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 merger would create Japan’s second-largest electronics manufacturer behind Hitatchi Ltd. (ADR:HIT), as Panasonic is the world’s No. 1 plasma TV maker and Sanyo is one of the world’s largest rechargeable battery makers, Reuters reported.

Should the deal clear regulators, Panasonic said one of its intentions is restructuring both companies. It targeted three “primary synergy” areas:

• Solar: The combined company plans to expand its silicon solar cells and batteries and accelerate development and commercialization of next-generation solar cells. Panasonic expects “a significant increase” in solar sector sales.

• Rechargeable Batteries: In addition to fusing Sanyo’s lithium-ion rechargeable batteries business with Panasonic’s black box technology, the companies plan to make “active investments” in batteries for hybrid electric vehicles and electric vehicles. More practically, the deal would nearly quadruple Panasonic’s share of the rechargeable-battery market.

• Financial and Business Position: Panasonic believes the combined enterprise will produce cost cuts in procurement and logistics.

“Panasonic and Sanyo recognize that existing strategies must not only be accelerated, but also that drastic action is now required for further strengthening initiatives to achieve potential revenue and profit growth in the global economic recession stemming from the financial crisis as well as in the midst of intensified global competition,” Panasonic said in a statement.

The company added: “Combining the accumulated technologies and manufacturing knowledge of both companies, Panasonic and Sanyo believe that together they will evolve into a corporate group which will be highly admired globally by enhancing the quality of life for the people worldwide and becoming a business entity coexisting in harmony with the global environment.”

The deal cleared a major hurdle Thursday when Goldman Sachs Group Inc. (GS) agreed to share its 29% in Sanyo to Panasonic for at least $6.4 billion, Reuters reported. Goldman had previously rejected two other offers from Panasonic.

“A merger would supply much-needed funds for Sanyo to maintain its position in the solar-battery market,” Yuuki Sakurai, general manager of investment planning at Tokyo’s Fukoku Mutual Life Insurance Co., told Bloomberg. “It’s difficult to imagine Sanyo succeeding by going it alone, and in that sense the offer is progress.”

Sanyo was founded by Toshio Iue, who in 1946, quit his job at Panasonic’s former entity Matsushita Electric Industrial Co. to form Sanyo the following year, Bloomberg reported.

Source: Panasonic Offers $9 Billion for Controlling Stake in Sanyo

• Hewlett-Packard Co. (HPQ) is buying Electronic Data Systems Corp. (EDS) for $13.2 billion in a deal that will create the second largest technology services provider behind International Business Machines Corp. (IBM), the Associated Press reported. Under the terms announced yesterday (Tuesday), HP will pay $25 per share in cash for EDS.

• St. George Bank Ltd. yesterday (Tuesday) agreed to be taken over by larger rival Westpac Banking Corp. (WBK) for $17.5 billion, creating the largest Australian bank by market capitalization. Westpac, Australia’s third-biggest bank, is offering 1.31 of its own shares for St. George share, the Associated Press reported.

• United Parcel Service Inc. (UPS) announced yesterday (Tuesday) that it has ordered 200 hybrid electric vehicles and 300 compressed natural gas vehicles in an effort to shield itself from rising gas prices. The 200 hybrid electric vehicles, which will be used starting in 2009, are expected to save 176,000 gallons of fuel annually, the Associated Press reported.

• Canada’s Cameco Corp. (CCJ), the world’s largest producer of uranium, posted a $132.8 million net income for the first quarter, more than doubling its total last year as sales increased by 45%. Cameco said it could face production shortages next year as it begins a new mine at its flagship McArthur River mine area, Bloomberg reported.

• Brazil’s state-controlled oil company, Petroleo Brasileiro SA, beat analysts’ estimates with its first-quarter earnings report. Profit rose 68%, good news consider the company is about tap several offshore oil fields. “This is a surprising and very good result,” Luiz Otavio Broad, an analyst at Agora CTVM, Brazil’s largest brokerage, told Bloomberg. “The result is largely operational, and the stock should open well.”

• Record prices and slower economic growth, particularly in the United States will decrease global demand for oil, the International Energy Agency said yesterday (Tuesday), Reuters reported. “This report sees further downward adjustments to demand, and they may not be the last,” the IEA said in its Monthly Oil Market Report.

• American International Group Inc. (AIG) announced yesterday (Tuesday) that it would raise $17 billion through a combination of stock and debt to prop up a bleeding balance sheet due to two consecutive quarterly losses, Bloomberg News reported. AIG stock gained 79 cents, a 2% increase, to close at $39.16 the day of the announcement.

• Shares of Yahoo! Inc. (YHOO) jumped 5% yesterday (Tuesday) on reports that Carl Ichan could be preparing to mount a proxy battle to replace Yahoo’s board of directors after they passed on Microsoft Corp.’s (MSFT) $47.5 billion offer. The Wall Street Journal reported that Icahn could hold “as many as 50 million shares” of the Internet search engine firm. Yahoo shares gained $1.30 to close at $26.56.

Source: Global Investing Roundups: Wednesday, May 14th, 2008