The Ethanol Papers - Paperturn manuscript - Flipbook - Page 39
The leaded gasoline didn’t just give GM the ability to build vehicles with higherperforming engines it gave them a unique process that they could patent. GM
combined their process with similar processes being tested by DuPont Chemicals and Standard Oil, which gave GM three cents on every gallon of leaded
gasoline sold anywhere in the world. They quickly determined that their share
of profits in the sale of leaded gasoline would be worth many billions of dollars
over the next decades.
The significance of understanding what this meant to General Motors is not just
calculated by profits earned, more importantly, it explains why General Motors
– the world’s largest company and automaker - would come to have no interest
in developing vehicles that could get better mileage per gallon of gasoline. It is
essentially the same reason why tobacco companies had no desire to lessen
the addictive qualities of cigarette smoking. The more gallons of fuel that a vehicle used translated to more profits to GM. In essence, the vehicles could be
used as a loss-leader to stimulate gasoline sales.
This new stream of nearly incalculable profits meant that they didn’t have to
really compete on an even playing field with other auto manufacturers:
• They could undercut competitions’ products because they didn’t need to make
profits from their vehicles, thereby driving the competition into bankruptcy.
• They could accept worker demands that they knew the other car companies
would not be able to live with on a long-term basis.
• Moreover, even if they didn’t undercut the price of their competition or permit
unrealistic employee compensation packages, the added revenue gave them a
marketing war-chest that could not be overcome – also ultimately helping to
drive a long list of car makers into obscurity.
Any of the above could have given GM a huge edge over the competition, but
together it was impossible for most competitors to withstand.