General Motors Corp., along with one of the auto maker’s sharpest critics, takes exception to comments by President Obama’s auto industry task force regarding the commercial viability of the upcoming Chevrolet Volt extended-range electric vehicle.
In a 5-page report rejecting GM’s latest viability plan submitted to keep receiving taxpayer loans and stave off bankruptcy, the task force says GM is “at least one generation behind” principal-rival Toyota Motor Corp. in developing alternative powertrains.
It then suggests the auto maker may have gone all-in with the Volt to remain competitive. “In an attempt to leapfrog Toyota, GM has devoted significant resources to the Chevy Volt,” the task force says in its determination of GM’s viability.
“While the Volt holds promise, it is currently projected to be much more expensive than its gasoline-fueled peers and will likely need substantial reductions in manufacturing costs to become commercially viable.”
GM expects to bring the Volt to market late next year for less than $40,000. Even at that price point, the auto maker concedes it will not book a profit on the vehicle.
Rather, the company is banking on a maturation of the supply base and progressively higher sales volumes in succeeding generations to make the Volt more affordable to build and less expensive for consumers to buy.
“The Volt is a brand-new technology, no different than the iPod, plasma-screen televisions or DVD players,” says GM spokesman Rob Peterson. “We’re working towards Generation II and Generation III, when costs come down and the business case gets brighter. But you have to take the first step in that direction, and that’s what we’re doing.”
Plug In America, a national coalition of plug-in hybrid-electric-vehicle owners and enthusiasts, also takes exception to the task force’s comments.
“This discouraging statement about the Volt’s early viability is counter-productive to (Obama’s) own goal of 1 million plug-in vehicles by 2015,” Plug In America advisory board member Chelsea Sexton says in a statement.
Chevy Volt holds promise but not commercially viable, presidential task force says.
“It is unreasonable to expect the Volt and any similar new technology to be immediately profitable when other technologies that started with a price premium, such as the Toyota Prius, became wild successes,” adds Sexton, a former GM employee who helped market the auto maker’s now-defunct EV1 electric vehicle.
The advocacy group, which sharply criticized GM’s decision to kill the EV1 and has led a push demanding taxpayer loans to auto makers come with a stipulation for investing in EVs, also proposes a means to make the Volt more affordable.
California law, the coalition says, requires manufacturers of plug-ins and extended-range EVs to sell the cars with a 10-year warranty. That means auto makers must double the size of the vehicle’s battery, which adds costs that likely will be passed on to the consumer.
Plug In America suggests instead that California, a hotbed for alternative-powered vehicles, ease the warranty requirement to five years, eventually phasing in the 10-year guarantee. “This, alone, could cut the number of batteries required by as much as half and reduce the cost of each vehicle by thousands of dollars,” Sexton claims.
The warranty reduction would not add liability to GM or its customers, she adds, because the federal government could include them in its program to back warranties on vehicles from GM and Chrysler LLC.
Obama announced the government backing earlier this week to alleviate consumer jitters over GM or Chrysler going bankrupt or belly-up and not honoring warranties and service contracts.
“The minimum Volt warranty we’re asking for has historically been the maximum ever given for any plug-in car,” Sexton says.
GM says it is engineering the Volt’s battery pack to achieve at least 100,000 miles (16,093 km) and 10 years of life. The auto maker has said it expects the car to surpass those limits, and once the battery pack can no longer power the vehicle it can be recycled for stationary use.
The coalition also notes a $7,500 tax credit exists for vehicles such as the Volt, and some states are adding an additional tax credit of $5,000 to help defray the cost.
GM spokesman Peterson says the Volt’s engineering team is aware of the president’s remarks, but “remains as driven today as the day they started.”
Peterson, who is quick to point out the task force did say the Volt “holds promise,” suspects if gasoline prices were as high as last summer the administration may have couched its comments differently.
“When gas was $4-a-gallon, there was no doubt people wanted alternative technology, and the most popular of those was electrification,” he says. “That’s where heads turn when gasoline price rise.”
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