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Chevy Volt Battery

Chevy Volt Battery

April 22, 2013.  It was on that date that I published my last update on the world of electric vehicles and related topics.  The news wasn’t good:

AS A CANDIDATE for president in 2008, Barack Obama set a goal of getting 1 million all-electric and plug-in hybrid vehicles on the road by 2015. In February 2011, the Obama administration’s Energy Department issued an analysis purporting to show that, with the help of subsidies and tax credits, ‘the goal is achievable.’ This was a paltry claim in the first place, since 1 million cars amount to less than 1 percent of the total U.S. fleet. Yet it is increasingly clear that, despite the commitment of many millions of taxpayer dollars, the United States will not hit Mr. Obama’s target by 2015. A recent CBS News analysis suggested that we’ll be lucky to get a third of the way there.

The Energy Department study assumed that General Motors would produce 120,000 plug-in hybrid Volts in 2012. GM never came close to that and recently suspended Volt production at its Hamtramck, Mich., plant, scene of a presidential photo-op. So far, GM has sold a little more than 21,000 Volts, even with the help of a $7,500 tax credit, recent dealer discounting and U.S. government purchases. When you factor in the $1.2 billion cost of developing the Volt, GM loses tens of thousands of dollars on each model.

It is no better today.  In many ways, the early era of Obamite enthusiasm for the green wonders of vehicular electrification has collapsed in a smoldering stew of electrolytes, but the dream limps pathetically along.  “Osama Bin Laden is dead and GM is alive,” cried Vice President Joe Biden.  Perhaps, if zombie-like shambling is an indicator of life.  Like the Veep, some people just can’t admit failure.  Here’s the administration’s spin: 

As the Troubled Asset Relief Program (TARP) continues to wind down, the U.S. Department of the Treasury today announced that it has sold all of the remaining shares of General Motors (GM) common stock.

‘The President’s leadership in responding to the financial crisis helped stabilize the auto industry, and prevent another Great Depression. With the final sale of GM stock, this important chapter in our nation’s history is now closed,’ said Treasury Secretary Jacob J. Lew.  ‘The President understood that inaction could have cost the broader economy more than one million jobs, billions in lost personal savings, and significantly reduced economic production. As a result of his efforts, which built on those of the previous Administration, more than 370,000 new auto jobs have been created, and all three U.S. automakers are profitable, competitive, and growing.

Michael Barone provides the facts: 

Remember how the Obama re-election campaign kept crowing that “General Motors is alive and Osama bin Laden is dead”? Well, Osama is still dead, and the government is now selling the last of its GM stock — at a loss to taxpayers of $10 billion. Who has gained? Bloomberg’s James Sherk has the answer: GM’s UAW-represented employees.

Sherk points out that the government agreed to — actually, it engineered — terms quite different from those of ordinary bankruptcies. UAW members, unlike employees of bankrupt airlines, took essentially no haircut, and there was even $1 billion for UAW employees of Delphi, to whom GM had no legal obligation. (Delphi was spun off from GM several years before)” [skip]

So our Chicago-based president helped his funders, at a cost to the government of $10 billion.

GM avoided the bankruptcy that would have allowed it to restructure, modifying or eliminating union contracts that make it difficult for GM—and Chrysler—to make a profit, and restoring profitability.  Instead, President Obama enriched the unions while merely putting of GM’s eventual demise, and lost $10 billion dollars of taxpayer money to boot.  Yes, that’s Democrat leadership for you.

Speaking of GM, how is that icon of green tech, the Chevy Volt, doing these days?  As regular readers know, I live in the Dallas/Ft. Worth Metroplex and spend quite a bit of time driving its main arteries.  Since the introduction of the Volt in 2010, I’ve seen exactly five of them, and I’m pretty sure at least two—perhaps three—of those sightings were vehicles I’d seen before.  The Detroit News reports: 

Chevy Volt

Chevy Volt

General Motors Co. is slashing the price of its plug-in hybrid Chevrolet Volt by $5,000, making it the latest automaker to lower prices of electric vehicles in the face of lagging consumer demand.

The Detroit-based automaker said it will cut the base price 12.5 percent, from $39,995 to $34,995. The price cut comes just weeks after the automaker announced a $5,000 give-back on the 2012 Volt and $4,000 on the 2013 model.

The first Volt, a 2010 model, cost $41,000.

As I pointed out in previous articles, Chevrolet is losing money on every Volt that rolls off the assembly line—big money.  Behold the GM spin:

The lower price and cost savings from driving on electricity provide Volt owners an unmatched balance of technology, capability and cost of ownership,” said Don Johnson, U.S. vice president, Chevrolet sales and service. “We have made great strides in reducing costs as we gain experience with electric vehicles and their components.

They’re referring to lease prices, which are running about $299 per month in 2014.  The primary way Chevrolet has been able to sell Volts is via very favorable lease terms, again, making not a cent on the vehicle, and losing many, many cents.  Ford, Nissan and Honda have also followed suit, dramatically reducing the MSRP and lease costs of their EV offerings.  Yid With Lid notes:  

Even with the built-in tax breaks for eligible buyers, electric vehicles have struggled to gain market share. No more than a few thousand Volts are sold each month in the U.S., a tiny fraction of overall auto sales.

‘I don’t see how General Motors will ever get its money back on that vehicle,’ countered Sandy Munro, president of Michigan-based Munro & Associates, which performs detailed tear-down analyses of vehicles and components for global manufacturers and the U.S. government.

A normal company would cut its loses and stop producing the car. Sadly for General Motors, this is not a normal company, it takes its orders from Washington DC, who doesn’t mind wasting taxpayers money.

Quite so, but didn’t the government sell its remaining shares of GM stock?  Yes, but gangster government knows no boundaries or limits. 

$14,000 of incentives on a Chevy Volt and GM still does not seem to be able to sell more than about one tenth the amount of Toyota Camrys that sell in a month. GM and its shareholders lose money, as do taxpayers. Maybe it is time for GM to stop the farce and cut losses for those that are footing the bill to push a green agenda that centers on plug-in electric cars that can not succeed without massive subsidization.

Skyrocketing Sales?  Not quite.  EV sales in general continue to be distinctly underwhelming. Greenautoblog, which seems to be something of a cheerleader for EVs, notes: 

The Leaf made a valiant attempt, and did have its best month ever with 2,529 units sold. That means that for 2013, Nissan moved a total of 22,610 Leafs, more than twice as many as in 2012 (that year, Nissan sold only 9,819 Leafs in the US) and actually more than 2012 and 2011 Leaf sales combined (which was 19,493). Nissan continues to see the effects of its price drop and expanded sales areas, with Georgia rapidly becoming a Leaf hotbed. Nissan’s Paige Presley said that Atlanta was once again the Leaf’s number one market and that, ‘sales are expanding deeper into Georgia markets such as Macon and Columbus.’

The Volt saw a boost upwards from a November slump and sold 2,392 units in December. That puts the plug-in hybrid’s annual total at 23,094, just down from the 23,461 sold in 2012. For all of 2013, though, the Volt outsold the Leaf by 484 vehicles. In a competition like this, we’ll count that as a win for both sides.

What does this mean in the general auto market?  In 2013 Toyota sold more than 400,000 Camrys and 302,180 Corollas.  Honda sold 336.180 Civics.  Chevrolet sold 200,594 Malibus.  Ford sold 234,570 Focus compacts and 295,280 Fusions.

Compare the Chevy Avalanche, discontinued in 2014.  In its peak year—2003–it sold 93,482 units, but by 2010 it slumped to 20,515, firmly in Volt territory.  When its 2012 sales were 23,995 and 2013 sales were only 16,526, it was doomed.  Remember that it’s likely the Avalanche made money for the most part, just not enough money to justify its continued production.

Clearly, vehicles like the Volt aren’t remotely profitable.  Manufacturers routinely discontinue models that sell many times the numbers of the Volt and Leaf.  Even the Avalanche sold 2-4 times more vehicles for seven years of its 12-year run.

Sticker Shock:  One of the biggest problems for Volt owners—particularly second owners—is battery cost.  GM originally quoted replacement costs in the $8000-$10,000 range, but reality has apparently sunk in.  Greenautoblog provides clarity:

There’s a growing hubbub in the plug-in vehicle community over what looks like some ridiculously cheap replacement batteries for the Chevrolet Volt going up for sale. GM Parts Online, for example, is selling a replacement Volt battery with an MSRP of $2,994.64 but, with an online discount, the price comes down to $2,305.88. For the 16-kWh pack in the 2012 Volt, that comes to a very low $144.11 per kilowatt hour (kWH). But is it a real deal? How can it be, when a Chevy dealer may quote you a price of up to $34,000 to replace the pack? [skip]

So, $144.11 certainly sounds great, but what’s the story here? Kevin Kelly, manager of electrification technology communications for General Motors, reminded AutoblogGreen that GM Parts Online is not the official GM parts website and that, ‘the costs indicated on the site are not what we would charge our dealers or owners for a replacement battery. There would be no cost to the Volt owner if their battery needs replacement or repair while the battery is under the eight year/100,000 mile limited warranty coverage provided by Chevrolet.

Particularly when used in all-electric mode, the Volt is essentially a short-range commuter, so it’s likely that initial owners would exhaust eight years long before reaching 100,000 miles.  Keep in mind, however, that the average new car owner keeps a vehicle only about five years.  No one knows the average lifespan of a Volt battery, but estimates of 6-8 years seem reasonable, particularly for Volts that are used daily.  And while having a free battery replacement during that time is nice indeed for owners, it’s terrible for GM not only in parts costs, but in terms of resale value.  Who is going to buy a used Volt knowing they will have to pay up to $34,000 for a new battery in the near future?  Back to reality:

We called up Keyes Chevrolet in Los Angeles and were quoted a broad price range of between $3,400 and $34,000 to replace a ‘drive motor replacement battery’ in a 2012 Volt. Tellingly, perhaps, the dealer we spoke with was not sure what replacing a ‘drive motor replacement battery’ (and the ‘Grade B’ version, at that) entails, and told us we’d have to bring a Volt in to see what’s wrong with the pack to get a real estimate. We got the same confusion and numbers to replace the battery from Berger Chevrolet in Grand Rapids, Michigan. We asked GM to clarify what this $34,000 charge includes, but that information was not forthcoming. [skip]

So, what does a replacement Chevy Volt battery actually cost? No one seems to know for sure.

Exactly.  This kind of uncertainty is not exactly a selling point, for new, and particularly for used, Volts.

It’s Chilling:  As I’ve often noted, batteries lose substantial capacity and performance in cold weather.  Sufficiently cold weather can drain all usable power from batteries.  For EVs, this means halting acceleration, hampered regenerative braking, greatly reduced range, and of course, greatly reduced or entirely eliminated electric heat and glass defrosting.

This article at technologyreview.com is a reasonably good basic outline of the issues.  Its basic premise is that technology for dealing with—not overcoming—the cold-imposed limitations on batteries is not ready for prime time and is in fact, many years into the future.  However, it does offer a bit of whimsy:

For now, drivers are looking for creative ways to cope with less heat, especially on long trips. On the Tesla forum, one Model S owner recommends buying heated jackets and gloves designed for wearing on motorcycles. Dahn says the solution is ‘snowmobile suits.

There, in a nutshell, are some of the most telling arguments against EVs.  While the drivers of even the most modest economy cars zip along wintry roads getting 40+ MPG in their shirtsleeves, their windows frost-free, the well-heeled owners of EVs many times their cost have to deal with bundling themselves up like motorcycle and snowmobile drivers.

Coming Next Week:  Part 2 of this Update, which deals with the demands EVs put on the electrical grid, governmental attempts to force EVS down all our throats, and the fate of Fisker.  I hope to see you there!