Watch CBSN Live

GM To Build its Own Electric Motors; Motor Supplier Remy Looks Elsewhere

General Motors will announce today that it will make its own electric motors for both electric and hybrid vehicles. Leveraging a $105 million Department of Energy grant, GM is tooling a transmission plant in White Marsh, Maryland to produce the motors (which it spent the last seven years engineering).

The first application for the new GM motors will be the second generation of the company's two-mode hybrid vehicles, which debut in 2013. GM shared dual-mode technology with Chrysler, Daimler and (through Daimler) BMW. The first-gen motors are made by the now-independent Remy International, a longtime GM division (when it was most recently known as Delco-Remy). Some 70,000 of Remy's motors are on the road (starting in 2003), and the company boasts of only two warranty claims.

This new development underscores some challenges for OEM suppliers in the electric space. In this case, a $60.2 million grant is helping Remy accelerate commercialization of hybrid and electric car motors. But $105 million, also from the DOE, is aiding GM's bid to vertically integrate in that area.

According to Guy Westermeyer, a Remy spokesperson, "The tendency for big auto to go captive is no surprise. We've already planned for announcements like this. We will continue to work with manufacturers who do not have the desire to in-source. And the Remy electric motor is made for a wide range of applications in many different industries, not just automotive. Remy has a unique patented design that sets us apart from our competition and we will aggressively protect our IP."

In a wide-ranging interview before the GM announcement, Jay Pittas, president of Remy, and Kevin Quinn, general manager of the hybrid business, talked about where Indiana-based Remy is today and where it's going. The company currently provides hybrid electric motors to GM (including all of its SUV and truck-based hybrids to date), Daimler, Allison and BMW (through Daimler). It is working with some other potential European customers on its next-generation EV technology. Caterpillar and Cummins are among the company's current customers (for starters and alternators) on the heavy-duty side.

There's an interesting history, according to Pittas. The Remy brothers started their business circa 1890 producing electric components for automobiles, including the first magnetos (predecessors of today's alternators) and automatic starters. It was in fact the self-starter, invented by Charles Kettering for Cadillac in 1911, that allowed the internal-combustion engine to triumph over electrics in the marketplace. (The starter eliminated the crank.)

Today, Remy is one of a growing group of Indiana-based suppliers that includes Allison, which makes transmissions for hybrid buses, Ener1, which makes EV batteries, Delphi (another former GM division) and Bright (an automaker as well as a military contractor). OEM manufacturers in Indiana include Honda, Toyota, Subaru and Isuzu. Quinn points out that if you draw a 500-mile circle around Detroit, it takes in Indiana and Ohio--both big auto supplier states.

Remy's big news is that, again with $2 billion in government funding, it is in line to supply motors for a massive conversion of 160,000 U.S. Postal Service vehicles to plug-in electric. "It's an exciting one for us," said Pittas. "Postal vehicles make lots of stops and starts, and they're perfect for an electric application."

Despite the setback with GM, the company sees big growth ahead. "We expect to see two to three million hybrid vehicles on the road by 2015, and 20,000 to 50,000 heavy-duty vehicles." A chart prepared for Remy indicates that the company expects to see a demand for three million electric propulsion motors by 2015.