To hear some people tell it, the five-week Chevy Volt production hiatus that GM announced last week is the death blow to GM’s plug-in hybrid. After missing 2011 production goals by about 24% and selling less than 1,700 Volts in the first two months of 2012, the Chevy Volt really seems to be struggling over a year after production first began. But is it really?
No doubt GM has a had a hand in the politicizing of the Volt. Then again, I’m not sure anything would change even had GM kept the hype toned down. We’ll never know. What we do know is that there are a lot of people hoping and praying for the failure of the Chevy Volt, and they’ve had some success in that regard, despite their complete and utter distortion of the facts. Perhaps the greatest detriment to Volt sales has been conservative-commentators’ ability to link the Volt to President Obama, even though the Volt Concept debuted in January 2007, two years before Obama was sworn into office and a year before he even started campaigning for office.
The NHTSA investigation of the Volt battery pack was much ado about nothing, but the damage has been done in regards to the Volt’s image. Furthermore, GM and the Obama administration’s incredibly generous production estimates make it seem like there will be a $40,000 Volt in every other driveway. Perhaps in a strong economy with more generous government subsidies, these numbers would have been achievable. But in the middle of a recession? Not likely.
But let’s take a step back and analyze the situation, without making excuses for the Volt. Let’s just look at the facts.
First and foremost, the Volt went on sale in just a few select areas at its launch, starting in California, New York City, and Austin Texas. Only in November did the Volt go on sale nationwide…right around the time the NHTSA battery scandal developed. It was a small issue blown out of proportion, truly awful reporting by most of the mainstream media. But the damage was done. Still, sales of over 7,600 Volts in just a handful of markets isn’t exactly awful.
GM missed its own imposed 2011 sales target of 10,000 vehicles by almost 2,400 units, and in January sales barely broke 600 cars. February sales were only slightly better at about 1,000 units, prompting GM to halt production for the third time. The first time was over the summer, when the Hamtramck assembly plant was shut down for retooling that would allow GM to build up to 1,200 Volts per day.
The second shut down came in December, when GM sought to align production with sales. Even though December 2011 was the Volt’s best sales month yet, moving more than 1,500 cars, that’s only a little more than a day’s worth of the plant’s possible production capacity. One of GM’s biggest problems pre-bankruptcy was over-production, which resulted in a lot of fleet sales that impacted resale value and brand perception. It hurts the Volt’s image to have production shut down for five weeks, but it may also preserve long-term value. It also does GM no good to have a bunch of unwanted Volts just sitting on dealer lots.
Historically speaking, the Volt’s slow initial sales are not necessarily an indicator of future success. Someone correct me if I am wrong, but in the summer of 2000 the Toyota Prius went on sale nationwide. In six months on sale across the nation, the Prius sold only 5,600 units. The first full year the Prius was on sale in 2001, Toyota only sold about 16,000 Prius hybrids in the U.S., and a grand total of just 30,000 Prii worldwide. In 2010, Toyota sold over 2 million.
One does not even have to look outside of General Motors to see the history to see tales of cars that almost failed, only to go on to be huge successes. The original Chevy Corvette, born in 1953, was subject to terrible sales for its first 3 years. Sales were so bad, in fact, that GM came close to killing off the Corvette altogether. Flash forward almost 60 years, and the Corvette is ingrained into the hearts and minds of Chevy fans world wide.
Edward Niedermeyer over at The Truth About Cars opines that GM should have marketed the Volt more as the “anti-Corvette,” an expensive technological wonder whose technology would eventually trickle down to other vehicles. I think he’s absolutely right, and GM has bungled its marketing of the Volt almost from day one.
But this is not the end of the Volt, not by a long shot. GM has too much invested into the Volt to just abandon the project, and there may be better sales just on the horizon. Gas prices are going up, and the Obama administration is talking about hiking the EV tax credit from a $7,500 tax credit to a $10,000 immediate rebate that would bring the cost to purchase a Volt down to about $31,000. Even if that doesn’t happen though, GE and other companies may buy the Volt for the simple fact that it can use little or not gasoline for a vast majority of short-distance trips.
In short, the demise of the Chevy Volt has been greatly exaggerated. I’m not saying the Volt isn’t in trouble. It’s image is tarnished, its sales are slow, and its future is uncertain. But I still wouldn’t bet against the Volt, and GM, to make a strong comeback starting this year. Politics tend to go out the window when gas prices go up.