GM and the Volt: Charge!
NEW YORK--General Motors CEO Ed Whitacre set off a brief media storm when he said the company's revolutionary Chevrolet Volt (whose gas engine is not connected to the wheels, but provides power for the electric motor) would be priced in the low $30,000s.
That's far less than earlier estimates, but Whitacre's price took into account the $7,500 federal tax credit. The actual price, then, could be closer to $40,000. "The truth is that the car doesn't have a price yet," says Britta Gross, GM's director of global energy systems and infrastructure commercialization over a Manhattan lunch. "We're doing market research to see what consumers want--what they tell us is important."
Her words suggest that GM is prepared to lose money on the Volt in the short run, but Gross won't confirm that. She said, instead, that the Volt is like the plasma TV--the price will come down eventually. To ensure that will happen, GM started with an "over-designed" vehicle whose manufacturing costs will go down as engineers go through it for the second generation. The first Volts are scheduled to go on sale in November; "Gen 2 will be less conservative," Gross promised.
The Volt is not a pure electric vehicle. It has a gas engine, but if the battery is kept charged, the tank never has to be filled. And if the battery runs down, the gas engine can provide power. GM is betting that this combination of new and old technologies will take some of the fear factor out of buying an electric vehicle.
Gross acknowledged that the Volt will initially be a low-volume product, unable to capitalize on economies of scale. "We're going through a checklist of items, working with various regions and states," Gross said. "How well we execute the launch is crucial, and we want to get up to scale as quickly as we can--then expand nationally within several years."
At first, though, it will launch in three markets: California, Michigan and Washington, D.C. It's plain the company is thinking strategically.
California is full of environmentalists and early adopters, and also offers weather friendly to charging an EV. In 2006, California handed out 85,000 permits enabling hybrid owners to drive by themselves in the carpool lanes. Those permits stay with the car, creating a lively secondary market; used hybrids with permits sold for as much as $4,000 more than those without. Securing similar status for the Volt is a big "to do" on Gross' checklist; she also wants to persuade municipalities to provide free parking for it and similar vehicles. "There's a tangible market value to those things," she said.
Michigan is home turf for GM, and selling Volts in the state where it is built (and subsidized by the state government) makes sense. GM is spending $336 million on the Detroit-Hamtramck Volt plant, which is also 30 percent taxpayer subsidized, according to BusinessInsider.com.
As for Washington, D.C., remember that GM got $240 million in Department of Energy grants last August, and that the U.S. government is a majority owner of GM. Putting some Congressman and Senators in Volts couldn't hurt.
GM has partnered with utilities in all three locations, including Pacific Gas & Electric and Southern California Edison in California, DTE in Michigan, and Pepco Holdings and Dominion Resources in the D.C. area. Gross offers data showing that utility loads peak around 6 p.m. and quickly taper off, meaning that there should be plenty of off-peak, low-priced power available to plug in the Volt.
And although GM (and other carmakers, including most prominently Ford and Nissan) is working on public charging, Gross said that it will be a small part of the picture; most Volt owners, she believes, will plug in at home. The workplace is also crucial, and GM is looking at providing infrastructure for corporate charging and municipal parking lots.
The Volt does many things differently, and that's required GM to think differently. too. "We are building a new supply base, working with many non-automotive partners that are new to us," Gross said. "We've never worked on this scale before. It's quite an undertaking, an amazing feat."
Photos: Gross/Jim Motavalli; Volt/Flickr by Crouchy