have turned on the evening news over the past few days, you have certainly seen the shots from the Detroit Auto Show. Wagoner has been grabbing any media attention he can to show off his company’s shaky billion-dollar investment, the Chevy Volt. The CEO needs to do everything he can to create demand for a $40,000 electric car when crude prices are plummeting.

But even worse than the Volt’s chances of becoming a bestseller are GM’s chances of solidifying a life-saving deal with the UAW. The negotiations between the employer and its employee representative will not start until Monday, but already trouble is brewing.

Here we go again

Ron Gettelfinger, the UAW’s fearless leader (I mean that in a bad way), told reporters that he wants Obama to remove some of the concessionary terms placed in Congress’ recent bailout legislation. In other words, the UAW does not want to negotiate.

We should not expect the UAW to be cooperative over the next few weeks. But it may not matter. Already, there is at least one bill making its way through Capitol Hill that will lower the requirements and terms of the loan furnished through the Treasury’s TARP.

Talk about changing the rules in the middle of the game. This is one big political fiasco.

When we boil away all the fat, this subject really is not about cars, the Big Three, or American workers. It is about politicians shoring up their next election. The contingency that can deliver the most votes will emerge the winner.

As investors, there are two ways to look at this situation. We can take a short-term stance and be ready to trade the news. Or we can look at the long-term stance and short the heck out of GM.

Either way, investing in GM is less about fundamental value and is increasingly becoming more of a political bet. That is something no investor should be comfortable with. Remember, dollar and cents add up. Politicians do not.

If you thought the GM story ended when it received its bailout, you had better think again. That was merely the end of the first chapter. There is much more on the way.

Source: Why won’t they just go away