GM-VOLT : Chevy Volt Electric Car Site

It looks like we may be on the cutting edge.

It turns out only 7 percent of the US population said they would very likely purchase a plugin car in a random nationwide survey performed by Consumer Reports. Over one quarter of the respondents (26%) said they were likely to consider one.

However, 72% of the population said they were unlikely to even consider it.  Consumers appear unwilling to sacrifice performance or convenience.

The study of 1752 purchase-intent people also looked at perceived range requirements and price expectations.

Overall the median electric car range desired was 89 miles. It was 102 miles for men and persons in households earning less than 50,000 per year. Less than half (49%) the respondents felt 75 miles of range was adequate and only 29% would be satisfied with less than 49 miles.

An additional 29% said they needed at least 200 miles of range.  Total range was the consideration, which in the case of the Volt would be gas plus electric or roughly 340 miles.

The median price premium people were willing to pay for an electric car was $2068. One fifth (20%) would pay nothing extra and another one fifth (20%) would be willing to pay $5000 extra, though this was correlated to income.

The majority of people (63%) said they would consider an electric car only if they could charge while at work.

A previous study published by Pike research in late 2009 drew a different conclusion.  It showed 48% of the US population would be very or extremely interested in buying a plugin car with a 40 mile range like the Volt.

So although we may lament GM’s near-term maximum production volume of 50,000 – 60,000 Volts per year, uncertainty of this new market may make planning difficult.

Source (Consumer Reports)

Some expressed concern when GM’s new sales and marketing chief Mark Reuss told GM-Volt he expects pure EVs to eventually obtain a larger market than EREVs.

“As (Volt) technology flows down to BEV in what will be smaller cars to carry smaller packs, that may be the higher volume play over a longer time,” he said.

It seems likely GM is expecting multiple healthy parallel markets including those for EREVs, BEVs, and plugin PHEVs.  As there are many subgroups of consumers each with their own specialized needs, offering options for all of them makes good business sense. This is especially true if costly common denominators such as lithium-ion packs can be eventually be brought to lower price points though economies of scale.

“In the end, the market will determine the winner and the technology that carries the day,” Tony Posawatz told GM-Volt.com.

“Considering the effects of temperature and the real world on pure EV’s, they will be limited for many years to come,” he said.  ”The concept of E-Flex or the flexible extended range electric vehicle will be much more than a bridging strategy.”

“We are happy that the EREV will someday help to launch EVs into the market,” he added.

Of course GM is limited by production capacity which is why multiple Voltecs aren’t yet planned, and part of the reason the Cadillac Converj was cancelled.

Confirming this Bob Lutz conceded in a text message to Automotive News “the Volt and Ampera will use all available capacity for years to come.”

Upon taking the helm, GM CEO and Chairman Ed Whitacre recognized the tremendous value and importance of the Chevrolet Volt.

He has admitted he wanted the Volts to roll out prior to the planned launch date of November 2010, even in small numbers. In an exclusive one to one interview with him, Mr. Whitacre told GM-Volt “I did ask them (the Volt team) ‘If I gave you another billion dollars could you get it out sooner? They said no because its all about testing.”

Even though full scale rollout couldn’t be done, Whitacre still wanted at least a few cars to get in the hands of the public early on. “We’re going to have a few out early,” he said

However, the Detroit Press has just learned that the company is becoming fearful about even letting a few cars into the public early.

Though some executives still want it to happen there are apparently obstacles. The plan has “a number of problems, and the car isn’t one of them” one source told the Free Press.

The Volt team is concerned the cars will still need routine “tweaks and changes” that go on right until rollout, that early cars won’t have in place. The could result in creating public misunderstandings that could lead to a public relations problem. The Volt is after all GM’s most important public relation move in decades.

Some executives therefore don’t want to chance any potential for a flawed launch and are strongly considering sandbagging the early Volt plan.

“There’s a lot of hard work that needs to be done between now and November, but the team remains on target to deliver,” GM spokesman Rob Peterson told the Free Press.

Source (Detroit Free Press)

How often has the car buying public been subjected to a headline like “Big Auto Company Introduces it Fabulous Concept Electric Show Car With 22″ Wheels…That Is Coming Soon-ish,” only to have that be the last word we ever hear on it? Fifty? A Hundred Times?

Personally, when I spot a new concept EV, I think to myself, ‘it looks like somebody had a couple thousand pounds of modelling clay getting old somewhere and this is the end result. Or perhaps there was just too many design interns last summer, and they didn’t know how to keep them all busy.’

I doubt the thought of, ‘I wonder what the demand for this car will be once they start producing it,’ crosses many people’s minds. That is of course until recently.

With GM currently ramping up for production of the Volt at its Hamtramck facility in Michigan, and Nissan on the cusp of actually taking orders in a few weeks, we can now focus somewhat on the acceptance of electric vehicles themselves once they hit the market.

Given the Volt’s very low initial production levels (8,000-10,000 for the first year), it is assured that it will be a virtual sell-out heading into 2012. But what happens when full line utilization is reached?

GM hopes to be producing 50,000-60,000 copies a year starting sometime in 2012. Looking even further out to 2015, Bob Lutz (GM’s vice chairman) predicted that the total market for the plug-in vehicles “will reach 250,000-300,000 units annually,” and added “they will mostly be our products.” /that is a lot of Volts Bob.

These are lofty goals, but are they reasonable?

Brent Dewar, while having his ‘cup of tea’ as head of Chevrolet, put it pretty succinctly, “There definitely is demand. We just need to get the cost and infrastructure in balance. Our biggest problem (right now) is infrastructure.” Brent ‘elected to retire’ a few days after making this statement, so we never got a chance for him to expound on just what he saw ongoing demand for the Volt to be…and new boss James Campbell seems to have his hands full catching up with the demands of Volt’s roll out to be making his own predictions at this point. /fortunately I have all the time in the world to do some armchair quarterbacking

For the Volt to achieve a level of 60,000 units per year in 2012, GM would have to sell 5,000/month. To achieve Lutz’s goal of more than half of his estimated plug in market for 2015, GM would have to sell 12,500 copies per month in five years time.

Demand will come from one of three main areas:
-existing customers currently buying vehicles at a similar price point
-current hybrid/eco sensitive buyers
-price trade ups in the same size (middle/compact) class

Existing High End Customers (Luxury/Sedans Over 30K)
This segment is the playground of the more affluent among us. According to NADA (National Automobile Dealer’s Association), 1 in every 13 cars sold in January (7.8%) were in the luxury car segment. More specifically than that, there was 46,000+ 4 door sedans sold in the month that had a starting MSRP of over $30,000 (only 7,000 of which were domestics). At a $40,000 price tag, that number drops to under 15,000. The Volt with a estimated MSRP around $40,000 (pre-rebate) would seem likely to take a portion of this segment.

The most likely casualty from the arrival of the Volt in this niche would probably be the Nissan Maxima, which tips the scales starting at $30,460. (The Maxima also sells the most of any non series/class car priced at this level, with 4,016 units sold last month)

Hybrid/Eco Customers

While this is the smallest of the three groups, statistically the Volt stands to gain the most ground as a percentage here by far. The hybrid group is growing at a year over year rate of almost 30%, and adding electric vehicles into the mix will only expand it further. (Last month there were 14,511 hybrid passenger cars sold compared to 11,221 the year previous)

While it is hard to judge at this point whether the Prius’ numbers (8,484 units sold in January) will take a direct hit from the Volt, it would seem likely that its sibling, the Lexus HS 250h (think suped up Prius with a trunk) will certainly lose some business to Chevy’s extended range car. The hybrid Lexus sold a not insignificant (considering the base price point of $34,650) 1,247 units. That was good for 3rd spot on the hybrid best sellers list. (156 ahead of the Fusion)

The Sell-Up
This is the wild card, and where ultimately the future success or failure of the Volt will be judged. The willingness of a customer to expand their price range to make the massive jump into MSRPs that start with a 3. This is where the Volt’s eventual MSRP and the government rebate ($7,500) really comes into play. At a pre-rebate starting price of $40,000, you are not likely to convert a lot of Honda Accord/Toyota Corolla buyers…but at $35,000, many will choose Volt over traditional best sellers.

The most likely casualty of the Volt’s success in this category, would be GM’s own Chevy Malibu/Impala. (Which I’m sure they would be ok with in the long run)

So What Is the Secret to Demand?
No secrets here at all. Even Brent Dewar knew it in his short stay at the top of the Chevrolet pecking order; GM has to “get the cost in balance with the market.”

With gas prices hovering at $2.60 nationally, the economy not going so well, and Nissan now threatening to make good on the rumor to set the price of the Leaf in the mid 20s after rebate, (“…we promise there will be a “wow” factor with how affordable it is!”) GM will have to do a lot better than $39,999 to sell at the volumes they are looking for.

Hopefully with the benefit of scale, good engineering, and falling battery prices, GM can find a way to get to market with a MSRP in the mid 30s and be a leader in this new segment. But then again…maybe they really don’t want to be. Maybe selling 2,000 Volts a month plus a few hundred even more pricey Volt-based EREVs is good enough for them. /I hope not

There is no debate that GM is years ahead of the competition in getting a extended range EV to market. The platform’s advantages are obvious. Hopefully, GM management doesn’t use this opportunity for short term gain by over pricing a handful of cars (relatively speaking) in lieu of owning a big piece of the future of the automobile.

(My own ‘guesstimate’ for ongoing sales (post initial demand) for the Volt follows below)

Jim Campbell is the newly appointed chief of Chevrolet. I had the chance to ask him for his thoughts on who he thinks the customers of the Chev Volt will be, and how GM will educate the public about how the Volt is superior to pure EVs.

What do you think the market potential will be for the Volt and who will the customers be?

As a team at Chevrolet and with the dealers, we have a big job to do to educate potential customers about the category of electric vehicles .  And frankly the industry as a whole has to do that so that people understand exactly what an electric vehicle is as it compares to a hybrid or a plugin hybrid.  So that is the first order of business.

And then the second piece of it is to define the Chevrolet Volt as an electric vehicle with extended range capability which is a key differentiator for us.  In terms of a daily commute its that you can go up to 40 miles gas free.  For those who travel more than 40 miles in a day the generator will seamlessly kick in and give you up to 300 more miles of range.

So the differentiator for us is that its an electric vehicle with extended range capability and the key is its really going to relieve the range anxiety that many people considering the category will think about.

So that’s our job we have a lot of work ahead of us to do that.

It makes a lot of sense to me and I understand the value of the Volt, but sometimes you talk to people who don’t follow the industry they say things like “only 40 miles” and you know how that goes.  So how do you plan to educate people?  TV commercials?  You can’t force them to read a book.  What will be the mechanisms?

Again were going to have to use all the media, digital, social, advertising at the appropriate levels. Today I spent the entire day doing interviews every half and hour and that’s actually a great way to get the word out what the Volt is.

Explaing that in interviews is one of the steps in the process.  Its going to take a multimedia effort for us to get the word out.  Chevrolet is going to have a key role in that obviously GM more broadly, and really the whole industry has a big job to do to educate about the category of electric vehicles an how they differentiate from hybrid and plugin hybrids.

Do you plan to work in a consortium with other automakers to produce this message? Obviously competitors are going to try to say their solution is better.

The bottom line is the vehicle we’re going to categorize as an electric vehicle and the range extender is one of the key differentiators.  The real news is we’re already deep into the validation of the vehicle with the engineering team to prepare for production of the Volt.  A lot of our competors are working on EVs, and others are still in the concept or show car stage, so I think we have an advantage there but we have to make sure we capitalize on the opportunity at hand.

Though Nissan has recently disclosed some details on how to order the LEAF EV, GM has not officially released the Volt’s MRSP or sales mechanism yet, and claims they won’t do so until the summer.

I did have the chance to discuss issues about how these decisions might be made with Jim Campbell who is GM’s new Chief of Chevrolet

Do you anticipate a conventional pricing scheme for the Volt or are you looking at a surprise or battery lease?

Obviously we haven’t priced the Volt yet.  That’s going to be my job on the Chevrolet side to lead that effort with our team. One of the previous assignments that I had was to manage our retail advertising.  I’m familiar with a lot of the different tools we have in our toolbox, and I’ve been involved in my whole career on pricing activity when I was at Chevrolet previously.  We haven’t priced it yet, we’ll look at all the options we have to make a smart business decision and proposition to the consumer.  That’s going to be one of the tasks at hand as I start my new assignment.

So you have two very dramatic and intense tasks managing the demand and the price of the Volt .

Yes those are both very important.

Do you expect to do a  special pricing/selling scheme or straight MSRP?

That will be part of the whole pricing process.  We’re already deep into it but I don’t have anything to announce yet.  The pricing  responsibility is in my shop.

Can you say if battery leasing is being considered?

No.

Is there any chance GM will get the cars out earlier than November?

I would just say we’re on our plan to bring it out by the end of the year, and that’s where we’re at right now.  I’m excited to be back at Chevy on this team to prepare the launch of that vehicle and other new vehicles like the Chevy Cruze.  We’re on our plan, well produce them by the end of the year.

I heard Maria Rhorer was reassigned.  Will there still be a position of Global Volt marketing director?

There definitely will be, there’s no question about that.  I’m in the process right now of identifying the person.  In the meantime, I’m heavily involved with members of my executive staff.

I’m in the process right now of identifying who’s going to lead that process for us leading the Volt.

What do you anticipate the lifecyle to be from when Gen 1 launches to Gen 2?

We talked about early adoption of technologies.  If you look at new technologies in other categories sometimes those generations one two and three come very quickly, sometime it takes a little more time.  So I’m really counting on our engineering leadership to really set the timing on that and to make the right decision on that front.