January 8, 2006

TOM STEPHENS:
Good evening.

General Motors is on a continuing quest to reinvent the automobile and to remove our vehicles from the environmental debate. Central to this is GM's three-prong advanced propulsion technology strategy... which is focused on reducing tailpipe emissions, ultimately to zero... while significantly improving fuel economy.

As part of this strategy in the near term we're improving the efficiency of both our gas and diesel engines... introducing advanced six-speed transmissions... and aggressively pursuing alternative fuels. These strides have already helped make GM an industry leader in fuel economy. In fact, in North America.. when it comes to vehicles that get 7.8 liters per 100 kilometers... or 30 miles per gallon or better on the highway... no automaker offers more than GM.

We're also working to expand our world-wide availability of advanced diesel engines. Here in the U.S., we're selling every Duramax Diesel engine we can build. The Duramax is now available in the Hummer H1 Alpha... the Savana... and Express full-size vans. It also delivers a class-leading 360 horsepower and 650 foot-pounds of torque in the Silverado and Sierra HD pickups.

We're also working to extend our leadership position in ethanol-compatible vehicles globally. For example, in Sweden, the Saab 9-5 BioPower accounts for 80-percent of all Saab 9-5 sales, making it that country's best-selling environmentally-friendly vehicle. And just last month in Brazil... where Ethanol is the most available fuel... 78% of vehicles sold by GM do Brasil... were equipped with Flexpower... that provides capability to run on 100% Ethanol. Here in North America, GM already has about 1.5 million E85 capable FlexFuel vehicles on the road… and we plan to build an average of 400 thousand more every year for the foreseeable future.

Beyond conventional gas and diesel engines, 6-speed transmissions... and alternative fuels... we're here today to talk about GM's major commitment to hybrid vehicles.. that we made three years ago, right on this stage.

GM's hybrid strategy is unique... in that we plan to offer several different hybrid systems... across multiple brands... and vehicle applications. Our U.S. strategy is all about customer choice.. and delivering fuel economy tailored to real-world driving. Over time, our plan will deliver at least 12 hybrid models.. in high volume car and truck lines.

We launched our hybrid program in 2003... with a two-mode hybrid system for transit buses. Since then, we've delivered more than 380 hybrid systems for transit buses... operating in 29 cities in the US and Canada… and we started 2006.. with orders for an additional 203 hybrid bus systems. In addition, we're close to delivering our first hybrid bus system to Shanghai, China. In 2003, GM also introduced the world's only full-size hybrid pickup trucks.. the Chevrolet Silverado and GMC Sierra -- which, by the way -- continue to deliver the highest city fuel economy.. of any full-size trucks.

Next we have developed a new... more affordable... GM hybrid system... for a broad spectrum of powertrain and vehicle applications. We've mated this hybrid system... in the Saturn Vue Green Line... to our 170 horsepower... all aluminum... 2.4 liter Ecotec engine and a modified 4T45E transmission. This system is flexible and cost-effective.. combining sophisticated hybrid controls.. with a precision electric motor/generator mated to the engine. It is ideal for high volume global applications... and is planned for passenger cars... both inside and outside of the U.S.

For example, a GM hybrid vehicle is targeted for introduction in China, in 2008. The 2007 Saturn Vue Green Line... which debuts here in North America this summer... will be the first application of this technology.

Let's take a quick look at how it works...

This hybrid system eliminates all fuel consumption at idle... by shutting off the engine when the vehicle is stopped. The engine then promptly restarts... when the brake pedal is released... for the next acceleration. It provides an electric power assist.. during launch.. as well as during wide-open throttle maneuvers... such as passing... when additional performance is required. The system does not use any fuel during decelerations... while also intelligently charging the battery... through regenerative braking. These operations and the transitions between them.. are virtually transparent to the consumer.

The bottom line?

We forecast an EPA fuel economy increase... of 5 mpg in both city and highway driving. And third-party tests... conducted in a real-life, typically American driving cycle... validates that customers will see about a 20 percent improvement in fuel economy -- without sacrificing utility... and with enhanced performance. In fact, the Saturn Vue Green Line's 0-60 time... is actually one second better... than the non-hybrid version.

The second hybrid system we're showing today... is the two-mode hybrid... which we're co-developing with both DaimlerChrysler and the BMW Group. This partnership pools the technical expertise of all three companies... and speeds up development time... while reducing the development costs incurred by each OEM partner. And as I've said before... we are open to collaborating with other OEMs on this technology. Together, we're taking this flexible... and scalable.. two-mode hybrid technology... originally implemented in transit buses... advancing the technology... and adapting it for use in a broad variety of cars, trucks and SUVs. GM's full-size SUVs, the Chevrolet Tahoe and GMC Yukon in 2007 will feature the next iteration of the Two-Mode system. The engine will be a generation 4... aluminum small block V8... producing in excess of 300 horsepower.

Here's a brief look at how it works...

