Volt Sleeps With the Fishes
GM has just
announced it will be idling the plant (and the 1,300 workers at
that plant) where the game changing Chevy Volt electric
car is uh, was built. GM says its only temporary
until they figure out how to align production with
demand. It could be a long wait for those workers.
production of 45,000 Volts this year. That may have been just a
little bright-sided. Last year, 7,621 of them found buyers (about
2,400 fewer than the 10,000 GM had hoped for). This past month,
just over 1,000 of the $40,000 sort-of electric cars (sort of, because
deep inside the thing, theres a gas engine that serves as
a sort of carry-it-with-you range extender), which means
production and demand have a ways to go
before they are, er, aligned.
why, obviously though perhaps not to GM is that the
concept itself was misaligned. Electric (and hybrid-electric) cars
exist for one reason: To do an end-run around gasoline. The whole
point of the exercise, as a practical matter, is to lower the cost
of driving by cutting the driver loose from $4 a gallon fuel. But
when it takes $40,000 to do that, it becomes pointless as
a practical matter. Yes, its a clever bit of engineering.
I know. Ive driven the Volt. Remarkable. It can operate at
steady 60 MPH for several miles (rather than coast for a few seconds,
like most hybrids) purely on the strength of its electric motor
and batteries. Very cool. But also very expensive and thats
the point that matters.
sticker price is in BMW 3 Series/Lexus GS land. Do people who purchase
$40k cars have to worry much about $4 gas? Apparently this thought
did not occur to the people at GM responsible for the Volt. Even
with a $7k direct federal subsidy to each buyer (more on the indirect
subsidies below) a new Volt still costs what we call in the car
business entry luxury money. Easily two (even three)
times the amount that would buy you any one of several very appealing
compact sedans, several of which get 40 MPG on the highway.
So, drum roll,
people looking for something economical did not look at the
Volt. Who did? CEO Dan Akerson conceded that the average income
of a Volt buyer is $170,000 annually not exactly hard times.
(so it said) the Volt could be sold to the less flush on the basis
of its down-the-road economies. But those are theoretical and ill-defined
(including, for instance, such as variables as winter driving; how
will extreme cold weather affect the electric drivetrain? Etc.).
But the up-front costs are very real and forbidding. People
facing lean times are not lining up to finance a $40k purchase,
even with a$7k carrot dangled in front of them. And the potential
buyer pool of 170kers per year is just about dried up.
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© 2012 Eric Peters
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