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Electric Cars at the Auto Paris Show

If Barack Obama and John McCain are as serious as they say they are about ending U.S. dependence on foreign oil, they might want to dispatch a trusted aide or two to the Paris Auto Show, a biennial global industry extravaganza that opened last week.

In the vast exhibition halls in southern Paris one color dominates: green. From the carpeting and lighting to the artificial lawn trimming and acid-green cocktail dresses worn by countless exhibition assistants, the message is hammered home that the industry has staked its economic future on the green revolution. The transformation has been swift. Only a few years ago automakers sued California and Rhode Island to stop governors from imposing local limits on carbon dioxide emissions, and they have lobbied hard against the European Union's efforts to legislate emission standards from Brussels.

Why the change of heart? Basic economics. Fewer than 1 million cars were sold in the U.S. last month — the lowest monthly figure in 15 years — as car loans and job prospects dried up for many Americans. And in Europe, where nearly half of car purchases are financed, auto executives have told reporters that they are bracing for tough times ahead.

Yet there is one reason drivers might be tempted to spend tens of thousands of dollars on a new car: the urge to go green. Says Matthieu Tenenbaum, deputy director of Renault's electric-car project: "If we continue making polluting cars, some day or other we will stop selling cars."

By far the industry's hottest contest is to develop a mass-market electric vehicle, and the Paris show has 19 of them on display. Most are versions of the same system: well-insulated cars with electric batteries that plug into regular outlets at home or at charging stations on the street, a little like filling the tank. Batteries would recharge in a few hours (about six hours in the 110-volt U.S. or about half that time in 220-volt Europe) and run for about 100 miles when full. Executives are betting that range will suffice in cities, where people use cars mostly to commute to work and run errands around town. General Motors is testing its electric model, the Chevrolet Volt, in Denmark, and plans to sell between 100,000 and 200,000 Volts a year in the U.S. from 2010; the car would switch to regular fuel once the electricity runs out. Renault will roll out its ZE (for zero emissions) electric car in Europe in 2011, and Tenenbaum estimates that by 2015, auto companies will have sold about 2.5 million electric cars in Europe — about 15% of all vehicles driven on the Continent.

Yet this green dream is hardly problem-free or environmentally perfect. First, if oil prices continue dropping, perhaps to last year's $60-per-bbl. mark, drivers may opt to keep their old cars, especially if the recession in the U.S. and Europe deepens and car loans get even harder to obtain. In debt and facing slumping sales, the auto industry is also competing against flush high-tech companies in Silicon Valley, which are also racing to perfect a lithion-ion car battery. What's more, the billions that the auto companies are spending in research could be squeezed during the recession, especially since it is difficult to estimate how many electric cars they will ultimately sell. "Everybody is wondering what the market will be for electric cars and nobody has the answers," says Erik Morsing, GM's public relations manager in Denmark. "It depends very much on oil prices."

Nor should it be overlooked that electric cars need electricity, and making it isn't necessarily a clean process. Like GM, Nissan has a new electric car, the Nuvu, on display at the Paris show, and like GM, it is rolling it out in Denmark — a country of 5 million people with ample wind power and spare power during night hours, when most drivers are likely to recharge their cars. Renault's ZE is being tested in Israel, where there are plans to install the nation's first battery-charging stations, outside Tel Aviv, by the end of the year. Yet Israel is hardly typical; its 7 million people live in a tiny country with a reliable electricity supply and closed borders — perfect conditions for installing a nationwide network of charging stations.

It's hard to imagine electric cars solving the serious pollution problems in China or in electricity-starved Africa. More than 90% of China's power comes from overstretched coal-burning stations. "You could end up substituting CO2 emissions from a tail pipe with CO2 emissions from a power station," says Morsing. "If you cannot produce alternative energy, the whole idea of electric cars falls apart." In the end, governments will have to decide what is more urgent: cutting imports from the Middle East or cleaning up the planet.

DaimlerChrysler details plans for massive internal Web project

DaimlerChrysler AG today detailed a new Web-based infrastructure initiative that's designed to link all aspects of its vehicle design, production and marketing operations.

The Stuttgart, Germany-based automaker unveiled the multiyear FastCar project at a conference sponsored by the Office for the Study of Automotive Transportation at the University of Michigan in Ann Arbor. The new initiative is aimed at reducing the time it takes DaimlerChrysler to get new vehicles into production, according to the company.

