Think GM's Volt is failing? Think again

The plug-in hybrid may be trailing sales projections and facing a right-wing backlash, but October sales set a record and fuel-efficiency standards are rising.

By TheStreet Staff Nov 19, 2012 1:42PM

Electrical plug copyright Jupiterimages, Getty Images, Getty Imagesthestreet LOGO

By Ted Reed

 

October ought to have been a bad month for the Volt. Gas prices were falling. Auto industry wisdom had it that with so many conventional cars closing in on 40 miles per gallon, why would anyone spend $30,000 for a compact?

 

Also, the last month of the presidential campaign reinvigorated advocates of the political construct that anything government does -- particularly saving GM (GM) -- is bad.

 

Nevertheless, the Volt had its best month ever in October, selling 2,961 units. This broke the record, set in September, of 2,851 units sold. That broke the August record of 2,831 units. In fact, Volt sales have increased for six consecutive months. For the first 10 months of 2012, sales totaled 19,309. Sales totaled 7,671 in 2011 and 326 in 2010.

 

The trend is good, especially for a car with a $40,000 list price and incentives worth around $10,000, although full-year sales will not be close to GM's one-time goal of 45,000 sales in 2012.

 

"I don't think Volt is where GM and Chevrolet want them to be," said Polk analyst Tom Libby. "They sold about 3,000 units in October, while the industry sold 1.1 million. They are getting volume up from where it was, but the number is very low relative to what it needs to be accepted and to meet GM production goals. Also, as a footnote, even if the number were to double to 6,000 a month, GM is still losing a lot of money."

 

Still, for GM, the Volt is an important car becoming more important. "Volt took GM in the opposite direction from where Hummer took it," Libby said. "In terms of image, it was a positive step." Moreover, image equates with economic necessity. A 2011 agreement between the Obama administration and 13 large automakers increases the federally mandated Corporate Average Fuel Economy (CAFE) standard to 54.5 miles per gallon for cars and light duty trucks by 2025. The high standard "will require electrification on a very large scale," said GM spokesman James Cain.

 

Last week, GM said it will have up to 500,000 vehicles on the road with some form of electrification by 2017, with a focus on plug-in technology.

 

"The unique propulsion technology pioneered in the Volt -- the same technology that will be featured in the Cadillac ELR -- will be a core piece of our electrification strategy going forward," the automaker said.

 

GM was not looking for the Volt to be a political symbol. As CEO Dan Akerson said in January, when he appeared before a congressional committee investigating the alleged "cover-up" of a Volt safety investigation, "We did not engineer the Volt to be a punching bag, but that's what it's become." Edmunds.com said Friday that some Volt owners have reported acts of vandalism, such as slashed tires, expletives on the windshield or, in one case, being run off the road, evidently as efforts to express outrage against the car.

 

A key to the Volt's increase in sales came in February when the car gained eligibility for a coveted California's Clean Air Vehicle Decal, enabling single-driver access to high-occupancy vehicle lanes after GM added a low-emissions package. Now "we're getting a lot of traction in California," Cain said. Additionally, incentives valued by TrueCar.com at about $10,000 -- including a $299 monthly lease rate for the 2013 model -- have boosted sales. The Volt is eligible for a $7,500 tax credit.

 

The incentive spending reflects intense competition for green buyers between Toyota's (TM) Prius, the world's best-selling hybrid; Nissan's (NSANY) Leaf; and the Volt. The three offer differing technologies. The Volt uses electricity stored in a battery to power it for 35 miles, then switches to a gasoline engine that powers an electric generator to extend the vehicle's range by about 300 miles. The Leaf is battery powered and has a range of about 73 miles. Prius has a gasoline engine that shuts down when the electric one suffices.

 

GM said six of 10 Volt sales are "conquest" sales to buyers who previously owned other brands: the top trade-ins are the BMW 3 Series, Honda (HMC) Civic and Prius. But Volt sales will likely slow this month due to low inventory after production is suspended for four weeks to allow for retooling so that GM's Hamtramck plant, where Volt is built, can also build the 2013 Impala.

 

Volt's price is high because the cost of introducing new technology is high, but "we're working hard to bring it down," Cain said. "Each new generation should bring it down further and keep us on the road to profitability. (It takes time) to get experience with the technology, to get more efficient battery packs. You just can't miracle this stuff."

 

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Kevin Bullis, energy editor of the MIT Technology Review, recently wrote an essay titled "As GM Volt Sales Increase, That Doesn't Mean It's Successful." He remains skeptical. "It is too early to know how things are going," Bullis said, in an interview. "The Volt is doing well, but still falling far short of what GM had originally claimed it would be doing by this point.

