GM to halt Chevy Volt production

Daily News Article   —   Posted on March 16, 2012

Chevrolet Volt - 2011 Manufacturer's Suggested Retail Price (MSRP) $40,280

(by By Brent Snavely and Chrissie Thompson, Detroit FreePress, freep.com) – … Sales for the…plug-in electric vehicle industry aren’t meeting expectations for several companies, causing some to rethink goals and others to fold.

General Motors (GM) will stop making the Volt for five weeks starting March 19. Sales are below expectations, though stronger this year than those of the competing plug-in Nissan Leaf.

Meanwhile, for the first two months of this year, Toyota sold more than 10 times as many hybrid Priuses than all plug-in electric vehicles on the market, even as gasoline surged to $4 a gallon. The Prius and other similar hybrids are not plug-ins, using a combination of gas and battery power.

“All along, you saw an enormous amount of hype for electric (plug-in) vehicles,” said Brett Smith, co-director of manufacturing at the Center for Automotive Research. “The public’s perception of the time frame for widespread adoption was way out of whack with the reality.”

Troubling signs for the electric car industry are mounting this year:

• Consumer Reports said Thursday that a Fisker Karma all-electric vehicle it bought for $107,850 died on a test track. (Fisker… lost funding from the Department of Energy last month and operates out of an old out-of-state GM factory…)
• A123 Systems said Thursday that it lost $257.8 million in 2011, in large part because Fisker reduced its battery orders.
• Ener1, a maker of lithium ion batteries, declared bankruptcy in January.
• Bright Automotive, which hoped to sell hybrid plug-in delivery vans, said last month it’s closing its doors in Anderson, Ind.

GM says the Volt and other plug-ins just need time to catch on with consumers.
….
High prices have been an issue [with] plug-in’s… – [whereas] some traditional gasoline cars [are] getting an attractive 40 miles per gallon on the highway and priced nearly $10,000 less than an [electric plug-in] Volt or Leaf.

Over the last four to five years, automakers — along with the federal government, Michigan, Indiana and other states — have invested billions into the development of electric vehicles and the infrastructure [including re-charging stations] to support them. But in 2011, electric vehicles, including the extended-range Volt and Leaf, amounted to just one-tenth of 1% of vehicle sales.

The low sales rate will increase at a slow pace over the next few years, according to industry consulting firm LMC Automotive, which predicts sales of electric or plug-in electric vehicles will stay under 1% through 2017. At the same time, LMC predicts sales of gas-electric hybrids that don’t plug-in for recharging, including the Toyota Prius, could climb to nearly 7% of vehicle sales over the next five years from 2.1% last year. …

Even free is tough sell

Demand has been limited even when infrastructure is offered to consumers for free.

In August 2010, DTE Energy said that it would contribute up to $2,500 toward the cost of installing a 240-volt charging station for the first 2,500 applicants. For most homeowners, that means the installation would be free.

So far, DTE has installed only 260 of the meters. …

Doug Parks, global vehicle line executive and chief engineer for General Motors’ electric vehicles, said GM still has work to do to raise awareness of how much money consumers can save weekly on gas.

“Most owners charge their Volt at home, and they don’t necessarily need to charge anywhere else,” Parks said. “That’s as much as $60-$80 per week they are not spending on gas.”

Hoping patience pays

Ford, which introduced the Focus Electric at the end of 2011, has sold about a dozen of the all-electric cars, which start at $39,995, before a $7,500 tax credit. The Focus Electric is just now arriving at dealerships in several major markets.

The automaker has positioned the Focus Electric as just one of several fuel-efficient choices it is offering. It’s produced on the same assembly line as the conventional gasoline-powered Focus at the company’s plant in Wayne.

“Given the fact that the electric vehicles are still in their infancy, we want to be able to be flexible enough to meet customer demand,” said Erich Merkle, Ford’s sales analyst.

GM, on the other hand, has described the Volt as its “moonshot,” portraying the car as a symbol of the company’s technological ability. GM began promoting the Volt about four years before it went on sale, which makes the weak early demand that much more glaring.

The Volt won accolades and awards from nearly every major automotive publication last year. But it also became the subject of a high-profile National Highway Traffic Safety Administration investigation last fall and was caught up in congressional hearings in January. …

For much of last year, [GM CEO Dan] Akerson talked of trying to build more than 120,000 Volts as early as this year. Now, GM has decided to halt production at its Detroit-Hamtramck assembly plant for five weeks starting March 19 because of the limited demand.

“It might be a rough year for us,” Parks said. “But GM is 1,000% percent committed to this car. It’s not going away.”

But until the prices of electric cars come down, and their ranges increase, sales are likely to remain low, said Mike Omotoso, senior manager of global powertrain for LMC Automotive.

For instance, the Prius plug-in hybrid that goes on sale this month will get up to 15 miles of electric-only range and then an estimated 49 m.p.g., all for a starting price of $32,760, including delivery.

Meanwhile, Ford, GM, Hyundai and others have introduced compact and subcompact cars that get 40 m.p.g. on the highway for between $16,000 and $24,000 — making even the standard gasoline engine a formidable competitor to electric cars.

[Note: This article was first published at freep.com on March 11th.]

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