The Last Fashionable SUV (Has Already Been Sold)

The advertising slogan for the Hummer is: "Like Nothing Else."

Which is also an apt description for the fuel price surge that has crashed the market for extra-heavy consumer vehicles. The physics and economics are simple. Lugging around a lot of iron requires a lot of fuel. At $4 per gallon, the fuel bills start to pinch hard and household solvency trumps a cool image every day of the week.

The Hummer was the most extravagant manifestation of Detroit's most recent business model, which was to turn dowdy trucks into ultra-hip, must-have wheels. Car guys know that people don't buy cars, they buy image. Detroit's car guys ingeniously pushed a lot of emotional buttons when they marketed Hummers and other slick SUVs, which convey an aura of dominance and allow their owners to show the world who's the toughest and coolest of them all.

Throughout most of the 1990s and the first part of this decade, the model worked great. Sales of flashy SUVs and pickups returned handsome profits. Economy car product lines were largely a nuisance to the Big Three, which built them largely to keep the companies in compliance with CAFE standards.

Unfortunately for Detroit, its business model was based on a premise that cheap oil would be available indefinitely. Detroit was slow off the mark when warning signals began flashing yellow, then red, that the era of cheap oil was drawing to a close.

Reality has arrived in the Motor City. General Motors essentially dumped its truck-oriented business model this week in announcing that four manufacturing plants that build big pickups and SUVs will be shuttered permanently. The Hummer brand is facing a large makeover, if it isn't sold off entirely. The company says it is going to focus on selling economical cars that people want to buy.

GM CEO Rick Wagoner signaled that the shift in strategy is not a temporary retreat. The dramatic consumer shift towards smaller, more fuel-efficient vehicles is likely permanent, Wagoner acknowledged.

Looking ahead, GM is betting its still-considerable resources that consumers will embrace an entirely new kind of car – the Chevrolet Volt, which will feature a lithium-ion battery that can propel the car for 40 miles, good enough for everyday use, and can then be plugged into an ordinary socket for recharging.

Chevy Volt

The Volt will feature a small internal combustion engine, but it will play second fiddle to the battery. The engine would only kick in to recharge the battery during longer trips, improving the vehicle's range and, theoretically, overcoming a significant barrier to consumer acceptance of battery-powered cars.

On June 3, GM's board gave Wagoner the green light to put the Volt into production and get it into showrooms by the end of 2010. It's a big gamble. For the Volt to succeed in driving GM into a new era, the battery packs have to be ready and the plug-in hybrid technology has to be glitch-free. The price has to be right and consumers hesitant about adopting new technology have to be convinced that the warranty and post-purchase service will be rock-solid.

The car will have to look like a car, with cool, come-hither styling that will press a different set of emotional buttons. Too often, electric cars of the type often seen at environmental festivals have a dorky, oddball look that may seem futuristic but is a turnoff for ordinary consumers.

For the Volt and vehicles like it to succeed, mainstream appeal will be a must. Once GM and its competitors plunge into plug-in hybrids and, later, fuel cells, there will be no going back. The more that automakers can engineer a smooth transition to newfangled transportation technologies, the better, for themselves and their customers.

High oil prices and the prospect of carbon caps mean that change is coming, but a smoother road into a cleaner future will be better than a bumpy one.