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Chevy Volt
Chevy joins the party, but has found its plug-in hybrid car may be a bit too pricey for car buyers

General Motors and other U.S. automakers sat back and watched as foreign-based automakers, led by the Toyota with the Prius, developed newer, more advanced green energy efficient cars.  A step behind, they are now trying to play catch-up, leading to some very interesting results for car buyers in the market for a fuel efficient vehicle.

The Chevrolet Volt, a plug-in hybrid car capable of traveling 40 miles on a full charge, uses a lithium-ion battery pack able to be recharged in a household power outlet or can be trickled charged using the car's onboard gasoline engine "range extender."  Instead of just mimicking the Honda Insight and Toyota Prius, however, Chevy hoped to offer a sportier vehicle -- which inadvertently drove up the price of the car.

GM Executive Bob Lutz, who spearheaded the Volt's development, also noted a retail price tag believed to be in the high $20,000s has turned out to be significantly more.  Due to expensive parts used in the car, including an $8,000 battery, more expensive drivetrain, and other parts, the average transaction for a Chevy Volt is somewhere near $43,000.

"When I said I hope to sell it in the 20s, I just thought, well, if a conventional car of that size with a conventional four-cylinder engine, we can sell it for $15,000 or $16,000, then let's notionally add $8,000 for the battery and we're at $25,000," Lutz told AdAge.com.  "That's the way my brain worked on that one."

GM had to modify several standard systems it uses for its compact-car architecture -- a setback because it wasn't ready before -- which drove the price of manufacturing through the roof.

Volt buyers are eligible for a $7,500 federal tax credit, but that money won't be seen for several months after the car's purchase, while the owner must deal with financing and insuring the car.

Chevrolet will likely find it very difficult to sell the $40,000 Chevy Volt, especially with competition from Toyota, Honda, and other carmakers.  For example, Nissan recently announced the 2010 Nissan LEAF EV zero-emissions vehicle that has already been dubbed a possible "Volt-killer," though auto industry insiders say it's far too early to say such things.

Automakers have shown a renewed interest in hybrids, biofuels, and electric cars, as car shoppers also shift away from regular gasoline to greener technologies.  After GM opened its Global Battery Systems Lab last June, there was a concern GM saw only a short-term market for electric vehicles, which is no longer true.  Despite a more serious effort to develop fuel efficient vehicles, Chevrolet may likely find it very difficult to sell its expensive Volt in the face of new, cheaper competition.





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