QUESTIONS AND ANSWERS ON GM'S HYBRID PROGRAM!

Q: It seems as though GM is way behind its competitors when it comes to hybrids. Why wasn’t GM out there with hybrids four or five years ago, like Toyota and Honda?

A: We are not behind anyone in respect to fuel-saving advanced technologies. When you look at the full complement of near-term technologies – such as Displacement on Demand, variable valve timing, electronic power steering, alternative fuels, our Duramax diesel, advanced electronics and the like – all the way through hybrids and on to fuel cells, GM has a sound strategy. There is no silver bullet when it comes to advanced technologies, and we believe it makes sense to play in all of these areas. As for hybrids, our portfolio of systems will be just as advanced and will position GM very credibly against any competitor. This is not about one technology in particular. It is about using a variety of technologies to save the most fuel by starting with the highest fuel-consuming vehicles first.

Q: How many Sierra and Silverado hybrid pickups are you producing for 2004 and 2005?

A: We began offering the hybrid Sierra and Silverado for fleet and commercial customers in May, 2004. The volume was at 500 to get our manufacturing and service needs in line. Then in October (’04), we began offering the hybrid trucks to retail customers in six states – Alaska, California, Florid, Nevada, Oregon and Washington – based on consumer demand for hybrid vehicles in those markets.

We are projecting around 2000 of our Silverado and Sierra hybrid trucks for the ’05 calendar year (includes 500 for fleet) . A decision has been made to expand the availability of GM hybrid pickup trucks nationwide for the 2005 calendar year beginning with the ’06 model year production. Ultimate production for the 2005 calendar year will be based on consumer demand.

Q: How much will the hybrid option add to the price of Sierra and Silverado hybrid pickups?

A: The hybrid option will be net priced at $1,500 MSRP, and the pickups will have an eight year, 100,000 mile warranty on all hybrid related components.

Q: Why is GM only making 2,000 hybrid pickups in 2005 when Toyota will make 50,000 Priuses and Ford will make 20,000 hybrid Escapes? And why is GM introducing these pickups in only six states, compared to national sales of Toyota and Ford hybrids?

A: We are producing the hybrid Sierra and Silverado in limited quantities at first to ensure that we have our manufacturing and service needs in line. This is standard procedure whenever new technologies are introduced.

Q: Bill Ford has said that there are only two true hybrids on the market – the Toyota Prius and the Ford Escape – and that GM and Honda are misleading the public by calling vehicles that deliver less than 50 percent fuel economy improvements “hybrids”. How do you respond?

A: With the facts. GM is proud to be the first automaker to produce a hybrid propulsion system for a full-size pickup truck – as opposed to on a small car or a mid-size SUV. We’re also proud to have delivered the first hybrid built in North America, and the first hybrid that offers a 42-volt battery pack and four 120-volt auxiliary power outlets. The hybrid Chevrolet Silverado and GMC Sierra feature electric motors integrated between the engine and transmission, engine-off at idle, and a built-in power generator replenished by regenerative braking. They also deliver up to 10 percent improved fuel economy, making them the most fuel-efficient full-size trucks on the road.

Q: You’ve introduced hybrid pickups that run on gasoline and hybrid buses that run on diesel fuel. Will GM introduce hybrid diesel pickups?

A: GM responds to the market, and could introduce hybrid diesel pickups if consumers demand them. However, there are several challenges facing automakers when it comes to putting diesel engines in light-duty passenger vehicles.
· Sulfur – the world's fuel supply has too much of this catalyst contaminant (Europe at 350 ppm for 2003 and 50 ppm for 2005), (U.S. at 500 ppm today and 15 ppm by 2006).
· Legislation – new standards in Europe and U.S. clamp down on diesel's weak points (NOx and particulates) – Diesel engine requirements will go into effect in 2007 with each new truck and bus at about 95 percent cleaner than current models. The new fuel regulations will require most diesel fuels to become 97 percent cleaner, in terms of sulfur content, by 2006.
· Customer negative perceptions – in the 1970s and early 1980s the customers' perception of diesels was that they were smelly, noisy, hard to start and slow.
· Fuel stations – diesel fuel stations are sparse in many areas in the U.S.

