Tesla Model S on Letterman

Elon Musk was interviewed by David Letterman on The Late Show last night, and the Model S was driven onto the stage. Letterman just gushes over this car. The Chevrolet Volt? Not so much.

Here's a clip that you might actually be able to watch for a while before CBS makes them take it down.



Is it just me, or does Elon Musk look like Roland Gift of the Fine Young Cannibals?

From the Nerds with Too Much Time File
The Star Trek Theme Played on Theremin

In honor of the new Star Trek movie opening next week I present the Star Trek theme played on a theremin.




This is well-done but nerdy in so many ways, I can't even count. First, you have to own (or make) the Star Treck uniform. You have to find a clip from the show, and learn how to insert the performer into the clip via green screen. You need to learn to play the theremin. Just maybe you need to build the the theremin, because most of them are supplied in kits. (Clip from youtube.com via synthtopia.com)

Yes Virginia, there Is a Chrysler Bankruptcy
Chapter 11 filed today. Hopes to be out in 60 days.

As was speculated yesterday, Chrysler couldn't negotiate a deal with holdout creditors, so Chapter 11 was filed today. Fiat is on board. The US government and Canadian government have pledged about $10 billion to get them going and keep them going. Starting May 4, the plants will be shut down until Chrysler "emerges" from bankruptcy, hopefully within 60 days. Count on it. In 60 days Chrysler will emerge as a beautiful butterfly.

Solving the Saturn Problem

When GM introduced the Saturn brand in 1984, it was meant to be a break from GM past. Saturn was built on an innovative small car and a dealership experience geared on treating the customer with respect, from a no-haggle pricing strategy to fresh-baked cookies in the lobby. At the dealership level, the brand was a success, and Saturn dealers ran up customer satisfaction scores that were much better than GM dealers as a whole.

Saturn was never a financial success for GM. The SL series that the brand was founded upon was expensive to develop. Chevrolet dealers, the root of much of GM's profit, complained that by developing the SL as an exclusive to Saturn to Chevrolet deprived them of a modern small car for years. Consequently, the SL series was the first and last Saturn-exclusive platform, thereafter, all Saturns would be based upon a platform shared by other GM divisions. As Saturn lost its exclusivity, it slowly started losing its reason to exist. As competition grew tougher, GM had more and more problems both supplying its multiple brands with unique and up-to-date models and supplying the brands with enough marketing support to drive sales of those models that were in the showroom.

Currently, Saturn has its best line-up of vehicles in a long time, perhaps ever, but sales have been awful. The Astra is a competent small car that competes directly with the Volkswagen Golf, one of the most popular cars in the world. The Astra now has huge incentives, but dealers still have trouble moving them off the lot. The Aura was car of the year when it was introduced a few years ago. The most frequent criticism of the car was lack of a rear seat armrest; and when that's the worst problem a car has, that's not too bad. Sales of the Aura are in the toilet. The Vue was recently redesigned. The Vue is a solid, competent small-to-midsized SUV/CUV. It's too heavy though, and sales have been low. The Saturn Outlook is one of the much-praised three-row GM crossovers. Chevrolet, Buick and GMC sell their own versions of the same vehicle, and there's just not enough market to support four versions of the same vehicle. The Saturn Sky, a two-seat convertible sports car, was never meant to be a high volume seller, and that's good, because sales haven't even met expectations.

Now that General Motors is effectively insolvent, GM has announced that it will no longer develop new Saturn models. There is talk that the dealers may take over the brand and source models from any manufacturer that will cut a deal with them, but there are a lot of obstacles in that plan. The primary obstacle is that nobody has figured out how to pay for it. GM tried putting Saturn on the market, but there were no buyers.

Here's my solution: give Saturn to Chrysler. Technically, GM wouldn't give Saturn to Chrysler, it would trade Saturn for Chrysler stock, but since Chrysler stock is worth next to nothing, it would effectively mean giving it away. Nevertheless, giving Saturn to Chrysler would solve problems for both companies.

