G.M. Again Pauses Production of Chevy Volt

[OKIsItJustMe]

http://www.nytimes.com/2012/03/03/business/gm-suspends-production-of-chevrolet-volt.html

[font face=Times, Times New Roman, Serif][font size=5]G.M. Again Pauses Production of Chevy Volt[/font]
By NICK BUNKLEY
Published: March 2, 2012
[font size=3]DETROIT — General Motors said on Friday that it planned to halt production of the Chevrolet Volt for five weeks beginning later this month because dealers had more than they needed.

The suspension, which will result in temporary layoffs for 1,300 workers at the Detroit plant that builds the Volt, is another troubling sign for the plug-in hybrid, whose sales fell short of G.M.’s targets in 2011. G.M. officials had already backed away from projections that they could sell 45,000 Volts in the United States this year, instead saying that production would match demand.

Production is scheduled to stop March 16 and resume April 23, a G.M. spokesman, Chris Lee, said. It will be the third time that Volt production has been stopped for at least a month since the car first went on sale in December 2010. G.M. tripled the plant’s production capacity during downtime last summer, and the plant was down for all of January in preparation for building a lower-emission version that is eligible for car pool lanes in California.

...

G.M. sold 1,023 Volts in February, up from 603 in January, on the heels of a federal investigation into the possibility that its battery pack could catch fire after a severe crash. Regulators concluded that the car was no more dangerous than a traditional gasoline-powered vehicle, though G.M. agreed to strengthen the structure around the battery.

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[shcrane71]

1. I'm surprised there's not more demand for the Volt. Is it priced too high?

I believe the Prius is priced in the 20s, while the Volt is priced in the 40s.

[OKIsItJustMe]

2. Yeah, I think it's the price

But I don't expect the price of the plug-in Prius to be much lower.

[shcrane71]

8. Shoot... do you foresee the prices of plug-ins coming down in a few years?

I'd like to get one, but it's too rich for my blood right now.

[OKIsItJustMe]

9. Yes, I do

There's a lot of promising battery research. However, it takes a while to get from the laboratory to the showroom floor.

[Yo_Mama]

17. One of the issues will be electricity prices

Personally I believe that in five to ten years, the EVs will be coming into their own. I think they'll have much longer ranges and that the costs will have dropped significantly.

Then an interesting effect occurs. The cost of driving an EV depends mostly on electricity prices; such prices vary widely across the US and the world. At 50 kwh/100 miles and graded electricity prices:
10 cents kwh = $600 per 12,000 miles.
12 cents kwh = $720 per 12,000 miles. (US average)
14 cents kwh = $840 per 12,000 miles. (about CA)
16 cents kwh = $960 per 12,000 miles.
18 cents kwh = $1,080 per 12,000 miles. (about CT, NY)
25 cents kwh = $1,500 per 12,000 miles.
29 cents kwh = $1,740 per 12,000 miles. (current Hawaii avg)
This article has final figures for 2010 only, but it is easy to view them and it gives a better sense of the very high variabiliy of residential electricity pricing:
http://www.usatoday.com/money/industries/energy/story/2011-12-13/electric-bills/51840042/1

Focusing on consumer transport and figuring 40 mpg as average commuter then and graded gas prices:
$2.50 gal = $750 per 12,000 miles
$3.00 gal = $900 per 12,000 miles
$3.50 gal = $1,050 per 12,000 miles
$4.00 gal = $1,200 per 12,000 miles
$4.50 gal = $1,350 per 12,000 miles (current Hawaii gas price is about $4.25)
$5.00 gal = $1,500 per 12,000 miles.
$5.50 gal = $1,650 per 12,000 miles.
$6.00 gal = $1,800 per 12,000 miles.

So then there will be an interesting shift and adoption based on not just the price of gas but of electricity. The reason why Germany is so little interested in electric vehicles is that the electricity price makes them difficult to justify. Even if you could buy an EV in Hawaii right now for the same price as a high mpg car, it would cost you more to drive the EV than the high mpg car.

Economically this sets up an interesting situation, in which relatively small changes in pricing occurring on either side of pricing gradient can have a strong effect on operational pricing levels; already, these vehicles make sense in a state like Washington (< 9 cents kwh) and don't make sense in some other states like CT.

The average price of electricity in the US is supposed to keep rising for some time.

[kristopher]

19. That's like comparing an SUV with a subcompact

How did you arrive at 2 miles/kwh and 40mpg?

The Leaf does about 3.2 miles/kwh IIRC and it is not designed for the kind of maximum fuel efficiency that would be required to deliver 40mpg average from an internal combustion engine. So when you base your comparison on those two assumptions, you are strongly stacking the deck to deliver a false negative impression regarding the relative economics of the two technologies.