Q. It will take years, if not decades before GM’s hybrid or hydrogen vehicles make a real impact on fuel savings. Meanwhile, GM continues to make gas guzzling trucks, SUVs and cars. What is GM doing to improve fuel economy today on its vehicles?

A: General Motors is an industry leader in applying fuel-saving advanced technologies to high-volume production vehicles. Category for category, power for power and payload for payload, GM will stack its fuel economy record against that of any automaker.

According to 2005 EPA data, and within Ward’s Automotive segmentation, GM leads the auto industry in providing the broadest array of fuel-efficient cars, trucks,SUVs and vans.

· GM makes 19 models that get 30 mpg or better – more than any other automaker.

Q: If GM’s fuel economy record is so good, then why does GM have lower CAFE numbers than its competitors?

A: CAFE numbers are sales-weighted and favor companies that sell smaller vehicles. As a full-line automotive manufacturer, GM makes the widest range of cars, trucks and SUVs to meet consumer demand, and this mix of vehicles contributes to GM’s CAFE number. If one applied GM’s sales mix to other manufacturers, they too would have similar, if not lower CAFE numbers. This is why GM often says that CAFE policy is flawed. CAFE is about what customers buy, not what manufacturers build. GM offers 20 2004 models that get better than 30 highway mpg or better, and we will continue to invest in technologies that improve vehicle fuel economy and performance.

Q: When does GM expect to see real production fuel cell vehicles in the market?

A: GM is a leading company in developing fuel cells and is stretching for a commercially viable fuel cell by 2010. GM plans to be the first manufacturer to profitably sell one million fuel cell vehicles. That would be a fuel cell that is competitive with today's engines on cost, power and durability, assuming high volumes. For this to happen, we need to have sufficiently available hydrogen refueling options for our fuel cell vehicle customers. Additionally, appropriate codes and standards must be adopted and in place to enable the practical production, storage, delivery and dispensing of hydrogen fuel.

With concept vehicles such as Autonomy and Hy-Wire, GM has demonstrated that its commitment to fuel cell technology continues unabated. GM is focused on major cost reduction and continued technology improvement to hasten the day when fuel cell vehicles will be available to the public.

Q. The GM-DCX two-mode full hybrid will hit the market literally just a couple of years before you’ve said GM will have a commercially viable fuel cell. Isn’t this just a waste of money if the fuel cell is the true vehicle of the future?

A. GM sees hybrid propulsion as a stepping-stone toward fuel cell vehicles. A lot of the components used in hybrids such as the control system and electric motor will help us bridge to fuel cell technology. Gasoline, diesel, and other renewable fuels, and hybrids will be relevant for our consumers for many years until we fully transition to a hydrogen economy.


Belt Alternator Starter System

Q. What is the actual cost of this system to GM?

A. Like most other vehicle manufacturers GM does not disclose internal cost numbers.

Q. Does this system provide electric boost?

A. The system provides a momentary electric boost when accelerating from a
stop and during passing maneuvers.

Q. How many BAS vehicles can GM make?

We are not yet announcing volume numbers. However, the BAS system has the potential of becoming a global hybrid system.

Q. Why doesn't GM do a performance V6 version like the Honda Accord?

A. The BAS hybrid system can be applied to a wide variety of engines, including V-
6's, and can provide varying amounts of performance boost. GM has chosen the Ecotech 4-cylinder engine for its first BAS application, in keeping with its goal of introducing the most affordable hybrid system in North America.

Q. Why doesn't GM do a performance V6 version like the Honda Accord?

A. The BAS hybrid system can be applied to a wide variety of engines, including
V-6's, and can provide varying amounts of performance boost. GM has
chosen the Ecotech 4-cylinder engine for its first BAS application, in keeping
with its goal of introducing the most affordable hybrid system in North
America.

Q. What is the life of the battery and how much does it cost to replace?

A. Battery life is approximately eight years and is covered by warranty for that
period.

Q. Will the BAS system be offered on the new Saturn sedan that will be produced in Fairfax?

A. The only announcements we have made regarding the BAS system have been with the Saturn VUE in 2006 for the 2007 model year and the Chevrolet Malibu in 2007. We do not have any announcements on any additional applications at this time.


Two-Model Full Hybrid

Q. What’s taking GM so long to deliver a strong hybrid? Why not until 2007?

A. We believe the best way to apply the technology in the market is to start with
the highest fuel consuming vehicles first. That is why in the U.S., our hybrid strategy is focused on larger vehicles, such as buses, full-size trucks and SUVs.
In 2003, we launched a two-mode full hybrid diesel-electric drive system for buses.

We’ve delivered 335 GM hybrid propulsion systems for buses to 20 US cities, representing about 7 percent of the total transit bus industry sales.

We are also in the market with a full-size hybrid pickup truck, the GMC Sierra
and Chevrolet Silverado. It delivers the highest estimated city fuel economy
of any full-size truck and offers some additional attributes for consumers such
as power generation capability through outlets in the cab and pickup bed to
do almost everything from operating power tools at a construction site or
running home appliances during a tail-gate party.

We are developing two additional hybrid propulsion systems. The belt
alternator starter hybrid system will be offered to consumers in the Saturn
VUE in 2006 and in the Chevrolet Malibu in 2007. We think it will be one of the most affordable hybrid choices for consumers.

Also in 2007, we will have the two-mode full hybrid, which we will co-develop with DaimlerChrysler. It will deliver a 25 percent fuel economy improvement in our popular SUVs , the Chevrolet Tahoe and GMC Yukon.

Q. How is your strong hybrid technology different than Toyota’s?

A. Rather than comment on Toyota’s system, let me tell you about our strong
hybrid system. It is the world’s first two-mode hybrid technology. Essentially, it’s a variable transmission with two electric motors and two full hybrid modes of operation.

The addition of a second mode to the drive system improves efficiency and
reduces the need for exceedingly large electric motors. The second mode is
used mostly when the vehicle is at higher speeds such as highway speed. The
two-mode full hybrid delivers seamless dependable power on demand and in
a more efficient package, with motors less than half the size of single mode
systems.

Q. How is your two-mode full hybrid system different than what Ford already has in the market with the Escape?

A. Rather than comment on Ford’s system, let me tell you about our strong
hybrid system. It is the world’s first two-mode hybrid technology and
delivers significant fuel economy and great performance in a wide range of
vehicles. Essentially, it uses a variable transmission with two electric motors
and two hybrid modes of operation. The addition of a second mode to the drive system improves efficiency and reduces the need for exceedingly large electric motors. The second mode is used mostly when the vehicle is at higher speeds such as highway speed. The two-mode full hybrid delivers seamless dependable power on demand and in a more efficient package, with motors less than half the size of single mode systems.

Q. Will the two-mode full hybrid replace the mild hybrid flywheel alternator
starter system you currently have on the Silverados/Sierras?

A. The mild hybrid system currently in the Silverado and Sierra is giving us some insight into real world hybrid usage. There is no decision at this time on what we will do in the future with this hybrid system in the Silverado and Sierra.

Q. Q. If the two-mode full hybrid is scaleable among all sizes of vehicles, why not
have it available in small cars as well in 2007? Why only full-size trucks?

We are studying a lot of possibilities. The two-mode full hybrid is certainly
a possibility in small cars and in a whole range of vehicles. In large vehicles,
the two-mode full hybrid just represents the best application for saving fuel.

Q. What is the actual fuel economy improvement on the buses with the diesel?
hybrid electric drive that you say is similar to the two-mode full hybrid.

A. The GM hybrid propulsion system for transit buses delivers significantly better
fuel economy than traditional transit buses. A third party independent test
using a SAE test standard indicated the GM hybrid bus propulsion system
improves fuel economy by 60 percent for a 40 foot urban transit bus. Real world experience has delivered fuel economy improvement results typically greater than 20 percent and on some cycles as high as 55 percent.

