Industry Market Trends
The Chevy Volt's Dying? What Took It So Long?
August 26, 2011
Can't say the news was all that surprising or unwelcome.
USA Today reported. "Interest in buying the $39,995 plug-in car is starting to taper off, not only among 'early adopters' but among lots of other buyers, as well, reports CNW Marketing Research, which tracks such things." It's not hard to see why it's dying: There probably hasn't been a less competitively-priced, oversold and underdelivering car for a target market in recent memory. "The car is far too expensive and not practical for the lion's share of drivers---not to mention the replacement cost for the battery when it goes. The high price tag makes it questionable that you'd ever recover the cost in savings," writes sldl04 in the comments on the USA Today piece. Groingo is more pithy: "Volt just a FAT overpriced American built Prius." You'll be shocked, of course, to learn that the Chevrolet Volt is a division of Government Motors. Government is always so keen and clever when it comes to the free market. Other than who's making the car, though, its failure isn't particularly shocking. 1 Honda Civic + 225,000 miles = 1 Chevy Volt The compact car is priced at around $40,000. For comparison purposes, the Chevy Cruze Eco, a compact/subcompact, "gets 42 mpg, no electric issues and is less than 20K. Amazingly, this is a top seller," USA Today commenter Paint the world says. Which does frame the issue rather neatly -- which car would you buy? Consider that the average U.S. per capita income is $39,138, and you wonder what GM was smoking when they marketed this car. There's another particularly telling stat from blogger My Daily Roast: A Honda Civic costs $20,000. Figuring an average cost per gallon of $2.70 for gas, you could drive that Civic 225,000 miles for $21,000 -- the total cost of a Volt. So you can either plunk down for a Chevy Volt and start the meter on the gas, or for the sme price, get an exceptionally well-regarded, reliable car and 225,000 miles of driving as part of the deal. And you choose... That's right. That's the answer American car buyers have given, too. $41,000 for a $17,000 Car? I'll Take Two! The car was probably holed below the waterline in public perception when Edward Niedermeyer published his much-noted op-ed piece in the New York Times in July 2010. Mr. Niedermeyer edits a site called The Truth About Cars. And in this case he's rather unflinchingly truthful about the Volt. It's easy to forget that the whole Volt concept was introduced in 2007, with the promise of being a sleek coupe that would go 40 miles on an electrical charge, and after that make its own electricity from a gas engine. Yet when delivered, as Niedermeyer notes, it resembles nothing more than... the Toyota Prius, about which there is nothing remotely "sleek." More evidence that this is a car only government planners could love: It drinks only premium gasoline. It was designed with the battery in the middle of the back seat so it seats four, not five people. As Niedermeyer says, it "has less head and leg room than the $17,000 Chevrolet Cruze, which is more or less the non-electric version of the Volt." The wonder isn't that the Volt's dying. The wonder is why anybody bought it in the first place. Now here's where the "only from government" concept comes into play: When President Obama took over General Motors in 2009, his task force reported that the Volt "will likely be too expensive to be commercially successful in the short term." Yet they went ahead with it anyway. Now we hear you: "Toyota did the same thing with the Prius!" Well, not exactly. As Niedermeyer explains it, Toyota sold Priuses at a loss -- a heck of a loss -- in Japan for years, then "Toyota was able to hold its price steady, and then sell the gas-sippers in huge numbers when oil prices soared." But, being Government Motors now, instead of having the freedom and flexibility to follow a successful market model, GM had to please its government masters, and government is never, ever motivated by sensible market practice in anything it ever does. So the marketing strategy they came up with was to offer a $350-a-month lease over 36 months with a pitiful 12,000 miles per year limit. Now, if you or I were running a car company and realized we had designed a car with a projected price tag of $41,000 that was not noticeably different from a car costing less than half that, we would laugh, crumple the plans and go for lunch. But if we worked in government, we'd