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Americans just aren't lining up to purchase GM's vision for electric vehicles

It appears that General Motors just can’t catch a break with the Chevrolet Volt. The vehicle is capable of driving around 35 miles on battery power alone, but can also fallback to its gasoline engine/generator to travel up to an additional 372 miles (something that can’t be said for pure electric vehicles like the Ford Focus Electric or Nissan Leaf).
 
The vehicle has come under attack for its relatively high price tag, reliance on a $7,500 federal tax credit to make its price more palatable, missed sales forecasts, and potential for battery fires.


The Chevrolet Volt can travel roughly 35 miles with a fully charged battery before the gas engine kicks in [Source: GM]
 
However, positive news for the Volt started to trickle out over the past few weeks. Production was restarted on February 6 after a holiday hiatus, and the Volt outsold the Nissan Leaf by a 2-to-1 margin in February with sales of 1,023 units versus 478. But even those bright spots aren’t enough to overcome the blunt reality: Americans just aren’t [currently] interested in electric vehicles.
 
I. GM announces yet another Volt production shutdown
GM announced on Friday that it is shutting down Volt production again starting March 19. This lull in production will last for five weeks. GM decided to take this step of cutting back production instead of putting more money on the hood to get customers to drive away from the dealership with a new Volt.
 
“This move is to keep proper inventory levels,” said GM spokesman Chris Lee.


GM's original sales target of 45,000 Volts for 2012 is simply unobtainable [Source: GM]
 
The Chevrolet Volt failed to meet GM’s sales forecasts of 10,000 units for 2011 (the year’s tally was just 7,761). Likewise, with January sales of 676 units and February’s total of 1,023, GM is likely to come nowhere close to meeting the original second-year sales goal of 45,000 units in the United States.
 
II. Gasoline alternatives cost half as much as a Volt
Many consumers are finding it hard to make a case for the Volt, which costs $39,995 before any tax credits are applied. Most other mainstream gasoline-engine compacts start in the $16,000 to $17,000 range (with most transaction prices hovering around $20,000) which puts Volt is clearly out of step with what many Americans are willing to pay for a vehicle of its size.
 
In addition, many compact sedans are touting city fuel efficiency ratings approaching 30mpg in the city and highway ratings of 40mpg or more. Even the standard Toyota Prius, which is rated at 50mpg combined, undercuts the Volt with a base MSRP of $24,000. The smaller Prius c is even cheaper with a base MSRP of $19,710.
 
And one other downside that isn’t often mentioned with the Volt is that it can only seat four passengers instead of five like its more traditional competition. The Volt’s center-mounted battery pack nixes the center-rear seat position that most people take for granted.


The Volt is strictly a four-seater thanks to its center-mounted battery pack [Source: GM]
 
III. GM looks to Envia Systems to cut Volt costs
GM needs to get the price of the Volt’s battery pack down in order to make it more palatable for consumers. GM has invested in Envia Systems, which claims to have developed a battery cell with an energy density of 400 watt-hours per kilogram. With a price of about $125 per kilowatt-hour, Envia claims that an EV with a driving range of 300 miles would cost just $20,000.




[Source: Envia Systems]
 
At that price point, EVs start to make a lot more sense to potential buyers and would help drive adoption. The batteries are scheduled to hit the market by 2015, which should be just in time to power the second generation Volt. However, it likely won’t be soon enough to help President Obama reach his goal of having one million EV’s on American roads by 2015.
 
Last week, President Obama made headlines when he said that he’d purchase a Chevy Volt when he leaves office.

Source: Bloomberg





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