ETA:
The fuel cost of driving an electric vehicle depends on the cost of electricity per kilowatt-hour (kWh) and the energy efficiency of the vehicle. For example, to determine the energy cost per mile of an electric vehicle, select the location on the left axis (Electricity Cost per kWh) at $0.09 in the graph below. Draw a horizontal line to the right until you bisect the EV 3 mile/kWh line. Now draw a vertical line down until you bisect the bottom axis (Energy Cost per Mile). This tells you that the fuel for an electric vehicle with an energy efficiency of 3 mile/kWh costs about $0.03/mile when electricity costs $0.09/kWh.



The national average cost for electricity in the United States is about $0.075/kWh, while the average residential rate is about $0.089/kWh. Some electric utilities have had electric vehicle charging rates that vary by time of use, day, and season. These rates can range from $0.03 to $0.50/kWh. Older electric vehicles have energy efficiencies of about 2 mile/kWh. Some electric vehicles, such as the EV1 from General Motors, had energy efficiencies of over 6 mile/kWh.

To determine the energy cost per mile of a gasoline vehicle, pick the location on the right axis (Gasoline Cost per gallon) at $2.50. Draw a horizontal line to the left until you bisect the Gas 18 mile/gal line. Now draw a vertical line down until you bisect the bottom axis (Energy Cost per Mile). This tells you that the fuel for a gasoline vehicle with an energy efficiency of 18 mile/gal costs about $0.139/mile when gasoline costs $2.50/gallon.

The mileage for commercial fleet vehicles, such as light-duty pickups, ranges from below 17 to about 22 mile/gal. The energy cost per mile is also included for a hybrid electric vehicle with an energy efficiency of 40 mile/gal, as these types of vehicles are increasingly being used.
http://www1.eere.energy.gov/vehiclesandfuels/avta/light_duty/fsev/fsev_gas_elec2.html

[tinrobot]

11. The $369/month lease isn't that bad...

Particularly considering you'll save loads of money on gasoline.

[Yo_Mama]

12. I read that they are dropping the lease price to $350

It was originally $399.

The only thing I really know is that I was reading dealers who said they had a lot of interest, but most people couldn't swallow the price. The Chevy Cruze is selling very well. I think a lot of people can't afford the extra cost.

[tinrobot]

20. With gas at $4-$5 per gallon in CA, it makes sense

If you drive 12,000-15,000 miles per year, you'll probably spend $150-200 per month on gas at $4/gal. For an average driver, most of that expense will go away when driving a Volt, because the majority of miles will be battery powered.

So the $350 per month lease suddenly becomes $200-250 per month when you factor in fuel savings. I'm surprised this simple math isn't used by Chevy when advertising the Volt. It makes a lot more sense to tell people they're not only helping the planet and giving oil companies the finger, but they're also doing it for the same price as other cars.

[think]

3. Volt sales aren't as bad as all the propaganda would make you believe

The Volt has been totally bad mouthed by the right wingers and I'm surprised they've sold as many as they have considering the battle waged against it.

Look at these figures in comparison to the Nissan Leaf and it gives you a better picture of how the Volt is doing:

Chevrolet Volt Sales Up in February; Nissan Leaf Sales Down

~snip~

According to General Motors, Chevrolet delivered 1,023 Volts last month, versus 478 Leafs – a significant change from January when 676 Nissans found owners, versus 603 Volts.

Last year, General Motors originally projected Volt sales of 10,000 units but only reached 7,770 cars from its December 2010 launch, which GM executives blamed in part on a federal battery investigation now since resolved. By contrast, Nissan, which has managed to avoid as much overt negative publicity, sold almost 9,700 LEAFs during the same period.

It should be noted these two cars are not identical technologies – The Leaf is a battery electric vehicle, and the Volt is an "extended-range electric vehicle" with gasoline backup. For its part at least, GM has repeatedly said it is “not a race,” but because they were both launched as groundbreaking electrified efforts by major competitive manufacturers around the same time last year, market watchers have called it a race anyway.

~snip~

http://www.hybridcars.com/news/chevrolet-volt-sales-february-nissan-leaf-sales-down-42045.html

Also please check out the "battery fire" bullshit too. The fires were related to cars that were crash tested and then parked and then three weeks later the cars caught fire. No customer cars have ever been known to catch fire:

Volt fire 3 weeks after crash prompts safety probe
By Chris Isidore November 11, 2011: 5:34 PM ET

NEW YORK (CNNMoney) -- Federal safety regulators are investigating the safety of lithium-ion batteries after a fire started in the battery pack of a Chevrolet Volt three weeks after the vehicle went through a crash test.
The crash test was performed by the National Highway Traffic Safety Administration (NHTSA), and the Volt was sitting in a parking lot at the test facility when it caught fire, according to General Motors....

Full article:
http://money.cnn.com/2011/11/11/autos/volt_crash_fire/index.htm

[BlueToTheBone]

4. Way too high.

Even after the rebate it's over $30,000. They should drop the price and keep the people on the line and through economy of scale the price matches their current ratio of not profitable.