 

"The costs are very high because battery costs are still high and the whole architecture of the Volt is expensive," he said. "It has everything you put in an ordinary car, plus a more expensive and complicated transmission, a huge battery, and all the power electronics that go into controlling the battery. There is no way this kind of architecture will ever be as cheap as a pure electric vehicle or a pure internal combustion engine."

 

However, "over time, battery costs come down," he said. "GM has made a lot of investment in bringing down battery costs and there are a lot of interesting technologies around. Then you start to talk about does it make sense economically (if) it pays for itself in a few years.

 

"I don't want to come across as thinking this cannot work," he said.

 

More from TheStreet.com

56Comments
Dec 30, 2012 10:46AM
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My next car is going to be a : Tesla....Model "S"   now that is a true electric car. With a FREE 30 min Super charge you can truly go for 3 hours straight anywhere at any time, any distance and not use any fossil fuels at all. This will change America. Elon Musk is a true inspiration. GM can continue making recalled cars all they want.......Your Executive money pit is about to end very soon..Good riddance.!!!
Nov 26, 2012 9:31AM
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How many of these sales are to the government?

Our Bozo government is wearing one shred of clothing.

If this  machine was at all practical,which it is not, the government would not have to cover up it's collective foolishness and lack of touch with reality.

Nov 25, 2012 7:56PM
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These pompous schmucks that buy these electric/hybrid cars are total idiots !

They over pay for the car to begin with and yes they buy less gas BUT they ALSO spend big on electric. Somehow you never hear them crow about the cost of their electric bills ?

Is it FREE electric ? LOL

Why is electric energy GOOD and oil, BAD because GE/MSN/NBC (ALL ONE COMPANY ) TELL YOU IT'S BAD ?

These lefty lemmings are so pathetic , they really think they are saving the planet by driving a sheety Prius with thier Obuma stickers attached

Exactly like the poster said below about the green scam .It's yet another Obuma/Soros scam to rob the taxpayers

solyndra anyone ?

 

 

Nov 23, 2012 6:19PM
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So here's the dirty little secret no one wants us to know about the electric vehicle industry: Electric cars use about one-third the electricity of a typical household. That means that every  3 million electric vehicles sold equates to one million new housing starts. We buy 12-15 million new cars every year. Converting one-third of these to electric vehicles by 2025 would mean a HUGE increase in electrical demand and a HUGE decrease in gasoline demand. In fact, typical housing starts are less than one million a year, so our electrical demand from vehicles would be ten times as much as current residential demand by 2025.

 

At the same time that the Obama administration is demanding increased electrical vehicle production, it is refusing permits for coal, nuclear and natural gas utliity plants, setting up a supply demand squeeze that will cause electrical rates to rise ten fold by 2025.

 

So, Virginia, EVERYONE will pay for this administration meddling in the supposedly free market. It matters not how you feel about electric vehicles, you will pay for them anyway through $1,000+ monthly electricity bills by 2025. Start saving for them now.....

Nov 23, 2012 5:04PM
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Hitler had Volkswagon obammy has his volt take your choice both small and a killer and the propaganda government motors in their commercials about how little they go to the gas station doesn't tell us how much their electric bills went up? Green technology's? na bunch of crap either way buying gas or buying electricity its made with natchural gas or coal!
Nov 23, 2012 10:08AM
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This car is a dud.  The general public is not asking for these cars. 

 

This whole "electrification" strategy is being pushed from the government. 

 

Most of the registered sales are to municipalities, and those cashing in on government tax rebates. 

 

Take those away, and let the vehicle sell on its own. 

Nov 22, 2012 12:44PM
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I'm glad you're tickled pink Kahuna. You must feel good know my hard earned wages were taken at gun point only to be given (wasted) to another citizen who choses to ignore econ 101 so he can express himself as being "progressive" The cost per mile is off the charts, but hey, the end justifies the means.......speaking of the end, no one ever addresses our elect grid and how we are going to supply this new demand....Oh, that's right, projects like Solyndra.More money stolen out of my pocket "for the good of the people". Please, someone tell me one gov run entity that runs efficently. Some of you will never "get it" till we're broke.....Oh, yeh, we're already broke. Such a great time to throw more money at wasteful gov ideas.... Finally, I got a private reply from the author disputing my sales upon exiting the assembly line statement. He obviosly has never heard of "channel stuffing" that not only goes on here but in almost all major countries producing cars.
Nov 21, 2012 11:17PM
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if i have good fortune, I intend to get a ferrari and never get above third gear with the engine humming at 6-8 thousand RPM, blowing carbon everywhere. The absurd non science we have attached to fossil fuels is comedic.
Nov 21, 2012 9:47PM
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It just tickles me pink, how someone who doesn't own something bashes the hell out of it.  Forget all the BS reviews and backlash, check out what real Volt owners have to say about their vehicle (and I"m proudly one of them).  The Volt has one of the HIGHEST customer satisfaction rates of any car in history.  Driving it is a feels like being encased in an luxurious dream.  It is stylish, innovative, and one of the most technological advanced cars on the road....bar none. 
Americans should be proud, that one of our companies got the technology right over the foreign automakers.  This is the best PHEV car on the road at a fraction of the cost of a Tesla.  Seriously, do your research.  There is NO OTHER car on the road that can do what this car does.  The competition has wimpy alternatives.   The Leaf, no one gets the stated mileage and you have to worry about range anxiety.  The Prius Plug In doesn't run all electric at highway speed and only has an electric range of about 15 miles max (not to mention drives like a golf cart).  The Fusion Energi has the same problems as the Prius, but is larger than any other PHEV.  Wait till you see the msrp on that one.  When the tax credits are subtracted, the Volt is a very viable vehicle compared to others in its class with the same options. 

