3 Thoughts for GM While It Halts Chevy Volt Production (Again)

August was an all-time record month for the Chevy Volt. We don’t have the final tally yet, but GM said the company expects the Volt’s August sales, which includes both 2012 and 2013 models, to top 2,500, a 35 percent increase over July sales. Yet, apparently the sales of the Volt are still not strong enough and GM will close the Detroit-Hamtramck assembly plant, where the Volt is made, for four weeks, from September 17 through October 15.

GM, according to Detroit Free Press, disputed reports that the plant shut-down is connected to disappointing sales and explained it needs to upgrade equipment for the forthcoming production of the 2014 Chevrolet Impala. At the same time, William Grotz, a GM spokesman told Bloomberg that “it’s just a matter of matching supply with demand and gearing up for the production of the Chevy Impala.”

This is the second time this year GM has closed this plant temporarily. In March, GM halted the production of the Volt for four weeks and laid off 1,300 workers due to sluggish sales. As we wrote here GM needed not just to match supply to demand, but also to recalibrate its Volt strategy, and while sales have significantly improved since then, the fact that the plant is going to be closed again is an indication that GM still has some work to do. So while the manufacturing line workers will be at home, it might be worthwhile for GM’s executives to consider the following points:

1. It is time to be realistic about sales – as we mentioned last March, it looks like the company had a difficult time acknowledging reality. GM CEO Dan Akerson said last December that, “We want to ramp Volt production to roughly 60,000 in 2012.” Three quarters of those were intended for sale in the U.S. This forecast seemed a bit ambitious at the time, given that the company sold only 7,671 Volts in 2011 (short of its original goal of 10,000 cars). One would assume that after March’s shutdown and layoffs, GM would be more careful with its forecasts and adjust manufacturing to actual sales, but apparently this is not the case. Akerson, according to Bloomberg, said in June that sales would probably total 35,000 to 40,000.

Given that GM sold 10,666 Volts in the first seven months of the year that estimate seems very high. Even if monthly sales increase to 3,000 for every month until the end of the year, GM wouldn’t sell more than 25,000 cars in 2012. So it looks like Akerson is once again aiming too high, and it’s really not clear why. Lofty estimate don’t serve the company as they only highlight the missed targets. Maybe it’s time for GM to be realistic about the real market acceptance of the Volt before halting the Volt’s manufacturing line for couple of weeks becomes a common practice.

2. Think long-term, not short-term – the Volt is and will be measured by potential buyers in terms of cost-benefit. At the moment it seems GM is more involved in short-term efforts to reduce costs, offering dealers, according to CNNMoney, the best incentives it has ever had on the model. These efforts can benefit the company to some degree (more sales, less income), but if GM wants to build the Volt for the long-term it might want to focus on providing further benefits that will enhance the Volt’s value and justify its price.

For example, in California, where about a third of the Volts are sold, last February the state gave an approval for Volt drivers to use HOV (high occupancy vehicle) lanes on its highways, even if they drive alone. This tremendously popular benefit saves drivers time in addition to money. California has a history of extending such benefits to clean cars – when a limited number were offered to hybrid drivers, more than the going rate for the same car sans sticker. Carpool lane rights made a difference for Californians and they might have the same impact in other states as well, so shouldn’t GM be spending its time and money on these sorts of long-term benefits rather than short-term discounts?

3. Embrace the political debate, don’t ignore it – as we mentioned last March, GM and the Volt specifically became part of the political debate, with positive references from Democrats (President Obama promised to buy a Chevy Volt) and negative ones from Republicans (remember Gingrich’s statement that “you cannot put a gun rack in a Volt”?). The politicization of the Volt hasn’t stopped since then – last June Louisiana Governor Bobby Jindal said, while talking about Obamacare that, “it really raises the question of what’s next, what’s allowable. Taxes on people who refuse to eat tofu or refuse to drive a Chevy Volt…”

GM decided it wants to distance itself from the politization of its brands and banned all candidates from visiting any of its plants until after the Election Day. On one hand it makes sense as GM doesn’t want the Volt to become a Democrat’s car. On the other hand, it’s not like that after the elections conservatives will stop associate the Volt with Obama and big government spending, right? So why not use politics to move sales instead of shying away from them? If GM found a humorous way to use politics in a Volt’s marketing campaign, it could transform the debate from a risk to an opportunity.

Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and the New School, teaching courses in green business, sustainable design and new product development.

Raz Godelnik

Raz Godelnik is an Assistant Professor and the Co-Director of the MS in Strategic Design & Management program at Parsons School of Design in New York. Currently, his research projects focus on the impact of the sharing economy on traditional business, the sharing economy and cities’ resilience, the future of design thinking, and the integration of sustainability into Millennials’ lifestyles. Raz is the co-founder of two green startups – Hemper Jeans and Eco-Libris and holds an MBA from Tel Aviv University.

30 responses

  1. one has to wonder why chevy hasn’t looked at markets where the 35-40 mile range fits the commuting pattern? Why the dealers don’t have charging stations reserved for the cars, the buyers, and the potential buyers, and why they have not taken the car public…to buisnesses with offers of trade the car for a day, or a commute, etc. My experience driving a volt, it that once you have felt the acceloration and smooth feelings of the drive, you will want one!! I did!

    1. 80% of commuters drive 35-40 miles or less according to the US Department of Transportation. Chevy looked at that and designed the car to fit that pattern. That’s exactly why it has a 35-50 mile battery range. For those with a longer commute, it has the on board, gas powered electric generator that can take the driver another 380 miles.

  2. Why not check the REAL market demand, by eliminating the $8,000 rebate?!?!?! GM has not and will never pay back the bailout. The Volt is not failing because it is viewed as a “Democrat” car. It is failing because it does not meet the needs of consumers. It is expensive. Owners cannot recover the “energy savings” for 12 years! (IF the owner does not have to replace the battery pack for a whopping $8K every 5 years!…. it is a green boondoggle from Government Motors!

    1. 1. I pay $170 month more in payment. I save $170/month in fuel (even including electricity). My breakeven is ZERO years, ZERO months. The math is really not that hard.

      You can get a Chevy Volt lease today for $300. What kind of car can you get for an effective lease rate of $130/month (factoring in fuel saved)?

      2. The battery is warrantied for 8 years, 100K miles… double my lease term and longer than most powertrains. Even if there is a degradation with the battery after 100K miles, perhaps my MPG would dip from my current 100MPG to 70-80MPG… still triple an average car. Even if the battery degraded to not being able to retain any energy (perhaps 15-18 years from now), the car can still operate at 38MPG in charge sustaining mode indefinitely.

      1. You save $170/month in fuel(even including electricity) when compared to what car?

        You stated earlier you drive 55 miles round trip, so I am guessing you drive 1250 miles per month via a fudge factor for unaccounted trips and only commuting on weekdays. So lets say you had a TDI Golf and let’s say it only averages 36 mpg even though lots of people do much better. Yes I know that is 2 mpg higher than the EPA combined average but again real world examples show they do much better than the EPA figures. That amounts to something like 35 gallons of diesel per month, does that mean diesel is $4.859 per gallon there? Actually would it not need to be even more than that per gallon because I assume your $170 per month is not including that one tank per month of gas you put into the Volt.

        Regardless, a new Volt with Federal tax credits is what mid to high $30s? A new TDI Golf is around $10k less since I do not believe it has any tax credits. Math is not my strong point but if we just figure the average cost of diesel during ownership is $6.50 per gallon then you’d have to burn around 1525 gallons of diesel to then break even in costs assuming neither car has an out of warranty problem. Then staying with that 36 mpg average I said before you’d have to drive roughly 55k miles to then reach that point. Since I am guessing you drive 1250 miles per month then then it takes 44 months before you break even and that would put you outside most lease periods that people seem to get in both months and miles.

        I do not know but it seems to me that a clean air diesel could in fact cost less in the long run. Now if we take away the huge government and GM incentives to buy the Volt then you’d have to drive a ton more before it broke even and this all assumes the average cost of diesel across ownership spikes to $6.50 / gallon. Actually the real world figures probably could make the Jetta easily fit into not costing more and maybe even a Passat depending on how much VW might have for incentives. Oh and the Golf in a bind can actually sit 5 people so for a young family where the kids actually have friends that sure could help out. Yes I have a pet peeve with how GM had to run the battery on the Volt forcing it to be a 4 seater car and thus killing it as an option for my family.

