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Mon January 10, 2011
GM's Chevy Volt is more than a car - it's a technological strategy
For people who follow the car business, the big news coming from the North American International Auto Show on Monday was no surprise.
Still, GM employees enthusiastically cheered and applauded the announcement.
The Volt is GM’s extended range electric car. GM has big plans riding on the electric car’s small frame. In fact, the Volt is more than a car for GM. It’s an entire strategy.
General Motors began developing the Volt a couple years before the bankruptcy. The company was in terrible financial shape long before that near-death experience. GM was forced into one decision after another about what to cut - white and blue collar staffing, benefits, factories.
Some GM vehicles already in development had to be abandoned.
But not the Volt.
"GM deserves a lot of kudos for sticking through tough times and making sure the Volt saw the light of day," declares Brad Berman, founder of HybridCars.com and PluginCars.com.
Berman says GM now has bragging rights to the second-most fuel-efficient vehicle in the U.S. – only a few miles per gallon behind the all-electric Nissan Leaf, which was given a gasoline equivalent of 99 miles per gallon by the Environmental Protection Agency.
And unlike the Leaf, the Volt can run long after its battery is depleted, because there’s a backup gasoline engine.
"Can you imagine the dire straits they’d (GM) be in if they couldn’t point to the Volt, and say we’re back in the game? They would have been lost to Nissan," says Berman.
GM will build only 10,000 Volts this year.
That’s not unusual for a brand-new kind of vehicle. Toyota built very few Priuses in the first year of production of that car. But GM has deeply ambitious plans for the Volt for 2012 and beyond.
Tony Posawatz is Vehicle Line Director for the Volt:
"The Volt is something special," he says. "It’s a big idea, and we’re picking up reads from the marketplace that our planned production volume may not be enough to meet demand."
Reads from the marketplace such as, people willing to plunk down way over the sticker price to get a Volt, and long waiting lists at Chevy dealerships.
GM is now trying to figure out how it could make 60,000 or more Volts in the second year. And the company’s ambitions don’t stop there. More kinds of Volts are on the way.
The strategy is different than Nissan’s, which is betting big on all-electric cars, or Ford's, which is spreading its bets over a family of hybrid, plug-in, and electric cars.
Posawatz says the Volt can be flexible:
"The Volt allows us to move whichever way energy prices go, wherever demand in different regions go, because I can put in different engine generators, different sized batteries, different fuels - so the Volt is really our focused high priority initiative going forward."
It’s a big risk for GM. The automaker admits to spending $700 million on the Volt, but it could be closer to a billion.
Welcome to the car business, says auto analyst Csaba Csere. He says there’s no guarantee for GM -- or Nissan or Ford for that matter -- just as there was none for Toyota and its Prius ten years ago:
"Looking back on it now it’s a great success," says Csere, "but at the time, that was risky. GM wanted to take some of the green high ground back from Toyota by inventing a new kind of car. And that’s what they’ve done."
Meanwhile GM is ramping up Volt sales – slowly.
The car went on sale December 15, and 350 Volts sold by the end of the month.
GM is also trying to get a Volt to every Chevy dealer as quickly as possible so people curious about the buzz can see what it’s about for themselves.
Here's the audio version of this story:
Detroit Auto Show