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GM to buy Cobasys to secure hybrid future

 
2 956 views Jun 5, 2008
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GM to buy Cobasys to secure hybrid future

GM to buy Cobasys to secure hybrid future

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Earlier this week we brought you news of GM's recall of 9,000 hybrids due to leaky batteries supplied by Cobasys.

Now it looks like GM may buy the battery maker from joint owners Chevron and Energy Conversion Devices (EDC) to help smooth out its supply chain. If it does acquire the battery maker, it can get more involved with the production process to help prevent future recalls.

The buyout is being considered because Cobasys is having financial difficulties and GM desperately needs the company's product to continue building its mild hybrid line-up. That line-up of hybrids is becoming more central to GM's bottom line every day, and future hybrid production is just as important to the maker.

Buying Cobasys would prevent a shutdown which would leave GM searching for a new source of the in-demand batteries while its production lines idled. This worst-case scenario isn't as unlikely as it might seem. Apparently Cobasys' financial problems are severe, and GM's current product line-up isn't suitable to a mid-cycle battery swap, according to Automotive News. That would mean GM could potentially be stuck without hybrids until 2010, a disastrous outcome.

The problems at Cobasys go beyond the bottom line, however. The two owners have been arbitrating a fight over the company since last September. Chevron has since accused ECD of failing to fund Cobasys adequately and of not honoring Chevron's preferred interest in Cobasys. Still, the money matters are also an important part of the situation: Cobasys loss $76 million last year and will lose $6-8 million more this year for a total lost of at least $82 million.
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Comments (2)

  1. By Roy Posted: 6/5/2008 5:18pm PDT

    8 million dollars is nothing for GM to swallow - it's a drop in the bucket compared to the rest of their debt! No, the thing that kills me is that they have to safeguard their inferior mild hybrid line-up by buying a dog of a company that's in debt AND producing a faulty product. I guess you have to pick your poison, but what on earth possessed them to go with this company in the first place?
     
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  2. By chris Posted: 6/5/2008 7:45pm PDT

    because this is one of the only companies that can even source Lithium batteries by 2010.

    call the malibu hybrid what you want but it's merely a dabble in the market before they push full on with the volt. GM has jumped from mild hybrids directly to plug ins with lithium batteries. they've skipped the "prius" step that toyota's been languishing on for the last 10 years. even with the knowledge that GM would put out a lithium hybrid.. toyota still wont bring lithium to market.

    GM will leapfrog everyone in the industry... not too bad.
     
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