Will GM's Akerson Come Clean on the Chevy Volt?

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Akerson and VoltGeneral Motors' CEO, Dan Akerson, is scheduled to testify at congressional hearings on the NHTSA delay in reporting Chevy Volt fires. GM and the government agency waited about five months to report an incident involving a Volt which erupted in flames weeks after a crash-test. Up to this point, Akerson has not exactly been honest about the Volt; can we now expect him to come clean?

A culture of deceit has been evident at GM since the Obama Administration orchestrated a manipulated bankruptcy process that favored the politically powerful UAW over other classes. It was during the time of the bankruptcy process that the Chevy Volt hype gathered steam as the public was presented with a green wonder-car that served as partial justification for using $50 billion of taxpayer money to bailout GM. While Akerson's part in the story came later, the stage was set for the Volt to become what might be history's most controversial, as well as most over-hyped, vehicle.

Early claims about the Volt touted the car as a pure electric vehicle which would get the equivalent of 230 MPG. Neither of these claims was true. The Volt was also presented to taxpayers as the vehicle which would be a savior for GM. The now politically influenced GM stepped up the hype up to the time of GM's IPO in November of 2010.

It is worth mentioning crony company, General Electric, which would have its part to play in the deceit. GE was poised to benefit from the building of charging stations (as well as power grid infrastructure) for the Volt and CEO Jeff Immelt has a cozy relationship with President Obama. Was it mere coincidence that, at the time of GM's IPO, a financial TV news network majority owned by GE hyped the Chevy Volt along with the GM IPO? A case was made at the network that all taxpayers should be able to participate in the GM IPO so that they could "benefit."  The possibility of GM shares going down rather than up was not mentioned as commentators stated that GM would be "printing money," nor were disclaimers made to seek professional guidance before making investment decisions. Shares are down about 40% since that time.

This same GE-owned network spent the better part of a day promoting the Volt when it was officially rolled out. The car was presented as a "game changer" for GM and the industry. Since that time, GE has been buying Volts and has committed to buying a total of 12,000. That is about 150% of the total number sold in 2011. The GE sales are now kicking in to help GM show that the Volt is selling. In fact, fleet sales are rising disproportionately to retail sales as the GE orders grow. GE has also cut a deal with GM to buy some of the first Volts built in China. In return, GE gets to build charging stations in China. Can you say "Crony Capitalism?"

So, finally, we can come to Akerson's part in the deceit. Akerson was appointed CEO by GM (make that the Obama Administration) in September of 2010, prior to the Volt rollout. He immediately touted the Volt as the "future" of GM. Akerson has consistently claimed that Volt demand was exceeding supply, even as plans for a second shift to build the vehicle were cancelled and evidence grew that this was not the case. To add insult to injury, GM admits that the Volt is used as a "halo" vehicle to bait and switch consumers into buying Chevy Cruzes. Was that what taxpayers paid for when they subsidized Volt production? What other areas might GM, under Akerson's reign, be misleading the public?

Other questionable statements out of Akerson have been reported in the media regarding GM's balance sheet as available cash figures have been over reported (reported at $40 billion, number is about half that) and pension obligations under reported (reported only US under funding of $10 billion, total is about twice that.) Under Akerson's leadership, insiders at GM floated rumors that struggling European division, Opel, had bidders lined up; rumors that proved to be untrue and angered German Chancellor, Angela Merkel. Other rumors floated saw GM buying back taxpayers' stake in GM, something that would have benefited taxpayers if true. Only they weren't.

The list of areas of deceit at GM goes on. Truck inventory seems to have been fudged at the company to drive revenues in the past, and the stage is set for another build-up as factory retooling is cited. Recent claims boast that GM is now the world's largest auto seller, surpassing Volkswagen.  What is deceptively left out of that statement is that GM includes sales at Chinese minority owned SAIC / Wuling. GM only owns one third of the company, but bought rights to claim all of the sales. GM has used smoke and mirrors to claim victory over Volkswagen, which by most standards, sells more vehicles.

Having now put Government Motors' deceptive nature in perspective, let's look at the NHTSA congressional investigation. I would not trust statements out of agencies that are part of the Executive Branch of government. Nor do I trust statements out of GM. All documentation, including emails and phone conversations between government representatives and GM regarding Volt fires should be demanded.

GM had originally stated that the NHTSA fires were caused by not following protocol. The problem is, the protocol didn't exist at the time of the first NHTSA fire. NHTSA and GM stated that the original fire could not be replicated for months and that was one of the reasons for the five month delay. Yet two of three more recently tested vehicles had similar reignition fires. What, exactly, did NHTSA do during the first few months of delay to try to replicate the original fire? It doesn't sound like they tried very hard. There is also a report from SRS that has surfaced regarding the NHTSA investigation that "the lead investigator in this sensitive investigation is a mechanical engineer fresh out of college with no apparent electrical engineering background or experience. She joined the agency one month before the Volt ignited."

Then there is NHTSA's first statement regarding the Volt fires which stated, "Let us be clear: NHTSA does not believe electric vehicles are at a greater risk of fire than other vehicles." How could they make this claim prior to any investigation?

The original NHTSA Volt fire occurred about two months after a Connecticut fire involving a Chevy Volt. In that incident, a Volt reignited days after the fire. GM took over the investigation from local authorities. It is time to reopen that case and determine what communications were made and why GM did not follow up on the reignition problem. Given the similar problem with NHTSA's crash-tested Volt, the likelihood that there was a cover-up by GM and NHTSA becomes greater.

Considering that the president of the USA has such a vested interest in GM and the Chevy Volt, it is understandable to be suspicious of NHTSA's actions. Whether or not the Volt fire concerns have been resolved is not the issue. Government and corporate deception at such high levels should not go unaddressed. The stage is set for government misconduct as long as President Obama campaigns on a platform that boasts of the success of GM and the auto bailouts while maintaining taxpayers' investment stake in GM. As for Akerson, he has staked the future of GM on the Chevy Volt. He continually supports claims that the vehicle has huge demand even as evidence grows to dispute those claims. Does a CEO that has been so wrong deserve to be CEO?

Besides the question of government involvement with NHTSA's reporting delay, there is another question that should be answered during congressional hearings on the Volt. Regarding the Chevy Volt and leadership at GM; has Akerson been dishonest, politically influenced or just incompetent? The answer appears to be, "yes."

 

Mark Modica is an NLPC Associate Fellow.