        1. I save $170/month v. the new version of my last car, Chevy Impala (22.5MPG).
          My $170 savings includes gas and electricity costs v. just gas costs in my last car. I save a little more than $210/month in gas and spend a little more than $40/month in electricity. I save about 80% of the gas I used to use.
          I am comfortable with paying for gas with the remaining 20% because I have 360 miles of range whenever I need or want it.
          My understanding is that anyone can get the $7500 EV Tax Credit either directly (on their taxes) or indirectly through a very low lease payment relative to the MSRP of the car. Any cost analysis should include the EV Tax Credit as it is universally available.
          Whether you agree or object to the “George W Bush EV $7500 Tax Credit of 2007”, it is here to stay…thanks to GOP’s pledge to the Grover Norquist to not remove any Tax Credits.

        2. Interestingly, the Volt is outselling the TDI Golf. Other than the need to seat 5, I would prefer the Volt over the Golf for many reasons.

          The argument about how many years it takes to recover your savings makes little sense. It would be better to compare the Volt to cars that cost the same after taking into account the savings. This would generally be about $5000 discount in most comparisons. So with the tax credit, you would compare it to something around $28k. Without the credit, it will compare to cars around $35k. Given that information, you would still need to drive a volt to see why it might be better than all of those comparably priced cars. It is hard to understand what it means to drive an electric car until you experience it.

        3. OK, lets look at EPA estimates…If the Volt only used gas, it would still get 35mpg city / 40mpg highway…More than Golf. OK, it is just a four seater; but what nice seats…I’ll keep my “Anti-Terrorist Weapon”.

        4. A. The publication, Diesel Car Magazine named the Volt “Best Eco Car”. B. The best diesel VW’s are only about 5% cleaner than a Volt. C. I only have to reach for my cord to fuel up. Looking for diesel in the city? D. European Volt won the Monte Carlo Alternative Fuel Rally. 4 of top 10 places. Beat Tesla and all hybrids, etc. E. I’ve been in a Passat. Have you ridden in a Volt? World of difference. F. Some cars are not for everyone. People have put down almost $80k for BMW 6 series, a 4 passenger car. Most folks have 2 cars. 80% of a cars life miles are commuting to work & errands. Not exactly family stuff. When on vacation, and if you have more than 4, take the other car. G. I drove Cads for 30 years. This car is smoother because there is no shifting. Also, all ICE cars suffer their worst vibrations in the 0 – 5000 RPM range. At 70 mph, there is no noticeable vibration. H. Maint. Cost is lower due to very few oil changes. Brakes last much longer due to regen braking. In normal braking, down to 7-3 mph, the pads do not stop the car. The motor does the braking. Kiplinger Investment Group puts the Volt even in cost with VW diesels after 7- 8 years without the credit. 5 – 6 years with the credit.

          Last but not least, who cares? People buy $125,000 Porsche 911’s and nobody complains.

          7,500 miles driven. 6 gallons of gas used. $198 charging costs

    2. Never is a long time…It is not a rebate…It is a credit on taxes paid!…I have driven Cadillacs that deliver less performace and cost more, but my Volt has all the same luxury…If you are looking stictly at economy, then buy a Cruise…I believe that there are too many oil interests looking to “Kill another Electric Car”. Are you one of them?

    3. It’s obvious you are a hater, so I’ll only comment on battery remark. The new Volts have a 10 year warranty on the battery. DUUUUUUHHHHHH! Ok … 2 comments. The Volt outsells more than half of all the car models sold in the U.S.A. OK, 3 comments. I saved $9,000 the first year and will save $1,900 each year after. That includes charging costs. That’s a $17,000 savings after 5 years. $39,500 – $17,000 = $22,500. OK 4 comments. I haven’t been to the gas station in 6 months. You were there when?

  3. I drive a Volt. I have a 55 mile roundtrip commute. I use gas everyday. However, my MPG on my current tank of gas is 210. I will easily exceed 1500 miles on my current tank of gas.

    The car saved so much in fuel, it completely offsets the higher payment.

    The math is not hard, but there is some effort. I have confidence that many others will do it and realize how much of a money saving machine the Chevy Volt is.

    One other point, GM definitively stated that the plant paused in production due to Impala…NOT due to Chevy Volt sales. This was AFTER the statement that was published in the Detroit News. Perhaps the author could confirm this?

