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)