Additionally, the GM hybrid propulsion system for buses save thousands of dollars annually in maintenance costs and dramatically reduces certain emissions by as much as 90 percent when fitted with a diesel particulate filter. Finally, the GM hybrid propulsion system provides faster acceleration and operational sound levels approaching that of passenger cars.

Q. Why hasn’t there been more interest in the hybrid buses from other cities?

A We are very pleased with the 7 percent sales penetration (total U.S. transit bus sales) we had in 2004 representing a total of 335 hybrid propulsion systems in
transit buses in more than a dozen US cities. Two years ago, we weren’t even in the hybrid bus business. We are looking forward to continued sales growth in the US and Canada in 2005. Acceptance of new and evolving technology requires exposure to customers to familiarize them with the equipment and to help them achieve a level of assurance that their high performance, reliability and durability requirements will be met. Allison is involved in data sharing and bus demonstrations across the continent (including Mexico) to increase Allison Electric Drive awareness.


Q. You indicated that the two-mode provides the potential to explore
collaborations with other manufacturers that may be looking to co-develop
their own variations of the system. What OEMs are you working with?

Both GM and DaimlerChrysler are open to admitting further partners (i.e. other automakers) into the cooperative venture. There is nothing to announce, however, at this point in time.

Q. Do you anticipate much interest in the two-mode full hybrid from other manufacturers?

A. The two-mode full hybrid’s performance, fuel economy and efficient packaging enable application to a broad spectrum of vehicles and driving cycles. We believe it is the most efficient full hybrid design for most vehicle configurations.

Q. How much additional cost per vehicle will accompany this new hybrid system?

A. Can’t give you an exact cost at this time, however, our goal will be to make sure that the two-mode full hybrid is an affordable option for consumers.


Q. Why do you use two electric motors?

A. The two-mode full hybrid is a power-split hybrid system. This kind of hybrid requires two motors. One is used mostly as a generator; the other as an output motor.

The addition of a second mode to the drive system improves efficiency and reduces the need for exceedingly large electric motors. The two-mode full hybrid’s smaller motors are lighter and more easily packaged in the space of a typical vehicle transmission.

Q. While Toyota is already on the road with their second generation of hybrid
cars and close to introducing a second nameplate, GM did not pursue this
technology for a long time. What brought about your change of mind?

A. Since 2003, GM has been implementing a hybrid propulsion program that is
focused on the highest fuel consuming vehicles first, like buses, full size trucks and SUVs. Hybrid buses use our two-mode GM Allison diesel electric hybrid propulsion system, and we delivered 335 hybrid propulsion systems for buses to 18 U.S. cities.

We are the first U.S. OEM to introduce a hybrid vehicle, and that was a 2004 Sierra/Silverado mild hybrid. This is the first hybrid introduced in North America, and the first hybrid truck. But, we have been open about our plans for additional hybrid products.

We are developing two additional hybrid propulsion systems. The belt alternator starter system (BAS) and the two-mode full hybrid, which we will co-develop with DaimlerChrysler. They vary in fuel economy savings and cost, and we will deliver these vehicles with no compromise in performance. We will provide a broad portfolio of hybrid products – possibly the broadest in the industry.

Q: What exactly is the Federal Government's tax deduction for hybrids, also known as the "Clean Fuel Deduction"?

A: The impact of the Internal Revenue Code (179A) was recently clarified by the
IRS in their announcement (Revenue Procedure 2002-42), which better
defined the Clean Fuel Vehicle (CFV) tax deduction. The IRS clarified that gas-electric hybrid vehicles can qualify for the deduction. The IRS also clarified that it would accept a manufacturers certification as evidence of the incremental costs of the CFV in establishing the amount deductible (up to $2000) by the purchaser of a gas-electric hybrid vehicle. This has recently been extended through 2005.

Q: Does GM's hybrid pick-up truck qualify for the deduction?

A: We have not yet received a ruling from the IRS on the qualification of our
hybrid pick-up trucks.

Q: Have you filed the request for a ruling on the qualification of your hybrid
pick-ups for the tax deduction?

A: We are in the process of obtaining a decision on the qualification of the hybrid
pick-up.