Officials at DaimlerChrysler's North American unit said the FastCar project will include the deployment of a Web infrastructure that will provide tighter communication among the company's design, engineering, manufacturing, quality, finance, procurement and sales and marketing units.

For example, approved product design changes would get communicated instantly to other departments within DaimlerChrysler, as well as to external suppliers that are involved in equipping and supporting the production of a new car. The company hopes to cut at least three months out of the product development process.

The new project "is as ambitious as any we've ever done," said James Holden, president and CEO of the company's DaimlerChrysler Corp. unit -- a job that gives him responsibility for its Chrysler, Plymouth, Jeep and Dodge operations on a worldwide basis and its North American Mercedes-Benz units.

But Holden also alluded to the complexity of the FastCar endeavor. The project will create "a completely new way to communicate information and data within our organization," he said in a statement. "It's not unlike trying to re-wire a plane while it's in flight."

The FastCar announcement comes just three weeks after DaimlerChrysler began launching a series of new Web sites aimed at car buyers -- a move that ended months of idling by the company while rivals General Motors Corp. and Ford Motor Co. embarked on aggressive Internet strategies.

As part of the FastCar project, DaimlerChrysler will use computer-aided design software developed by Paris-based Dassault Systemes SA and business integration software from Dallas-based i2 Technologies Inc. About 4,100 internal employees and 5,000 external users will have access to the Web-based system when it's completed, the company said.

Initial pieces of the system could be deployed as early as October, DaimlerChrysler said. The company plans to start with the units responsible for its large vehicles and then follow with the ones that develop and produce smaller cars.

The FastCar program also could help DaimlerChrysler cut costs -- a step the company has been looking for in the face of slowing profits at its Chrysler unit in Auburn Hills, Mich.

Continuation of Smooth Ride..

There sure weren't many auto execs admiring Bentley when VW first came calling nearly 10 years ago. Back then, with the '90s tech bubble producing a bumper crop of billionaires, big automakers were on the prowl for exclusive luxury-car brands. When the British military contractor Vickers PLC put Rolls-Royce and Bentley up for sale in 1997, it seemed obvious that Rolls was the real prize. BMW had the inside track, since it already supplied engines to Rolls and Bentley. And indeed, Vickers initially agreed to sell to BMW. But VW rolled up big with an eleventh-hour offer of about $800 million, which bested BMW's bid by nearly $170 million. It appeared that VW had won. But in a bizarre twist, it turned out that Vickers didn't actually control the Rolls-Royce brand name. That belonged to Rolls-Royce PLC, a British jet-engine maker that also did business with BMW. That allowed BMW to swoop in and acquire rights to the Rolls-Royce brand name, leaving VW with just Bentley and the aged Crewe factory.

The CW in the car business then was that VW's charismatic chairman, Ferdinand Piech, had been taken for a ride. But Piech insisted he was always after Bentley, where he saw more upside potential. And given how things have turned out, it's now hard to argue with him. BMW's $330,000 Rolls-Royce Phantom isn't meeting its sales target, and the $335,000 Maybach limo, developed by Mercedes to compete with Rolls and Bentley, has been an outright flop. It turns out that Piech wasn't clueless about Rolls's unusual ownership situation. For months before buying Bentley, he met secretly with Bernd Pischetsrieder, then BMW's chairman, to divide the spoils of Britain's automotive crown jewels. The deal they hatched allowed VW to control both brands until 2003, when BMW launched its big new Roller. "I don't think Piech was hoodwinked," says Richard Feast, author of "Kidnap of the Flying Lady."

In an ironic postscript, BMW ultimately dumped Pischetsrieder. He was blamed for the failure of another acquisition of a British car line, Rover, which was hemorrhaging so much money it became known as the English Patient. Pischetsrieder, though, eventually emerged as chief of VW, where he now oversees Bentley and competes with the Rolls-Royce line he so cunningly acquired for BMW. "It's like a Jackie Collins novel," marvels Motor Trend editor Angus MacKenzie.

After VW arrived, it quickly went to work getting Bentley's groove back. Bentley had long languished in Rolls's silver shadow and reached its nadir in the United States in 1980 when it sold exactly zero cars. "Bentley didn't mean anything to my bottom line back then," says Bentley of Beverly Hills dealer Tom O'Gara, who also sells Rolls-Royce and Lamborghini. "I just sold a few to my buddies. It was like having a pet." In the mid-'90s, Vickers halfheartedly engineered a new model, but couldn't afford a new engine. So it bought an underpowered V-8 from BMW that one Bentley owner complained "couldn't pull the skin off a roast pudding." In his first meeting with engineers, Piech greenlighted a project to rip the Beemer engine out and replace it with an updated version of Bentley's classic big V-8. "He just wrote a $73 million check on the spot," recalls a still-stunned Bentley executive.