    1. bolo • 2 minutes ago

      had to switch to gas mode after 34 miles; gas was so old and gelled that there was no octane available. cost me $2200 to fix problem. pretty much evens out any $$$ savings. also, all the electricity generated to create the electrical power came from a coal generated power plant.

      1. As a driver of a Chevy Volt, it should be obvious to you that the gas tank is sealed in a different way than a conventional tank. The
        car does force you to burn gas if it is never used (as Mark Brooks mentioned).. but 1500+ miles between fillups won’t even come close to that point.

        You should also know that it is impossible to have a $2200 bill as ALL Chevy Volts are still under warranty and this would be a warranty claim.

        As a savvy Chevy Volt driver… you should also know that more than 50% of power plants are NOT coal, so your statement is more than 50% wrong.

        Also, you should know that when you plug in your car at night, powerplants are UNDER-capacity… so you are using wasted bandwidth with minimal impact to the overall power grid.

        You should also know that it is likely that your power company has green credits where you can pay a little more to support greener sources of electricity.

        You should also know that coal is a US produced sources, and it has a role in ending our extreme addiction to foreign oil.

        At least if you are trying to spread propaganda not rooted in facts, you may consider making your talking points somewhat believable.

      2. I hope you don’t claim to be a Republican. As a Republican I find your lies disgusting.

        As a Republican, I bought the Volt because:
        – It reduces the amount of money I send to countries that hate us.
        – It gives me a sense of comfort to have a redundant system. If there is ever a 70’s style oil embargo it won’t bother me.
        – I like the technology.
        – It is very well done and thought out.
        – It IS cost effective.
        – As someone else mentioned, it takes more coal power to produce a gallon of gas than it does to produce the equivalent recharge for the Volt.

        Again, you disgust me.

      3. Bolo. Before you make an a$$ of yourself again, go to any Volt tech site and study the subject you are about to comment on. Any Volt owner knows your statement is impossible. I guess you were lying for the benefit of the other haters, eh?

        Also, where do you think gas comes from? A lake somewhere? Last year, it took 50 billion kilowatt hours of coal burning electricity to refine gas. That is not including drilling, shipping, piping and pumping at the house of pain, AKA, gas station. One gas pump at 1 gas station emits more co2 than my Volt.

  4. GM’s management has given Volt haters a stick to beat it with so often that it is hard to believe that they truly want the Volt to succeed. A week before the Volt is going to break the record that was set in March the decide to announce a shutdown, every Volt hater cues up the “Volt is a failure” song they love so much. Why not wait until after the record is set to announce the shutdown?
    Thank God the Volt’s engineers were much better at their jobs than the flacks at GM’s corporate headquarters are at theirs.
    The Volt is a great car that costs too much for most people to afford, today, but the price of the battery is dropping by 8% a year, or more, depending on who you ask. Within 2 years the Volts net price will be below $30k and the price of gasoline will be above $5 a gallon. Any question as to how the Volt will be selling then?

    1. Chevy announced a few weeks ago that they are looking into a new breakthrough in battery tech that could lower the price and increase the range even more dramatically than previously thought. But you are right about GM’s upper management. It seems to me that Chevy almost made the Volt on accident because it just seems like the management has no idea what they have. They even let the guy who headed the Volt project go to Fisker. But the Volt is so good, it will succeed eventually despite everything going against it. The only thing Chevy has to worry about is other manufacturers catching up with the Volt.

      1. There is always the chance that some amazing technology will show up and blow the Volt out of the water by lowering price faster than forecast and increasing range faster. And I would be ecstatic to see that happen. But I think we will see continuing improvements in price and weight at around 8% a year. Which doesn’t change things much this year, but in 2 or 3 years there will be a huge difference in price and weight.

  5. had to switch to gas mode after 34 miles; gas was so old and gelled that there was no octane available. cost me $2200 to fix problem. pretty much evens out any $$$ savings. also, all the electricity generated to create the electrical power came from a coal generated power plant.

    1. Ok, what is your volt year and serial number and to which deaLer did you have the work done because he screwed you… And this needs to be reported on the volt user site so other owners are in the loop… Oh thats right, you just made it up right?

  6. Why would you not use a truck or even better, an RV, for your first hybrid/electric machine?

    You could pile a whole heap of batteries in an RV, and every RV campsite on the planet has an electric hook-up that you could use to charge up with overnight.

    Elektro-camping has to be the future!



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