GM Shows Again It Cannot Make Money On Electric Cars: Chevy Volt

The car company that famously killed off the most successful electric car in over a half century–the EV1–has struck again and killed off its 21st Century electric entrant; the Chevy Volt. Originally hailed as one of the shining new examples of the type of cars GM would produce after going bankrupt and being saved by the US government in 2009, the Volt failed to meet the high expectations of volume sales after the end of the Great Recession. It did get a major redesign in 2015, but the company balked at a third update for 2020 when it was clear it was shipping money with each car. Unfortunately the ending of the Volt disproportionately landed on the US autoworker as the car was made almost exclusively in the US (variants are still made and sold in China and Europe).

The end of the Volt is less about the virtues of that model and more about competition from Japanese electric car makers and US electric car company Tesla, as well as the general decline of sedans in the US in general. The Volt announcement also came with the termination of the gasoline powered Chevy Cruze, Chevy Impala, Cadillac XTS, Cadillac CT6, and Buick LaCrosse–all sedans that had not been selling well.

The announcement also came with news of the closure of several US manufacturing sites, the layoff of 15% of its salaried and contract staff, and the elimination of 25% of its executives. In the usual perverse calculus of the stock market, GM shares rose 5% after the announcement. GM CEO Mary Barra appears to be staying on as chief executive. President Trump loudly complained about the moves–not about the ending of certain car models–but rather that cuts in US positions from an automaker that had only recently survived through the actions of the US government.

The Volt was actually a hybrid electric car–one that comes with a small companion gasoline engine. But owners could charge the car with an electric hookup without the need for gas. The best selling hybrid Toyota Prius, by contrast, is only charged by the companion gasoline engine. The comparable hot selling Model 3 from Tesla is a fully electric car and does not have a companion internal combustion engine.

The Volt is not end of GM’s electric ambitions. The newly designed Chevy Bolt all electric car started manufacturing in 2016. The Bolt is not directly a replacement of the Volt as the Bolt is a subcompact car instead of a regular compact or mid-sized sedan as is the Volt. The Bolt is sold for about $40,000 and has a range of 230 miles on a charge. If one ignores vehicle weight and interior capacity, that places the Bolt in the same endurance class as the modern versions of the Tesla Model 3’s, Model S’s, and Model X–all of which are considerably more expensive. Still, it is not clear that the relative expensive and conventionally styled Bolt will meet production goals and significantly challenge the stylish Model 3 or the utilitarian hybrid Prius for dominance. Tesla is also significantly ahead of GM in the availability of on-the-road superchargers for its vehicles. Most importantly, GM is expected to lose money on every Bolt until at least 2025, assuming its production targets are met. Tesla, in contrast, makes money on all of its currently produced models.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s