Then it was off to the races. Bentley began life in the 1920s by winning the famed 24-hour Le Mans endurance race five times, piloted by wealthy and reckless racers who became known as the Bentley Boys. (Bentley's rakish reputation explains why author Ian Fleming originally put James Bond in a Bentley, not the Aston Martin that Sean Connery later made famous.) VW revived the racing tradition by bringing Bentley back to Le Mans in 2001. Two years later Bentley scored its first Le Mans victory in 73 years, copiloted by the new Bentley Boys, Guy Smith, Tom Kristensen and Rinaldo (Dindo) Capello. "That created a lot of buzz," says Andrew Stuart, CEO of Bentley's U.S. operations, which account for 45 percent of global sales.

Meanwhile, a plan to develop a "midsized Bentley" that had stalled on the drawing board under Vickers was suddenly put on the fast track. The goal was simple: create the world's fastest four-seat sports car--a title Bentley held a half century ago. It also had to have Bentley's bespoke tailoring with yards of buttery leather and burled oak from a single tree that is mirror-matched on each side of the dashboard. VW had a way to make this haute supercar economically: it would engineer it on the same chassis as the Audi A8 and VW Phaeton and equip it with their W-12 engine, augmented with a twin-turbo boost. And for the first time in decades, this Bentley would look nothing like a Rolls. Instead, VW crafted a modern interpretation of the 1952 R-type Continental, a classically sleek Bentley that was just named one of the top-25 automotive designs ever by Automobile magazine.

The Continental GT roared out of the gates, selling nearly 6,000 copies in 2004, its first full year--well beyond Bentley's wildest expectations. It was in such high demand, dealers were commanding $50,000 above sticker. And it quickly found its way into rap videos. "In youth culture, the Bentley is the modern-day icon," says Myles Kovacs, editor of DUB, a hip-hop car magazine that has featured a Bentley on its cover 11 times in the past three years. Bentley also helped drive sales of lots of Chrysler 300s, which borrows heavily on the GT's massive mesh grille. Sometimes, even rich men are accused of driving the poor man's Bentley. "I actually got a ticket and they wrote 'Chrysler' on it," says L.A. record producer Ken Tanner, whose GT received the citation while parked in front of his manse. "You'd think the cops in Beverly Hills would know a Bentley."

The Continental boom has overwhelmed Bentley's British factory. To make room for the new convertible, VW began building Flying Spurs last year in Dresden, Germany. That has been a controversial move among Bentley traditionalists, who already fret that the new models are really just VWs under the skin. "A German-built Bentley in the U.K. is considered a brand crime," says Lawson in London. "They don't sell those here." VW promises to halt German Bentley production by the year-end.

The overhaul VW has given the nearly 70-year-old Crewe factory is deceptive at first. As you walk up on the red brick buildings with spiky roofs, you expect to be greeted by Willy Wonka. Once inside, though, it's like you've entered Futureworld. Multicolored Bentleys move languidly along a brightly lit assembly line, as white-gloved inspectors run their hands along the car's graceful curves. Fred Bennett, who followed his father into the factory 30 years ago, spots a slight imperfection in a Neptune blue GT. "See that little high spot, right there in the panel behind the fender?" he says to a visitor who can't make out the mistake. Nearby, 45 women sit at sewing machines, stitching leather seat covers in a scene straight out of the Industrial Revolution. But beside them, the cowhides are being cut by a computer-guided laser that maps out the most efficient jigsaw pattern of seat shapes. Throughout the factory, Bentley's Old World craftsmanship blends with VW's New Age technology. "They've given us new tools to go about our business," says woodworker Dave Maddock, near an automated router that slices holes precisely in the dash for gauges. "In the old days, this shop would have been full of sawdust."

The days of Bentley's owning the "budget supercar" category also are going fast. A parade of new models are speeding into the $150,000-to-$200,000 price range, where sales have increased nearly sixfold since the GT arrived in 2003. Already, Bentley faces competition from new Mercedeses and Astons. And coming in 2009, the four-door Porsche Panamera will take on the Flying Spur. To defend its turf, analysts say, Bentley will have to refresh its lineup more frequently than the glacial 18-year life cycle its models used to be on. Bentley execs promise new designs will arrive by the end of the decade.

Actor James Caan is plenty satisfied with what Bentley offers now. He's had a chance to drive $300,000 supercars on his TV show, "Las Vegas." But he says nothing compares with his black Bentley GT. "These cars that are three-something are just pompous pieces of crap," growls Caan. "Anybody who'd pay 300 grand for a car should be shot in the head." With Sonny Corleone riding shotgun for Bentley, can anything really get in its way?

Smooth Ride

The rapper Xzibit made his name customizing cars. But when it came time for the host of MTV's "Pimp My Ride" to purchase his most expensive car ever, he didn't change a thing. His $200,000 gray green Bentley Continental GT came fully loaded straight from the factory with hand-stitched baseball-glove leather seats and a massive 12-cylinder engine. "There was no pimping required," says Xzibit. What was required, though, was some restraint on the road home to L.A. from San Francisco, where he bought his Bentley a few months ago. But Xzibit couldn't resist putting that 552-horsepower engine to the test. Before he knew it, he was doing 120mph and a police car was coming up in his rearview mirror. Fortunately for Xzibit, the cop was a car enthusiast. "I've never seen one of these on the road before," the cop gushed, says Xzibit, who adds: "He only wrote me up for going 80, which was a lifesaver."

Bentley has gone through its own lifesaving experience in the past eight years. A threadbare relic from the days when Britannia ruled the automotive high road, Bentley was reborn when it was acquired by Volkswagen in 1998. Yes, VW, the Beetle car company. What would the oh-so-pedestrian "people's car" maker know about august Anglo automobiles? Plenty, it turns out. VW injected nearly $2 billion into Bentley, overhauling its Crewe, England, factory and developing the new Continental car line that it cleverly priced at the low end of the über-luxury-car market--between $150,000 and $200,000. To mere mortals, that might seem like an outrageous sum for a car. But to the world's growing group of millionaires, it sounded like a bargain. And now the "budget" Bentley has become the car of the stars. Paris Hilton famously soaped up a black Bentley in a Carl's Jr. burger commercial and then went on to lose her own white GT in a poker game. Michael Jordan is said to have used his GT as the inspiration for his latest Nike shoe design. "There's so many Bentleys in the Hamptons," says Fabrizio Sotti, J.Lo's producer. (They each have one.) "It's like taxis in New York City."

But it isn't just Bentley buzz that's at a record high. So, too, are Bentley's global sales, which are on pace to top 9,000 cars this year, a ninefold increase since the GT first hit the road in 2003. Last year Bentley scored another sales success with the slightly stretched four-door Continental Flying Spur, the family car of the line, which starts at $165,000 and has a top speed of 195mph. And this month Bentley launches a $190,000 convertible, the Continental GTC (page E22). It's already sold-out through next spring. The bottom line: VW's Bentley bet is paying off big. Though VW won't break out exact figures, Bentley chairman Franz-Josef Paefgen says the luxury-car maker drove into the black last year, earning profits in the tens of millions of dollars. This year Bentley says it will generate revenue of about $1.3 billion. Analysts figure Bentley earns profit margins near 10 percent--twice the industry average. So profits this year could top $100 million. "Bentley," says auto analyst John Lawson of CitigroupSmith Barney in London, "has been a hands-down success."

Bentley's success in the stratosphere could provide a road map for everyday automakers. The key, say Bentley execs, is getting out of your comfort zone. Instead of simply selling a few hundred cars a year to sultans and crown princes, Bentley lowered its sights and expanded its horizons. With its Continental line it targeted an empty niche just above the high-end Benzes and Bimmers and well below the $250,000-to-$350,000 price of its old Arnage model and its more famous English cousin, Rolls-Royce. "We saw that you could move Bentley down slightly and still keep it away from what we call the cheaper luxury cars," says Paefgen.

While avoiding the riffraff, Paefgen found the demographics were still very attractive lower down. Rolls appeals to the superrich, those with a net worth north of $30 million. But Bentley was going after folks worth a mere $3 million-plus. There are just 80,000 potential customers in Rolls's rarefied neighborhood worldwide. Bentley, by contrast, was jumping into a pool of 1.5 million possible buyers. Still, plenty of luxury-car makers have failed at moving downmarket. Jaguar's $30,000 X-type model never achieved its sales goals and analysts believe it tarnished that elite English car line, which hasn't earned a penny for its parent, Ford Motor Co. "The risk VW took was huge," says German auto analyst Philipp Rosengarten of Global Insight. "They were going after a wide spot on the map and sometimes these wide spots turn out to be black holes."