Chrysler's biggest problem is almost the exact opposite of Saturn's. Chrysler doesn't have enough cars to sell. Chrysler has plenty of trucks, way too many, but cars worth selling are in short supply. When Daimler owned Chrysler, the new card development budget was whacked. Chrysler's designers were under pressure to use bargain basement parts wherever possible, and that penny-pinching was reflected in the quality of the cars. The newer car models have been savaged by critics and have proven to be much less reliable than average. The Dodge Caliber and its siblings are Chrysler's "small" cars, but they have trouble matching the fuel economy of midsize cars. I have joined the Chorus of people deriding the Chrysler Sebring for its looks, and it doesn't perform any better than it looks. The Dodge Avenger? See Sebring. Chrysler's 300 series was a hit when it was introduced, and it has some merit, but it's getting long in the tooth, and it's not enough to build a company upon. Compounding the problem with Chrysler's cars is that it has nothing int he pipeline to replace them over the next two years. Even a Fiat Merger won't do anything to help in the next two years. If the government props up Chrysler as expected, for two years or more, the government will have to cover the losses of a car company without cars to sell.

Here's how Saturn can help Chrysler, by merging Saturn with Chrysler, Chrysler dealers will have competent cars to sell much sooner than they could acquire them from Fiat or develop them in house. Suddenly Chrysler would have a competent small car (the Astra), Midsized car (the Aura) and small sporty car (the Sky). The Vue could fight it out with the Dodge Journey to see which is the survivor. The Outlook can either be dropped or serve as a complement to the Chrysler minivans.

Chrysler would help Saturn by giving Saturn a broader range of products including Dodge trucks and Jeeps. Later, there would be the potential to gain from The Chrysler/Fiat partnership and possibly through a partnership with Opel as well. The Saturn models would have better distribution, especially in rural areas that don't have a stand-alone Saturn dealership. In fact, this combination could take the form of a new keiretsu made up of GM, Chrysler, Fiat and Opel, with cross-ownership of stock all around. The product-planning model would be similar to that used successfully by Renault/Nissan and Ford/Mazda. GM can wholesale product to Chrysler in much the same way that Chrysler builds and wholesales the Routan for Volkswagen.

There are a couple problems with my solution, first is that it would exacerbate what is considered to be a current problem with Chrysler: too many dealers, as current Saturn dealers would be added to the Chrysler Dodge Jeep dealers. Personally, I've always thought that problem was overrated. Rhetorically, I counter: which problem would you rather have, too many dealers, or not enough product? Since the Saturn-Chrysler combination would likely occur in the context of Chapter 11 proceedings by GM and Chrysler, the dealer problem can be resolved through the Chapter 11 plan. The second problem would be too many models and brands. Again, which problem would you rather have, too many names or not enough product?

In summary, a Saturn-Chrysler combination solves a product problem for both Chrysler and Saturn. It increases fratricidal competition between dealers, but all of these dealers aren't going to make it anyway, the fittest will survive. Similarly, the car and truck models that are the fittest will survive. For a government-created enterprise that's a lot of Darwinism. Welcome to the new world.

Chrysler Bankruptcy Likely Tomorrow?

Multiple sources say Chrysler is likely to file bankruptcy tomorrow (Thursday). There are several holdout creditors that refused the haircut terms that the major secured lenders approved. The government even raised the offer by $.25 billion, to $2.25 billion, but it didn't work.

Actually, I wouldn't be surprised if Chrysler didn't file Chapter 11 tomorrow because I don't see what the hurry is at this point.

More later - maybe

Chrysler, Treasury Dept. and Lenders Reach Tentative Deal
Combined with UAW Agreement - Chrysler is Making Progress But Still Faces Rough Road

Multiple sources are reporting that there is a tentative deal between Chrysler, the Treasury Department and Chrysler's secured creditors that involves the creditors taking $2 billion and writing off the remainder of their $6.9 billion debt.

News reports about yesterday's UAW deal with Chrysler focus on the fact that the UAW will own a 55% equity stake in Chrysler. The news reports don't mention something that I'm assuming has to be a fact but has not been confirmed, that this equity stake will be divided into multiple trust funds. Some funds will belong to the general membership, some will belong to the healthcare VEBA, and some will belong to the pension plan. Each of these entities has a different trust structure and subtly different fiduciary duties. If this type of ownership continues it could be problematic at the time of the next collective bargaining agreement.

With fires put out concerning the secured creditors and the unions, Chrysler's and PTFOA's attention can shift to issues concerning Chrysler's cash needs and long term viability. Integral to that is the Fiat/Chrysler combination. The government has indicated a willingness to put $6 billion into Chrysler if it can demonstrate viability. The problem is that Chrysler has been losing $1 billion a month in recent months. It can take half a billion or a billion dollars to retool a factory to build a new model. Chrysler will have to retool three or four plants to build Fiats to make the merger worthwhile. The first Chryslerfiats won't be ready until 2011 at the earliest. It becomes readily apparent that $6 billion is just a drop in the bucket.

