Ford (F) and GM (GM) are each announcing new plans to save themselves from the earnings garbage bin and give their shareholders some needed hope.

It is awfully late to get started.

GM has come up with a plan creating a partnership between it and a number of the countries largest utilities. GM’s new electric car will be designed to pull power from the electric grid without causing black outs and other unfortunate side-effects. According to The Wall Street Journal, "Auto makers need the cooperation of utilities since they control the new technology’s primary fuel — electricity — and must make sure that the vehicles’ recharging processes mesh with the electricity grid and don’t inadvertently undermine grid reliability."

Of course, Toyota (TM) and Honda (HMC) have been beating GM to market with hybrids and other fuel-efficient vehicles.Catching up now may be a challenge that GM cannot meet. The company loses $1 billion a month in North American, and it may not have the capital to rearrange the company fast enough to regain market share in a soft US market.

Over on the other side of Detroit, Ford is getting ready to announce that it will retool several of its plants to produce small cars, some of which are already sold by its operation in Europe. The New York Times writes "as part of the huge bet it is placing on the future direction of the troubled American auto industry, Ford will realign factories to manufacture more fuel-efficient engines."

Ford and GM share a similar fate. Neither may have the cash to take it through an almost complete transformation of its operations with US car sales are at a multi-decade low. Raising capital will be hard, and current shareholders may suffer substantial dilution.

It is by no means certain that either company can make it through the next two or three years. Hardly anyone would be surprised if one or the other ended up being bought by a foreign manufacturer.

Ford and GM could merge, and save themselves a lot of trouble.

Douglas A. McIntyre

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