Paul Ballew, executive director for global market and industry analysis, told the Tri-County Economics Club at Saginaw Valley State University Monday his company is getting closer to solving the issue of storing the fuel so it will be a realistic source of power for commercially available vehicles "within our lifetime."

"We think we're at the head of the class," Ballew said, although he praised the Toyota Prius as a worthy competitor.

"The solution that we're all looking for at some point is to move away from internal combustion engines."

The company is experimenting with various ways to maintain hydrogen as a solid, rather than a liquod or gas.

Ballew expects gasoline prices, now above $2 a gallon in mid-Michigan, to increase slightly but to come below $2 a gallon eventually. Recognizing the fuel situation isn't going away, GM is focusing not only on fuel cells but on a full-size pickup hybrid and, in 2007, a hybrid utility vehicle.

"We continue to lead the industry in fuel economy with the internal combustion engine" according to the EPA, he said.

He glossed over recent media criticism, including a Detroit News article saying GM would junk its plans for the 2008 model year. He wouldn't describe GM's situation as a crisis, saying instead "it's a tough business for us." The company isn't cutting capital spending, he said, adding he feels good about the fact GM is maintaining its investment spending.

"People want to make 2005 1990," he said of critics. In 1990, GM was bloated and hemorrhaging cash; now the company is "fairly profitable" and has trimmed its operations. When asked if GM is the second-largest debtor in North America behind the U.S. government, Ballew said GM -- combined with wholly owned subsidiary GMAC Financial Services -- is "one of the largest debtors." But the company has cash holdings of $20 billion, and another $20 billion available. GMAC, he acknowledged, is hundreds of billions in debt.

In this time of rising gas prices, global sales surpassed a record 60 million units last year and revenue has grown 6 to 7 percent annually. Ballew believes vehicle buyers are getting more for their money because vehicles are 40 percent more affordable today than they were 10 years ago, relative to household income.

"There is not one mid-sedan today that is not the equivalent of a luxury car in 1990," he said. "You very rarely see a 'beer can on wheels' anymore."