The Two-Mode hybrid system is essentially an electrically variable transmission... with two hybrid drive modes... each separately optimized for city and highway driving. In the first mode... at low speed and light loads... the vehicle can operate in three ways electric power only, engine power only or in any combination of engine and electric power. The key to reducing fuel consumption in heavy stop and go traffic is leaving the engine shut off for extended periods of time... and moving under electric power only during low speed operation.

The second mode is used primarily at higher speeds... It combines electric assist and -- through the use of sophisticated electronic controls -- allows even more efficient engine operation... by optimizing fuel-saving technologies such as... Active Fuel Management, variable valve timing, late-intake valve closure, and a 12:1 compression ratio. To complement the fuel savings achieved by the hybrid system itself the Tahoe hybrid integrates a number of other design and engineering features specific to the model... Including unique aerodynamic treatments front and rear... Aluminum construction of the hood and liftgate to reduce mass... And light-weight, aero-efficient aluminum wheels with low rolling resistance tires to complete the package. These features work in concert with the Two Mode hybrid system to deliver a 25 percent composite improvement in fuel economy as compared with the base Chevy Tahoe… while still providing the comfort and capability that Tahoe customers demand and deserve.

What's the bottom line on GM's hybrid strategy?

We've been consistent in presenting GM's unique hybrid strategy... And today, I can say unequivocally that we are delivering on those promises. We've already put two-mode systems in transit buses and light hybrids in extended cab pickups. And this summer, we're going to continue our steady roll-out of additional hybrid applications... offering different hybrid systems... in a range of popular vehicles to develop the full market potential for hybrid technologies.

This all adds up to a portfolio of desirable hybrid-equipped vehicles that provides customers a choice of fuel economy savings at different levels of affordability. In short, GM is in the hybrid game!

And you're about to see how we're raising the stakes.

(Hybrid Reveal)

MARK LaNEVE:
Good evening.

I'm Mark LaNeve, Vice President of Vehicle Sales, Service and Marketing for GM North America... I'm joined by Saturn General Manager Jill Lajdziak.

(PAUSE)

Okay...I know what you're thinking... the oldest marketing trick in the book... use a bunch of cute kids to make a point. Well, in reality, they do make a point. Our hybrid strategy will not be confined to small cars or a limited number of vehicle architectures. Rather, we will offer sophisticated hybrid technology in a wide range of vehicles, and give customers what they've always wanted... choice.

In addition to the technologies themselves, the ability to haul large numbers of people in hybrid vehicles is going to be a competitive advantage for GM as we enter the hybrid segment in earnest. That's been a central part of our hybrid strategy from the beginning. We've focused our early efforts on large vehicles -- "people haulers" like transit buses... and utility vehicles such as the Chevy Tahoe and Saturn Vue. Why? Because that's where the most volume is, that's where the most fuel is consumed… so that's where our hybrid technologies are able to do the most good for the greatest number of customers, who... are represented here today by all these cute kids.

While we may not be first to the hybrid segment, we're in the game... with two new and distinct technologies, two new hybrid models with a bunch more on the way... demonstrating GM's commitment to customer choice. In short, we're going to cover every major vehicle segment with compelling hybrid versions of many of our most popular vehicles. Cars that people love to own.

This Chevrolet Tahoe Hybrid is a great example... it's kinda like compound interest... you get a 25-percent improvement in composite fuel economy… on top of its already segment-leading fuel economy. And it can haul a lot of your kids... with a lot of their stuff... in all kinds of weather... over all kinds of terrain. It will go on sale next year as a 2008 model, along with the GMC Yukon Two-Mode Hybrid. We'll be announcing pricing and production volumes for those vehicles at a later date.

(PAUSE)

The 2007 Saturn Vue Green Line arrives this summer.

JILL LAJDZIAK:
Powered by the new, more affordable GM hybrid system, the Vue Green Line delivers an estimated 20 percent improvement in fuel economy… or approximately 27 mpg in the city and 32 mpg on the highway. That's the best HIGHWAY fuel economy of any SUV currently on the market -- hybrid or otherwise. And because we believe that you shouldn't have to be rich to be "green," the GM hybrid system will cost customers less than $2,000. This will allow us to offer Saturn Vue Green Line at a starting price under $23,000 -- some $4,000 less than the nearest hybrid competitor. It is, by far, the world's most affordable hybrid SUV… some might say the FIRST affordable hybrid utility... period.

MARK LaNEVE:
As a final illustration of our intention to offer hybrids across the full bandwidth of our GM brands... I'm pleased to announce that we will also be offering a Cadillac Escalade Hybrid, featuring the Two-Mode Hybrid system.

Between the Saturn Vue Green Line, and hybrid versions of Tahoe, Yukon and Escalade, across numerous brands and a wide range of price points, you can clearly see the level of customer choice and potential fuel-savings made possible by our unique hybrid strategy. And speaking of Escalade, we're going to remain here for a bit to entertain your questions... then I hope you'll join us in the Cadillac display for a drink, some food and live music with DJ A.M. and Travis Barker... as we celebrate the arrival of the all-new Escalade family.

(TO CHILDREN:)

You have something you want to say...?

KIDS:
Thank you for your attention. Now please come on up for a closer look.

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Source: General Motors