General Motors will temporarily suspend production of its electric car with extended range, the Chevy Volt, to manage excess inventory on dealer lots.
The decision puts about 1,200 employees at GM’s Detroit Hamtramck plant on layoff.
The Volt assembly line will shut down between March 19th and April 23rd, to give dealers time to sell the Volts they already have.
Demand for the Volt has been lower than GM anticipated.
The car has been highly praised, but it’s expensive. Even with a $7,500 federal rebate, the Volt still costs about $32,000.
Meanwhile, people can buy a highly fuel-efficient regular car for much less – including GM’s own Chevy Cruze, which costs about $19,000.
Many analysts say it's not a Volt-specific problem, and they question how much demand there is for electric cars in general.
Meanwhile, a Congressional hearing in January on the safety of the Volt appears to have inflicted only temporary damage on the Volt.
Republican Congressman Darrell Issa of California called a hearing in January to explore what he alleged was a too-cozy relationship between the Obama administration, the National Highway Traffic Safety Administration, and General Motors.
Issa wanted to know if that relationship caused NHTSA to delay an investigation into an incident involving a Chevy Volt that had been damaged in a test and left to sit unrepaired for three weeks, at which point a fire broke out.
There appears to be no factual basis for Mr. Issa's claims, at least none that he could ascertain during the hearing. NHTSA and GM officials denied all the claims.
GM officials were not happy about the hearing, to say the least. GM CEO Dan Akerson testified during the hearing that the company had engineered the Volt to the highest safety specifications, however, "We did not engineer the Volt to be a political punching bag."
Volt sales did drop significantly in January from the month before. But sales climbed back up in February.
Even so, demand for the Volt has run far behind GM's initial prediction. The company figured it would sell 12,000 Chevy Volts last year, but in fact sold fewer than 8,000.
The company now says it will build the Volt to meet demand.