One of the most pressing issues for consumers, the auto industry, and our entire economy is the question of which energy source will replace oil, and when the crossover will come. There is, however, no simple answer to that question. Consider for a moment the following facts:

• The world economy consumes 1,000 barrels of oil per second.
• Throughout the world, people rely almost exclusively on oil to fuel vehicles (in the United States, automotive transportation is 96 percent oil dependent).
• The year 2007 marked the sixth consecutive year of record global auto sales.

Despite the current economic downturn, the automotive growth trend is expected to continue in the mid- and long-term. Today, there are 820 million vehicles around the world; by 2020, the number may exceed 1 billion.

What do these facts mean for the auto industry? That oil will be replaced— displaced might be a better way of putting it—by several different fuel sources over an extended period of time. As a business necessity and an obligation to society, we need to develop alternative means of propulsion, based on a range of fuel sources, to meet the world’s growing demand for automobiles. Even if we wanted to, we cannot continue to rely exclusively on oil going forward, for the simple reason that demand will outstrip supply.

At GM, we’re tackling this challenge in several ways. First, we’re making improvements to the internal-combustion engine and introducing more fuel-efficient vehicles every day. For 2009, we’ll offer an industry-leading 20 models in the United States that get 30 miles per gallon or better on the highway. Second, we are rapidly expanding the application of hybrid technology to our vehicles, improving fuel economy, and reducing gasoline consumption. GM currently has six hybrids on the road, with three more on the way by mid-2009.

Another important technology that could take a bigger bite out of oil consumption is biofuel. Today, there are more than 7 million flex-fuel vehicles (designed to run on gasoline, on 85 percent ethanol, or on any combination of the two) on the road in the United States. If all the flex-fuel vehicles currently in use today—together with the vehicles that US domestic automakers have committed to produce through 2020—were to run on biofuels, the country could save 29 billion gallons of gasoline annually, or 18 percent of projected petroleum consumption. No other technology can come close to having that kind of impact that soon.

But the technology that is generating the greatest interest is electrically driven vehicles. At GM, we’re focused on two basic types: battery-driven vehicles and fuel cell vehicles.

The Chevrolet Volt, our extended-range electric vehicle, is expected to come to market by the end of 2010. Since its debut at the 2007 Detroit Auto Show, the Volt has created more excitement, both in the United States and around the world, than I’ve ever seen from a concept car. When running off its battery, which customers will be able to charge in a standard electrical outlet, the Volt will operate as a traditional battery-electric vehicle with a driving range of about 40 miles, which exceeds the average daily commute of the vast majority of Americans. For those needing to drive greater distances, a small engine kicks in to keep the car going for hundreds of miles, eliminating the “range anxiety” associated with battery-powered cars. Those who drive fewer than 40 miles a day may never have to buy a drop of gas again. That will go a long way toward displacing our reliance on oil.

When it comes to fuel-cell vehicles, we’ve been making steady progress since introducing our first concept car in 2002. Our latest, the Chevrolet Sequel, is powered by our fourth-generation fuel cell. We’re in the process of implementing the Sequel’s technology by building it into the Chevrolet Equinox SUV, which has a range of 150 to 200 miles, refuels in five to eight minutes, and is a full-fledged, electrically driven, zero-emissions vehicle. In 2008, we delivered 100 of these vehicles to customers in the United States, providing GM with the world’s largest fuel-cell market test and a laboratory for making fuel cells commercially viable.

So, what will replace oil, and when? The answer is that over time, many alternative fuels will—but only if there is a commitment from every sector of the US economy. To reduce oil consumption quickly, we need to reach a consensus on which technologies to pursue and how those technologies can best achieve critical mass in the marketplace. The auto industry will need to take the lead in developing the technologies and driving their costs down. But, if this is going to work, government must play a huge role, supporting the development of alternative fuel technologies and then accelerating their adoption through tax credits, fuel subsidies, and other consumer incentives. Most important, America needs a comprehensive, consistent, long-term national energy policy that addresses both energy demand and energy supply.

As we move into an extended period of increased global energy demand and heightened environmental awareness, GM is aiming to remove the automobile from the energy and environmental debate. Doing so will go a long way toward reducing our dependence on oil. This is a goal that we can accomplish much faster and sooner than many think.

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