Billion Dollar Bet

A Pollution-Free Car That Runs On A New Kind of Fuel

What if there was a way to kick America’s oil habit –- using a form of energy that doesn’t pollute the environment?

It’s an important question with cars and trucks averaging the same number of miles-per-gallon as they had two decades ago.

But GM CEO Rick Wagoner says he has the answer. And as 60 Minutes II told you in April, he's bet an astounding sum - more than a billion dollars - on developing a pollution-free car that runs on hydrogen gas.

Correspondent Dan Rather went to Detroit to talk to Wagoner about his billion dollar bet.

“If this breaks through, it’s going to be the biggest thing to hit the automobile in the last 100 years,” says Wagoner. “We’ve got over a billion dollars in it. But we think it’s going to work. We’re not in the business of throwing money away.”

He and his chief designer, Ed Welburn, are staking their careers on what they claim is a revolution in engineering design.

The bulk of their money has been spent on the chassis, which contains all of the mechanics of the hydrogen car.

“The entire engine compartment, or power train, is within the chassis,” says Welburn. “There are very few moving parts.”

They call it “the skateboard.” Inside, a fuel cell uses hydrogen gas to create electricity to power the motor, combining hydrogen and oxygen to create its only emission –- pure water, no pollution.

It’s an environmentally clean car that could transform GM’s CEO into a champion of environmental concerns.

“We’d like to take the automobile out of the environmental equation,” says Wagoner. “What we’re doing is reacting to the demands of our consumers, to the legitimate demands of regulators in society, and very importantly trying to do it in a way that provides a good business opportunity for ourselves."

To understand how GM can profit from a hydrogen car, you need to understand how it was built. The “skateboard” chassis, which holds the entire engine, frees up GM’s team to take advantage of extra space, and consider various body or shell designs, such as see-through cars or tops where the driver could sit in the middle of the car.

The ability to put different tops on the same chassis could save GM a lot of money.

Right now, the company has to spend hundreds of millions of dollars to build different chassis for more than 80 kinds of cars. Having one chassis that works for all of them makes this the perfect alignment of interests: A car that GM believes is good for the environment and good for the bottom line.

GM invited Rather to test drive the billion dollar hydrogen car at its testing facilities in Mesa, Ariz.

There are no gas or brake pedals in the new hydrogen car, and all of the controls are on the Space Age-style steering wheel. The car, which is capable of speeds up to 100 miles per hour, has a range of 200 miles between refuelings.

Larry Burns, GM's technology chief, says the car is targeted to be available to the public by 2010. By that time, GM hopes to have a million hydrogen cars on the road.

Right now, it costs hundreds of thousands of dollars to make each car. But by 2010, GM says, a car like this will cost no more than an ordinary car.

And there will be one key difference –- clean emissions from water that will be pure enough to drink.

Hydrogen is the most abundant element in the universe. Right now, the easiest and cheapest way to make the fuel is to extract hydrogen directly from gasoline, methanol or natural gas.

But the goal is to do it cleanly and on a massive scale. At the Desert Research Institute in Reno, Nev., researchers are using solar and wind power to create hydrogen fuel from water.

But environmentalists say they’ve seen and heard this all before. They believe that GM should concentrate on building fuel-efficient hybrid cars that run on gasoline and electricity, and are being sold right now, rather than promising drivers the hydrogen car of tomorrow while selling gas-guzzling SUVs today.

Wagoner disagrees.

“We would argue that the problem isn’t the SUV; it’s the fuel that goes into the SUV,” says Wagoner. “If we can come up with a new technology to propel the SUV, then I think we’ve really substantively addressed a lot of the legitimate concerns about low fuel economy, emissions and things of that sort.”

Perhaps the biggest reason GM is pushing hydrogen fuel cells is because it thinks it can make a lot of money from them. GM believes there’s a huge market for this technology, and it's not just talking about cars.

Examples include a forklift that runs on hydrogen gas, power tools that run on fuel cell batteries, hydrogen-powered robots, and even a John Deere truck.

For GM, it’s a business opportunity that can’t be ignored.

“When you add it all up and talk about the sales of everybody that’s involved and all those kinds of vehicles we’ve talked about, you’re talking in the trillions,” says Wagoner.

And he’s just getting started. A refrigerator-sized fuel cell already provides enough power to light a research building on the GM campus.

This summer, GM, NASA and a company called Aerovironment will unveil a high-tech solar and fuel cell powered spy plane. Because hydrogen fuel is lighter than oil, the plane can fly at 70,000 feet, making it harder to shoot down. And it can stay up there for more than a week.

Someday, GM believes, hydrogen, not oil, will power the entire United States economy.

“Moving to a hydrogen economy as a vision for the U.S. is a great one, but it’s going to be a team sport to get there,” says Wagoner. “I think, absolutely, it’s going to require federal dollars.”

GM took its message to Washington and got a response. In January’s State of the Union Address, President Bush proposed $1.2 billion in research funding so America could lead the world in developing clean hydrogen powered automobiles.

GM was pleased, but if you think it was thrilled, guess again.

“We think it’s going to need to be bigger than that,” says Wagoner.

“If you go back to the ‘50s, the Eisenhower administration sponsored and pushed the national highway system, the interstate highway system, which has been a huge benefit, not just to auto manufacturers, but to the whole economy,” Wagoner says.

“That’s the kind of thing that required a national effort. If we really want to move to a leadership position in this country with fuel cells and a hydrogen economy, government leadership like that is going to be required.”