Nov 21, 2012 5:11PM
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Well, seeing we the taxpayer pretty much own GM, thanks to the bailout, we each should get one for around 25,000.  That is the appx. amount that EVERY taxpayer in this country owes to the national debt thanks to Nobama screwing with the natural order of business. 

 

What part of NO BAILOUTS don't you dem's understand?  If YOUR company is BANKRUPT, you file for it.  If you can't be solvent afterwards, you liquidate. 

 

But not to worry,  those UNION workers making the volts are doing so on OUR DOLLARS too.

 

Sickening...

 

Sincerely,

 

A dis-satisfied customer and voter...

 

 

Nov 21, 2012 4:41PM
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good thing GM isn't really selling what they expect - they lose almost $40K on each one they sell - it costs almost double what their retial price is - of course GMN predicts 7 out of 10 vehicles they sell in the future will be manufactured in China - at least thats what the pres of GM told the Chinese govt (google it if you don't believe me) - and a big thank you and f - you to the American taxpayer that bailed them out
Nov 21, 2012 2:23PM
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15 years ago GM and toytota were selling electric cars that got 100-140 miles per charge for $30,000. FACT, NOT OPINION. google general motors EV1 and toyota RAV4 EV.
They made these cars only because the state of california ordered them to. the auto and oil lobbies ventually got the mandate reversed, and then GM recalled and shredded all their vehicles, and toyota stopped selling.
GM bought the patent for the NiMH car battery and then sold it to texaco, which was soon acquired by chevron. chevron has basically sat on the patent. the patent expires in 2015.
the technology exists, but it is being suppressed by people who love money more than they love america. allt his info is readily available on google/wiki etc. not a conspiracy, it's easily-researched fact.
Nov 20, 2012 2:54PM
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Volt is a okay
But the price is not

Nov 20, 2012 1:37PM
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GM is selling a vehicle that costs over $80K to manufacture, for a list price of $40K, and even less in some case with the rebates. Who is buying these vehicles? Government agencies and corporate. That's sustainable, yeah right. Just like the solar companies, GM has become another government agency. How truly sad that fact is. When you sleep with the devil, you eventually have to pay up.
Nov 20, 2012 11:13AM
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How do you quantify success?  How many Prius’ and Leafs were sold that month?

Nov 20, 2012 11:01AM
Nov 20, 2012 10:22AM
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One dud of a car......! The article did leave out and not mention who GM mostly sold the Volts too....Huummmm! I bet I was mostly corporate and government entities....NOT END USERS.....The Volt is terrible. It can only travel 55 miles on one full charge.... Leaving you to switch to gas if you had a long traveling day......It barely qualifies a an electric car.....plus all the other related cost....after purchase...A DUD FOR SURE....!!! IT IS FAILING....hands down ...!!! This is another sparkle article to deceive the public.....!
Nov 20, 2012 9:55AM
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The Volt is another taxpayer rip off. Any one with a fundenental knowledge of science knows current battery technology is not commercially viable, nor likely to be for a long time, if ever. I wont bore anyone with costs/outpiut here knowing it will be rebutted with idealogical rants, none having any scientific or rational basis. Wait until you see the taxpayers bill for the  battery powered Cadillac, you could buy a Bentley for less.

This is all a continuation of duping the public into believing GM is a going concern. Subtract government purchases, GM is in the tank.

Nov 20, 2012 1:43AM
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Got to love it "............facing a right-wing blacklash....." in the title lead in. Wonder what direction this story is going?
Nov 19, 2012 10:05PM
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I ses the Obama haters out in full force.Next you`ll blame him for WW2.
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