Why the Chevy Volt will fail
Much has been written and hyped -- a lot of the latter from GM it self -- about the upcoming Chevrolet Volt. The Volt will allegedly go on sale as a 2011 model, which means it should be available towards the end of calendar year 2010.
I would be more than happy to see the Volt -- and it's siblings the Cadillac Converj and Opel Ampera -- succeed since the fortunes of so many people and places rise and fall with GM. However, me being the natural skeptic that I am, can't help but overlook several problems that GM has, thus far, not explained sufficiently for my taste.
Price
I don't think Volt prices have been released yet, but the number $40,000 has
been tossed around a lot so I'll assume the actual price will be something close
to that. There's allegedly a tax credit of roughly $7,500, which makes the Volt
$32,500. Individual states and municipalities may toss in additional credits on
top of that. Ignoring the state and local credits, however, makes several
problems evident:
Assume then, that you're most likely going to pay between $35,000 and $45,000 for a Volt, depending on options, markups, and availability of tax credits. That's quite a lot when you consider the Volt isn't a big car. It, in fact, shares the same Delta II platform that the compact Chevy Cruze will be built on. The production Volt is, obviously, not out yet, but I did see a mockup at the San Jose Auto Show in 2008. Assuming that the size is roughly the same, we're talking something Honda Civic or Prius size... just twice as expensive.
If you're interested in a more detailed cost analysis of the Volt, I suggest you read this one from the IEEE. The bottom line (I think) is that the Volt's batteries will cost way more to replace than you could ever save on gasoline, assuming (of course) no drastic price aberrations. Bottom line: buy a Volt if you want to make a political or philosophical statement, but there's no way in hell it makes financial sense for you or for GM.
Looks
Like the Prius and Honda Insight, the shape of the Volt is due largely to
aerodynamics. Personally, the Prius/Volt/Insight shape is not an attractive one.
It's not an ugly shape on its own, but looks downright awful when you place it
next to a Chevy Corvette or Audi TT.
Size
I mentioned before that the Volt is a compact car. Americans, by and large,
do not like compact cars for several reasons. First, we're a big people. Some of
us are tall, but more and more of us are just plain wide. Second, while we do
sometimes travel on our own, we often go places with people so having the
ability to haul 5 or 6 people at once comfortably is a big deal. Third, when we
go places -- be it on our own or with others -- we like to carry stuff.
Sometimes it's a dog, but it could also be a wheelchair, a mountain bike, or
some new fangled furniture thing from Ikea. This is one reason why mid-size cars
(think Accord or Camry with non-sticking gas pedal) are so popular.
Does the Volt have a size disadvantage compared to other similarly-sized cars? Probably not, although the Volt may lose some trunk space to batteries, like the Ford Fusion Hybrid does. Will consumers who didn't abandon minivans, SUVs, and pickup trucks for compact cars before now do so for the Volt? Not by a long shot.
Also, while the actual production Volt isn't out yet, footage of pre-production versions indicate that it will be a 4 seater -- 2 in front and 2 in back.
So to be clear then: $40,000 for a compact car that only seats 4 people. And I haven't even begun with the powertrain yet.
Powertrain
I could, theoretically, overlook the cost and the size and the looks, but
the powertrain is where the Volt goes completely wrong for me. From
it's own site, GM says that the Volt has two modes of propulsion. Assuming
you have a fully-charged battery, the Volt will first go on pure battery power
for up to 40 miles, depending on terrain, driving style, etc. When the battery
runs out, the Volt's gasoline engine will turn on and run some sort of generator
to produce electricity to propel you the remaining distance.
In other words, the Volt doesn't burn gasoline to derive motive force like every other car out there -- it burns gasoline to power a generator to produce the electricity that provides the motive force. Just on first impression, that sounds overly complex to me -- namely, that you have a gas engine connected to a generator connected to the drive wheels. Is this more efficient than a gas engine connected to the drive wheels directly? Perhaps in theory, but remember, that more efficient setup requires you haul around an engine and a generator. Not a big deal, perhaps, but it also sounds like the "engine-generator-drive wheels" method has more moving parts and more software involved, which can adversely affect reliability and development and manufacturing costs.
I'd also be very curious as to what battery life Volt owners actually get. The funny thing about electricity is that it's very difficult to store (other than in a battery, of course) so it's best to consume it as it's generated. If GM configured the Volt that way, I imagine that the gas engine would get good, but not great, fuel economy as the engine would speed up or slow down, depending on how much electricity was needed. Since maximizing gas mileage is the whole point of a car like the Volt, it would make more sense to use the battery as a reserve tank from which the drive motors could draw electricity as needed. The gas engine could operate at more predictable RPMs this way and you'd get better gas mileage, but you'd be charging and discharging the battery A LOT. The more charge-discharge cycles a battery has been through, the shorter it's life is.
In contrast, consider the battery in a Prius. It works at low speeds but only allows you to go in full-electric mode for about a mile (according to my friend with a gen 2 Prius that ran out of gas once). If you go long distances at low speed, then you'd be discharging and charging your battery a lot, but most people don't do that. Instead, they go a variety of distances at medium (e.g. city streets) or high (e.g. freeway) speeds. At medium and high speeds -- which is likely most of the time spent on a trip -- a Prius runs on its gas engine directly which means the battery isn't being used at all.
Uncertainty & Perception
I can think of two other problems that I think the Volt will have to
overcome. The first is uncertainty. The technology in the Volt -- while
fascinating -- is new. I'm sure other cars have used it -- I can't think of any
offhand -- but the overwhelming majority of cars in service worldwide do not use
it. With any new technology comes uncertainty about reliability and
serviceability. Will the Volt
catch on fire and explode some badly-designed laptop? Probably not, but you'd
much rather someone else find out first.
The second problem is perception. Even though it isn't objectively true anymore, many consumers still think GM cars are of poor quality and reliability. To get consumers to buy then, GM will have to convince a consumer to spend a lot of money on a possibly unattractive compact car with unproven technology made by a company with a poor perceived reputation for reliability and quality. Not an easy task.
Profitability
Given all of the above, it seems the Volt has a huge uphill battle ahead of
it, even if it proves itself reliable and dependable. GM, perhaps realizing
this, has set first year sales projections at a
meager 10,000 units. In contrast, Honda sold 28,238 Accords and 22,319
Civics. In a month (December
2009). I think it's safe to assume that GM will lose money on each Volt sold
for at least the first few years (much like Toyota did with the Prius).
Combined with such small annual sales volumes, I'd say GM's future lies more with cars like the Camaro (7,548 sold in December 2009) than it does with the Volt.
Thursday, February 11, 2010 10:54:02 PM