nod our heads and say "Okay boys, fire up the production line." As Niedermeyer notes in an aside, "in the industry, some suspect that G.M. and the Obama administration decided against selling the Volt at a loss because they want the company to appear profitable before its long-awaited initial stock offering." Aren't you glad the government gave an upwards of $60 billion of your money to GM to finance the creation of a $41,000 car that has the space and performance of a $17,000 car? Don't you wonder why these guys never got too far in private enterprise themselves? As Niedermeyer concludes, "if G.M. were honest, it would market the car as a personal donation for, and vote of confidence in, the auto bailout." And it would appear everyone so inclined has already so voted. Niedermeyer's salvo was fired in 2010. By March 2011 there were more red flags. For one thing, it wasn't even the electric car it was advertised as. Part of the rationale for the government sinking billions and billions of your dollars in an abject failure of a car, other than to protect union jobs at the expense of the rest of the economy, was that it would be an all-electric car, fighting global warming and whatnot. Uh, not exactly. As Forbes reported in March, the way the car was palmed off was as an "all-electric" car. As if electricity falls from the sky instead of needing generation using things like coal, but that's for later. On a full charge the car's battery lasts about 40 miles. After that, according to GM, the car's gasoline-powered engine didn't turn the wheels, but continually recharged the battery. Hairsplitting, yes, but even that fig leaf turned out to be a smokescreen. "It turns out that the premium-fuel fired engine does drive the wheels when the battery is very low or when the vehicle is at most freeway speeds," Forbes said, noting that "the Volt really isn't a pure electric car after all. I'm sure that the people who designed the car knew how it ran, and so did their managers." Why the deception? Why pretend that what's really nothing more than a hybrid is an all-electric? Because the car's massive government subsidy was pitched as necessary for producing an all-electric car. Nobody would have wanted the government to throw billions of taxpayer dollars at GM to produce a crappy, overpriced hybrid, but they got away with it to produce what they claimed would be an all-electric car. Bait, meet switch. Greenwashing You'd think the Volt's only real market, then, would be well-heeled greenies who can afford an expensive totem to their green street cred, who would cough up the extra bucks because they'd be doing their part to cut down on CO2 emissions and all that. Maybe that is who actually bought the car. But if so, it was the ones who can't do math. The invaluable JunkScience.com site analyzed the car's environmental claims in April 2011. As we didn't get much past high school biology, we'll let them do the explaining here: The 4-seat Volt is capable of driving 35 miles on its 16 kilowatt hours (kWh) of stored electric charge, and it gets about 37 mpg. Since a gallon of gas produces about 19.6 lbs. of carbon dioxide when burned, when operating on gasoline, the Volt produces 0.53 lbs. of CO2 per mile. In 2007, national average CO2 emissions were 2.16 lbs per kWh from coal-fired generation and 1.01 lbs per kW for gas-fired generation. And 44.46 percent of electricity in the U.S. is coal-fired and 23.31 percent is gas-fired, so the emission of CO2 per kWh is 1.2 lbs/kWh. You can hit the site for all the numbers and equations, we're summarizing here. JunkScience concludes that the Volt's "emissions mileage" from its stored charge is then 16 kWh x 1.2 lbs/kWh divided by 35 MPG = 0.55 lb CO2/mile, and that on an "average" basis, the Volt emits more CO2 from battery use than from gasoline use (0.55 lbs/mile vs. 0.53 lbs/mile). And where states rely more on coal-powered electricity, the numbers are worse. In Ohio, Volts emit about 0.84 lbs of CO2 per mile, JunkScience says, much higher than the gasoline-powered rate of 0.53 lbs. per mile, and there are 26 states where coal is predominately used to produce electricity. So not only is the car grossly overpriced, not the "all-electric" it claims to be, there are actually fairly common driving scenarios where it pollutes more than the $17,000 car it's in all other ways equal to. In other words, just the sort of car you'd expect government to produce."There's trouble on the horizon for the Chevrolet Volt, the electric wonder car,"