GM Unwraps Plug-In Hybrid Volt as Buyers Warm to Trucks

Updated on
Chevrolet Volt
The 2016 General Motors Co. (GM) Chevrolet Volt is unveiled during a news conference ahead of the 2015 Consumer Electronics Show (CES) in Las Vegas, Nevada, on Jan. 4, 2015. Photographer: David Paul Morris/Bloomberg

General Motors Co. unveiled a new version of its plug-in hybrid Chevrolet Volt as gas hovers near $2 a gallon and the number of buyers who want a fuel-sipping vehicle shrinks.

Cheap gas has been a boon for GM and its rivals for most of the past year, with sales of sport utility vehicles and pickups bringing fat profits to Detroit. Yet, it also underscores a problem. As GM and other automakers brag about new technology that will satisfy regulators and prepare for the future, consumers are more interested in SUVs these days.

“Who cares?” said Maryann Keller, an independent automotive consultant in Stamford, Connecticut. “With gasoline under $2 in some places, consumers aren’t that interested,” she said. “The Volt is an expensive car that doesn’t deliver value for most buyers.”

The new Volt, introduced today at the Detroit auto show, can travel as far as 50 miles on a single charge, compared with the current model, which can run 38 miles before its gasoline engine recharges the battery. If the driver runs the battery down and uses a full tank of gas, the car would average 41 miles per gallon and travel more than 400 miles, GM said.

GM also introduced the Chevrolet Bolt EV concept, which it envisions as a $30,000 pure-electric car with more than 200 miles of range. GM aims to put the model on sale by 2017, said a person familiar with the matter. GM leased the electric EV1 to limited consumers in the late 90s, and currently offers the Spark EV in select markets.

Profit Outlook

The company set out to cut production costs of the Volt by $10,000 to try to make the vehicle profitable.

“We’re coming within that range in terms of cost” reduction, said Mark Reuss, the executive vice president in charge of product development. Asked if the car will be a money-maker for GM, he said, “It can be. That’s the glide path we’re on.”

The Volt will have company. Hyundai Motor Co. plans to unveil a new hybrid version of its Sonata mid-size sedan as well as a plug-in hybrid version. Mercedes-Benz will show off a plug-in hybrid C-Class luxury car, which the company says is the only such model in its category.

Plug-in hybrids like the Volt can drive longer using electricity because they carry a larger battery than conventional hybrid cars. Drivers plug the cars in and recharge the battery to get more electric drive and use less gas. Honda, in an attempt to leapfrog everyone in the technology game, will show a fuel-cell concept car, which uses hydrogen to generate power for an electric motor.

Hybrid Sales

The average price of a gallon of gasoline in the U.S. has fallen for 101 straight days, reaching $2.152 on Jan. 9, according to motoring club AAA. That’s down 42 percent from April 26, when it reached a peak for the year of $3.696.

Cheaper gasoline has hurt sales of hybrids. Sales of the Volt tumbled 19 percent in the U.S. last year to 18,805 vehicles. The most popular version of Toyota Motor Corp.’s Prius, by far the bestseller among hybrid electric cars, slumped 15 percent to 122,766 cars. The Prius V, a wagon version of the car, fell 12 percent to 30,762. Hyundai’s Sonata hybrid sedan sank 25 percent to 21,052.

A price cut in mid-2013 helped boost sales of Nissan’s all-electric Leaf by 34 percent last year to 30,200. Chevy lowered the Volt’s price in 2013 by $5,000 to $34,995, the company said in a statement at the time.

Regardless of sales today, carmakers need to keep investing in technology, said Bill Fay, a group vice president in Toyota’s U.S. sales arm.

‘Long Haul’

“Obviously, the longer-term plans are built around complying with future regulations and our work continues in that area,” Fay said in a phone interview. “In the short-term, we’re very much focused on trying to deliver to consumers what they are really coming in and looking to buy.”

GM is also looking further out. Even with the drop in demand, Chief Executive Officer Mary Barra said the automaker will keep developing the Volt and other efficient cars.

“Over the longterm it doesn’t change our strategy at all,” Barra said at a roundtable discussion with journalists on Jan. 8. “We’re in this for the long haul.”

The Chevy brand, known more for tire-screeching Corvettes and Camaros or brawny trucks than for efficient technology, is getting a boost from the Volt, said Steve Majoros, director of Chevrolet’s passenger-car marketing. Among Chevy customers, only buyers of the Corvette sports car and the Tahoe SUV earn more money on average than Volt buyers, he said.

Brand Boost

“It is clearly bringing different people into the brand,” Majoros said in an interview.

Volt buyers are as enthusiastic about the car’s electric motor and fuel economy as Corvette owners are about horsepower, said Volt Chief Engineer Pamela Fletcher.

“The price of gas is what it is today,” Fletcher said. “There’s a segment of people who love it and want it. Many of our owners have an aversion to gasoline.”

GM isn’t looking for huge sales gains with the Volt, Majoros said. It’s something GM needs to do especially because no one can count on gasoline remaining at their lowest levels in five years.

“Let’s hope people have long memories,” Majoros said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE