The day I’ve anticipated for years, ever since I began writing about electric vehicles exemplified by the Chevy Volt, back in 2011, has arrived. GM has announced the imminent demise of the Volt. In 2012’s The Chevy Volt: It Doesn’t Get Any Better Than This, I wrote:
* Three days after Mr. Obama’s hubristic promise to buy a Volt as soon as he leaves office, GM announced that it would suspend Volt production for five weeks—it now looks like that suspension will be even longer—to more closely match supply with demand. Translation: Volts aren’t selling. [skip]
On the economic front, the Volt is selling so well, GM has dropped the monthly lease rate from $399 to $350 for 39 months. Wait a minute: if a product is in high demand, doesn’t that usually drive prices up? What’s that? Oh right: Obamanomics. GM North America President Mark Ruess–that kidder–said:
This technology is here to stay, we have all kinds of people who want to copy it and go after it. We are not re-evaluating anything…The only question here is what the rate of sales will be.
That’s a good question Mr. Ruess, a good question indeed.
ITEM: Volts Are Selling Like—Well, Like, Well, OK, They’re Not…GM has announced that it is suspending Volt production for at least another week. Sales numbers haven’t been good in 2012. GM sold only 603 in January and 1,023 in February. However, according to GM something over 2000 have been sold in March. That means GM will have to sell at least 4597 Volts per month for the rest of the year to make its 2012 sales goal. [skip]
We are left with the same conclusions I reached early in my analyses of the Volt: If you can afford the initial purchase price that is as much as twice that of many comparable, conventional, high mileage vehicles, if you can afford $2000 for a fast charger and whatever it takes for installation, and if you can somehow manage to drive no more than 25 miles before having to recharge, you may save sufficient money on gas to break even in nine years at best. But if that’s you, even GM’s statistics put you in the top 7%–economically—of all American households, which means you’re probably not buying a Volt as a money-saving measure in the first place. That’s a small demographic, not nearly sufficient to support long-term production of a compact car.
Not a good formula for profitability, as I continued to explore in The Chevy Volt: Alternate Calculations:
Note the advertising blurb that opens this article. It’s on the GM-Volt site, and I’ve seen similar ads for local dealerships across the nation, indicating that it’s a GM ad provided to dealers. Wasn’t the Volt supposed to be an electric wonder? Weren’t the benefits provided by that technology its primary reason for being and the feature by which it would take the automotive world by storm? GM’s recent Superbowl Volt adtried to promote the high technology of the Volt. For the record, I rather liked the ad, particularly the apparently sexual reaction of the five aliens to the guy’s wife, but strangely, that was the best part of the ad. And now GM is downplaying the electric nature of the Volt, trying to sell it by saying ‘It’s more car THAN ELECTRIC’? Why not: ‘It’s not really much electric, honest!’ Strange times, this age of Obama. [skip]
(3) Taxpayer dollars, as I noted in my last Volt article, subsidize each Volt to the tune of around a quarter of a million dollars(?!). No wonder Chevy can afford to market a vehicle that not only makes no profit but actually loses money. Thanks to Mr. Obama, the Volt operates above and outside the reality of the free market.
I’d long predicted that after the Obama Administration, particularly if a Republican took the White House, the Volt would be on borrowed time. Greenie street cred is nice—in some quarters—but GM needs to make a profit, and the Volt has always been a bottomless money pit.
Six years ago, President Barack Obama promised to buy a Chevy Volt after his presidency.
I got to get inside a brand-new Chevy Volt fresh off the line,’ Obama announced to a cheering crowd of United Auto Workers activists. ‘Even though Secret Service wouldn’t let me drive it. But I liked sitting in it. It was nice. I’ll bet it drives real good. And five years from now when I’m not president anymore, I’ll buy one and drive it myself.’
Now it looks like Obama will not get his chance to make good on the promise. General Motors announced Monday that it would cease production of the hybrid electric plug-in Volt and its gas-powered sister car the Cruze. The announcement came as part of a larger restructuring by the car company as it seeks to focus production around the bigger vehicles in favor with U.S. consumers.
The Volt and the Cruze were two of the signature achievements of the partnership between the Obama administration and General Motors following the auto-industry bailout. Although the Volt was long-planned by GM executives, it received a lot of support from the administration. Obama described the Cruze as ‘the car of the future.’
Both cars reflected the policies of the Obama administration but never really caught on with the car-buying public. They initially enjoyed a brief bout of enthusiasm from consumers but this was short-lived. Particularly after the price of oil fell dramatically, American consumers moved on to larger vehicles such as SUVs.
Once again, market forces have prevailed. The Volt was never ready for prime time. It, and similar EVs, were purchased by the top 7% of the public in terms of income. They were, in effect, rich men’s toys, greenie street cred for those that could afford a second, third, fourth or more car that didn’t have to have the flexibility of a normal, gasoline powered vehicle. Oh, and the Cruz, the “car of the future,” is being discontinued as well.
This was inevitable, not only because EV technology is not sufficiently mature, and not only because the infrastructure necessary to make EVs remotely feasible just doesn’t exist, but primarily because General Motors is in business to make money, and the Volt was never profitable. During its production run, GM discontinued models, like the Chevy Avalanche, that sold far better than the Volt.
Pundits are trying to blame President Trump—he’s responsible for everything because Trump—for GM layoffs. He is blameless. Fundamentally at fault is GM, who fed at the government trough during the Obama era, and in return, built the Volt, a car that not only never made a penny, but lost dump truck loads of cash. There is evidence GM was working on the vehicle pre-Obama, but what explains throwing away untold millions on a vehicle that could never turn a profit?
The value of Volts on the used car market will now plunge dramatically. Who is going to buy a vehicle no longer manufactured, particularly when they realize they’re going to have to replace a battery—if they can find one—that will cost more than the vehicle itself? Many Chevy dealers would not sell Volts, and few had technicians trained in their repair and handling. Some dealers will surely do what they can with the remaining Volts, but it won’t take long for this particular chapter of automotive folly to close once and for all.
All should be glad about this, not that Volt owners will be stuck with essentially worthless vehicles, but that in one more, albeit small sector, government is not going to be involved in trying to choose winners and losers in the marketplace. Perhaps President Trump will even let the $7500 dollar tax credit lapse?