How much more cash will Chrysler need - from the government or elsewhere? How much is rational to spend? Let's assume for the sake of argument that Chrysler turns its operations around and starts making half a billion a month in profit, or $6 billion a year. The auto industry in good tiems supports a 7.5 price/earnings ratio, so a fully functioning Chrysler would support a market cap of $45 billion. To get there, you might have to come up with $15 billion for interim losses, $8 billion in retooling, $8 billion in R&D for a couple more mainstream domestic models. That's $31 billion. Keep in mind though, you aren't going to be able to sell all the stock to raise money for the company. Fiat will have 20 to 35%. UAW trusts will have up to 55%. Treasury will have ?
The bottom line: the math is still tough.

If the math doesn't work, I don't think PTFOA should force it. Instead, they should step back from the Fiat plan and look back at the possibility of combining General Motors with Chrysler. If we're going to have an automaker that is nationalized for public policy reasons, you might as well be honest about it. By combining the two, you can make more strategic decisions regarding capital budgeting and eliminate duplicate costs. One bureaucracy can handle such necessary tasks as repurposing shut down plants and retraining displaced workers. You would also minimize the situation that we have now, and that's the problem with Chrysler selling its vehicles at firesale prices just to move them of the lot, contributing to a problem with gross margins across the industry.

Pontiac G8
Future Classic


Watch 2009 Pontiac G8 GXP in Autos & Vehicles  |  View More Free Videos Online at Veoh.com



The blogosphere is full of mourning over the loss of Pontiac. Pontiac was an underachieving brand, but it was OUR underachieving brand, damn it!

Fritz Henderson indicated that Pontiac's cars would not be resurrected under new badges. That means goodbye to the Solstice, Goodbye to the Vibe, and sadly, goodbye to the Aussie musclecar, the G8. Oh, G8, we hardly knew ye. I'm sorry I left you alone on that dealer lot all those cold lonely nights. The G8 was not a sales success, but it got generally good reviews. More than anything else, the G8 is a victim of lousy timing. The 2008 Model debut coincided with $4.00/gallon gas prices. The 2009 model arrived with the general economic freefall.

Ironically, with all the attention being paid to the passing of Pontiac, the G8 is finally starting to get noticed. My old superhero buddy, the GOOGLETEER, flew in the window and did this web search

"Pontiac G8" (and) future-classic

and the search returned 20,200 hits.

If you act now, you should be able to get a discount and some incentive bucks. I bet a month from now, it will be a different story entirely.

GM Lays its Last Card on the Table
- Last Ditch Plan to Avoid Bankruptcy Announced Today Including Reverse Split

This morning, GM CEO Fritz Henderson held a press conference and announced what appears to be GM's last non-bankruptcy restructuring plan. This plan seems to be more what the government was looking for all along, but it may be too late to avoid Chapter 11 bankruptcy. If I understand the plan, it offers bondholders 10% of their money plus collectively 10% of the stock in the company. The union and retirees get stock for their pension and healthcare givebacks, and the government gets stock for the bailout money. Existing shareholders would retain only 1% of the equity in the restructured company. To do this, GM will execute a 100-1 reverse split, trading 100 shares of current GM stock for 1 share of reorganized GM stock. The government would end up being GM's largest shareholder, which, when you think about it, is appropriate since the government will be providing all the money not just to clean up all old obligations but to pay for future operating losses and restructuring costs as well.

Ninety percent of GM's bondholders must agree to the restructuring for the plan to take effect; otherwise, it's Chapter 11 time.

In other news, Pontiac will be gone. Numerous factories will be closed. More than 22,000 workers will be cut, though not all at once, perhaps 7,000 or 8,000 of those workers will be production workers.

Things to do When you have Too Much Time on Your Hands
1. Build 1/10 Scale Saturn V rocket

Breaking NEWS: Tentative Chrysler Labor Pact with UAW

Just in time for the Monday morning news, Chrysler announced a tentative give-back deal with the UAW. Terms have not been detailed, but apparently the cash contribution Chrysler owes for retirees will roughly be cut in half, with the employees receiving an equity stake in the new company. The plan presumes that Chrysler will file Chapter 11 bankruptcy.

The deal with the UAW also includes some undisclosed cuts to benefits, but the particular benefits have not been disclosed. The deal with the Canadian Auto Workers included elimination of tuition assistance, car discounts and (at least a cutback in) the legal services benefit. L