With a federal election coming soon in Canada, the Conservative government of Prime Minister Stephen Harper has begun to liberally spread the pork. The most recent example is a deal that will relieve General Motors of Canada from the repayment of $200 million in previous government loans in exchange for new investments in plants in Oshawa and St. Catharines Ontario. GM Canada will install a transmission assembly line at its engine plant in St. Catharines to build 6-speed automatic transmissions. GM has also committed to building a hybrid version of a new mid-size sedan at the Oshawa assembly plant. Over in the discussion forums at GM Inside news there is speculation that this could finally be a hybrid rear wheel drive sedan based on the Zeta platform that is used for the Camaro that is also being built in Oshawa.

Unfortunately for enthusiasts, this is an unlikely scenario and here’s why. The transmissions to be built in St. Catharines will be front-wheel drive units. GM probably chose to build them there in part because of the proximity to Oshawa so they will probably be used there. All recent indications from GM are that the previously planned RWD replacement for the Impala built at Oshawa will never happen. Instead, an updated front wheel drive model with the 6-speed will be assembled. The 2010-11 timing of the launches does correspond with the second generation GM mild hybrid system which could be used with the 6-speed rather than the far more expensive two-mode system. Given the market and CAFE realities, a direct injected, turbo four cylinder, front wheel drive Impala with a second generation mild hybrid is probably what we’ll see from Oshawa in early 2011.

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An attentive Autoblog reader spotted what appears to be a prototype Mercedes S400 Hybrid in a Houston Texas parking lot the other day. The test car’s badges were all taped over, but the S400 and hybrid badging on the trunk lid seems to match the show concept. The S400 was shown at the Frankfurt Motor Show last fall and will launch into production in mid-2009 at about the same time as the ML450 Hybrid. While the SUV will use the Two-Mode hybrid system developed with GM, Chrysler, and BMW, the S400 will use the mild hybrid system created with BMW. The mild hybrid uses a 15kW motor sandwiched between the transmission and 3.5L V6. The Mercedes mild hybrid system is likely to be the first mass production hybrid with a lithium ion battery. At the auto show introduction, Mercedes claimed that the full-size hybrid luxury sedan will achieve nearly 30 mpg.

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As much as General Motors would like to sell more hybrids, we’d imagine it would be pretty tough to do so without having the batteries on hand. It turns out that since December of last year, GM has had to recall some nine-thousand battery packs produced by its supplier, Cobasys, which were due for installation in mild hybrid versions of the Chevrolet Malibu, Saturn Vue and Saturn Aura. The culprit was reportedly an internal leak in the pack which caused the entire unit to be inoperable. This setback hurts even more in the face of record gasoline prices and the resultant record sales of hybrid vehicles.

Chevrolet plans to begin production of the 2009 Malibu hybrid on June 23. Cobasys says that it has resolved the leaky battery problem and that current units are shipping without defects. Unfortunately, some damage has already been done, especially for the Saturn brand, as sales of the hybrid version of the Vue have gone down from 2,683 units by this time last year to just 326 units thus far this year to go along with just 69 retail sales of the Aura hybrid.

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