But the high-octane mix of sexy styling, outrageous power and relatively affordable price lured loads of buyers out of their "cheaper" luxury cars. "I was driving a $120,000 BMW Z8, so the Bentley wasn't that big a step up in price," says L.A. lawyer Bill Price, who recently replaced his $160,000 GT with a $170,000 Flying Spur. "The car looks incredible, but you have to be very careful driving it because it's wicked fast." Now other automakers are going to school on Bentley. "They found the sweet spot," says General Motors car czar Bob Lutz.

Entry Level Exotic

The rough economy has spawned a new moniker for single-digit millionaires who still may not feel wealthy enough: middle-class millionaires. Most don't belong to jet clubs or wear bespoke suits. They live in average-size homes and don't always call attention to what's lurking in their bank accounts. They may covet a sexy exotic car but feel conflicted about springing for the extravagance. If you're one of them, don't fret. Each wildly priced high-performance car from Lamborghini, Ferrari, Porsche and Maserati has a slightly less expensive sibling that doesn't compromise much in the way of looks or performance. To prove the point, I did the dirty work and drove them all.

Lamborghini takes first place for its exotic sports-car looks. Nothing subtle here. Reeking of testosterone, the top-line Murciélago and the entry-level (so to speak) Gallardo models both have sharply angled contours and sliver-thin side windows.

The Murciélago LP 670-4 SuperVeloce is a beast, the fastest Lambo ever built. Consider its torso-compressing 6.5-liter, 12-cylinder, 670-horsepower engine that yanked me hard to the seatback, rocketing to 100kph in 3.2 seconds. Spanish for bat, the Murciélago's doors open vertically, like wings on a Phoenix. And owners get to brag about its $455,000 price. Bargain-conscious millionaires can opt for the Gallardo LP 560-4 Spyder, at half the price, and still get a more-than-respectable 5.2-liter, 10-cylinder, 560-horsepower engine that snags 100kph in four seconds. The ride may be too taut for passengers with delicate stomachs, but this open-air beauty beats every heart-stopping ride at Disneyland.

While many Lambo drivers feed on the attention they are sure to get, Porsche owners by comparison can be downright self-effacing—after all, in some upscale suburbs Porsches are as ubiquitous as Camrys. Exacting engineering means that Porsches have predictable handling, which gives me confidence to push my limits as a driver. The racetrack-ready GT2's huge wing, or spoiler, pushes down on the car's rear, keeping it planted on the road. The GT2 sports a twin-turbocharged, 3.6-liter, flat, 6-cylinder engine that produces a formidable 530 horsepower. It's also got locomotive-stopping high-performance ceramic brakes. Like both Lamborghinis, it makes for a tight ride with very little shock-absorbing give. If the $192,000 price tag is too high for a daily driver, Porsche's 911 Turbo, for a mere $130,000, is at once nice and nasty. Nudge the accelerator and the car responds politely, with an easy, everyday ride. Stomp the gas and the 911 Turbo will restyle your hair.

And then there's Ferrari, Italy's iconic stallion. My heart belongs to the F430 Spider, at a modest $238,000. Strikingly sexy in a soft top, it is raucous with its 483-horsepower, V-8 engine and F1-style paddle shifters. Like a skirt hiked up just high enough, the F430 gives you a peek of its midrear-mounted engine through a glass-encased hatchback door. If the language of sex were morphed into an automobile, the F430 would teach all the tricks.

If you must have the best Ferrari, however, the $327,000 599 GTB Fiorano is considered by many drivers to be the epitome of Italian performance. This model has a 12-cylinder, 611-horsepower engine and gets the same brisk track time as the Porsche GT2. The car's sensuous curvy lines, created by the legendary Italian coach design firm Pininfarina, are subtler than the F430's. I guess it comes down to taste: Monica Bellucci or Sophia Loren?

Pininfarina also designed Maserati's latest touring cars, the GranTurismo and sportier GranTurismo S. Both are gorgeous, with hand-stitched leather interiors and optional five-piece luggage sets designed by Ferragamo. The S model has a luscious, bellowing sound—its 4.7-liter, V-8, 433-horsepower engine is so perfectly tuned that the automaker now offers it as a ring tone. It sells for $121,500, while the base model fetches $114,000.

The new American Dream: aspire to middle-class millionaire status with a budget exotic in the driveway. Not bad for austerity.