GM Faces Task of Rebuilding Volt Image After NHTSA Probe Ends

General Motors Co. (GM) begins the task this week of repairing the image of its Chevrolet Volt plug-in vehicle after federal regulators closed their investigation into a battery fire.

GM Chief Executive Officer Dan Akerson and David Strickland, head of the National Highway Traffic Safety Administration, are scheduled to testify Jan. 25 before a panel of the U.S. House Oversight and Government Reform committee. The panel is probing the response to a June 6 fire in a Volt three weeks after the car was crash-tested.

While NHTSA closed its investigation last week and said electric vehicles are no more prone to fires than other autos, Detroit-based GM is left to mend the Volt brand’s reputation and sellers of other electric cars may face additional hurdles in boosting sales, an auto analyst said yesterday.

“It’s not unlike a story that’s written that says somebody has committed a murder, and the next day they say, ‘Oh they didn’t, sorry,’” said Alan Baum, principal of Baum & Associates, an automobile-industry analysis company in West Bloomfield, Michigan, in an interview. “It’s been in the news.”

The agency’s decision to close its investigation “is consistent with the results of our internal testing and assessment,” Greg Martin, a spokesman for GM in Washington, said on Jan. 20. Martin declined further comment yesterday.

NHTSA started investigating the Volt on Nov. 25, more than five months after the post-crash fire at its test facility in Wisconsin. That fire began after battery coolant leaked in the simulated rollover crash, government and GM investigators found.

Volt, Leaf

The blaze and subsequent probe overshadowed the first year of sales for the Volt, a vehicle with batteries and a gasoline engine, and Nissan Motor (7201) Co.’s Leaf, powered only by electricity. The cars are the first electric vehicles sold for the mass market after President Barack Obama set a goal of having 1 million electric vehicles on U.S. roads by 2015.

Toyota Motor Corp. (7203), whose Prius accounts for half of all hybrid-vehicle sales, will sell a plug-in version this year.

U.S. buyers of electric cars, including the Volt, Leaf and luxury models such as Tesla Motors Inc. (TSLA)’s Roadster, qualify for a $7,500 federal tax credit intended to defer the extra cost of the new technology.

Government Bailout

The Treasury Department owns 32 percent of GM’s stock, according to data compiled by Bloomberg, following a 2009 government bailout of GM and Chrysler Group LLC.

Photographer: Tony Avelar/Bloomberg

General Motors Co.'s Chevrolet Volt plug-in vehicles are the first electric vehicles sold for the mass market after President Barack Obama set a goal of having 1 million electric vehicles on U.S. roads by 2015. Close

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Photographer: Tony Avelar/Bloomberg

General Motors Co.'s Chevrolet Volt plug-in vehicles are the first electric vehicles sold for the mass market after President Barack Obama set a goal of having 1 million electric vehicles on U.S. roads by 2015.

Still, marketing for GM’s other non-electric vehicles will be more difficult because of the issue with the Volt, Baum said.

“This is a reputation car,” Baum said of GM and the Volt. “They want people to look at General Motors positively and not necessarily buy a Volt but buy a Cruze or buy a Malibu. I think they’ll spend a lot of money to make that case.”

Consumers, citing price and questions about unproven technology, said they are less likely to be interested in buying a plug-in vehicle, according to a survey released this month by market-research firm Pike Research of Boulder, Colorado.

In a 2009 survey, 48 percent of respondents said they would be “very” or “extremely” interested in buying a plug-in vehicle, Pike Research said. In 2010, 44 percent said they were in those categories, and at the end of December that figure fell to 40 percent.

GM Largest Seller

GM said last week it sold 9.03 million vehicles worldwide in 2011, regaining its position as the world’s largest seller of automobiles. Led by the Chevrolet brand and sales of the compact Cruze, it reclaimed the title held by Toyota since 2008.

The automaker delivered 7,671 rechargeable Volts in 2011 and 7,997 in the model’s first 13 months of sales, missing its 2011 target of 10,000. Nissan sold 9,674 Leaf all-electric cars in the U.S. last year. The sales target was 10,000 to 12,000.

GM said Jan. 5 it would provide a fix to the Volts it had sold to reduce the risk of a post-crash fire.

NHTSA closed its investigation in less than two months, more quickly than the seven unrelated probes ended in November and December.

“I think the quick resolution and closure on the issue means that the whole fire controversy is probably done before it ever really became an issue to mainstream consumers,” Ed Kim, an analyst for industry researcher AutoPacific Inc. in Tustin, California, said in an e-mail. “GM came up with a fix quickly, and NHTSA gave the fix its blessing equally quickly.”

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

To contact the editor responsible for this story: Timothy Franklin at tfranklin14@bloomberg.net

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