[Yo_Mama]

13. They can't afford to sell the car at a big loss.

Word has it that to produce each car costs between 40-80K - I've seen different estimates.

Also they are retooling again to make a lower-emissions model for CA.

Depending on how you will be driving the vehicle mostly, you might get close to the same gas mileage as with the Cruze. See the tables at the end of the Wiki article:
http://en.wikipedia.org/wiki/Chevrolet_Volt

It's a great car for some, and not all that efficient for others, based on the testing. Even the reported kwh-consumption per 100 miles varied a lot in testing. At the higher end (68 kwh/100 miles), the cost at 12 cents per kwh (avg US) would be about $8 each 100 miles, and efficiency on the gas engine is pretty low. A 40 mpg rating is close to equivalent at $3.50 per gallon, and if you have to do much gas driving the lower efficiency could really drop your savings to pretty minimal, so you could drive the car for ten years and not recover the additional cost.

Supposedly they expect to be able to get battery costs down by 50% pretty soon, and that will make it possible to cut pricing. Right now the people for whom it would work most efficiently are the same people who would have a hard time recovering the extra cost of the vehicle because they are not high mileage drivers, and the high mileage drivers actually would get close to the same results with a more efficient, far cheaper vehicle.

Drop the cost of it significantly and I think there is a massive change in saleability.

The key to dropping production cost is to cut the battery cost, and that's what they are working on. So they can't cut the production cost significantly by just producing more cars.

[OKIsItJustMe]

14. According to the article, they already did the California emissions retooling

http://www.nytimes.com/2012/03/03/business/gm-suspends-production-of-chevrolet-volt.html?_r=1

[font face=Times, Times New Roman, Serif][font size=3]...

Production is scheduled to stop March 16 and resume April 23, a G.M. spokesman, Chris Lee, said. It will be the third time that Volt production has been stopped for at least a month since the car first went on sale in December 2010. G.M. tripled the plant’s production capacity during downtime last summer, and the plant was down for all of January in preparation for building a lower-emission version that is eligible for car pool lanes in California.

...[/font][/font]

[Yo_Mama]

15. I think production on the E-85 version started Feb 6th. n/t

[BlueToTheBone]

18. Well, it seems they are losing money

at a rapid rate without the cars being sold and on the road. People imitate and if they see them, they want them. But if you let them set and then lay off your workers and have to pay unemployment benefits, you are adding to your loss.

"Drop the cost of it significantly and I think there is a massive change in saleability." I so agree.

And this is the answer IMHO. Sell at a loss until you get the thing perfected, it's also called "beta models" and people are paying to experiment for the company.

I hope they get some of this worked out within the next year or 2 because I don't want to buy an old generation vehicle, but can't afford $40,000 for a car. $30,000 is over my limit too.

[madokie]

5. Betting on a come

You'd think they'd figured that one out with their near extinction. Instead of lowing the price on the over priced vehicles they're going to curtail production in hopes of more sales in the future so if the sales come they can clean up. Hey GM the volt is over priced, simple. Lower the price and they'll be heading out the door faster than you can build them.

splchk

[Firebrand Gary]

6. The Volt is doing just fine. Period.

We are pulling ourselves out of a historic economic collapse and this is new technology. I'd bet that the Volt is going to start coming down in price in the next few years while the economy still gains steam. The Volt is a great fit for many rural american households.

My only issue with GM is that they are still playing games with the all electric car. I refuse to purchase another car that runs on gas, I just will not do it. Therefor we have decided to go with the Leaf.

[Riftaxe]

7. How long can you stay in business

if you can not move your inventory even with third party incentives provided to purchase it?

If it was doing fine, 1300 employees would still have jobs next week, not a tentative promise to "rehire" them down the road.

I believe it is possible to offer an electric car at an affordable price; However, it is unlikely we will ever see one from GM.

[Firebrand Gary]

16. 7.6 BILLION in profit?

You will be in business for some time.

Again, its new technology. This is Fox News rhetoric designed to hurt GM sales, specifically the Volt. The right wing has feared this for years now. When people actually start to drive the Volt or any electric for that matter, its game over for big oils control on the US. Its just a matter of time.

[kristopher]

10. Fox News was making a big deal of this also...

Personally I think the crowing about blips while the trends are inexorable is motivated by dark motives...

Like you say about the trends...

Iran, Electric Cars and Our Stuck Narrative
Randy Essex
Editorial Director
December 30, 2011

...

Our national leaders are stuck and our narrative is stuck.

The entirely predictable response to Iran’s threat will be calls for military action and increased domestic oil production.

These decades-old ideas, which have not yet made us secure and leave us to depend on the continued stability of Saudi Arabia, of course do nothing to address the environmental and economic risks of continued fossil fuel dependency. We urgently need a new storyline, such as the Reinventing Fire vision of freeing the U.S. from fossil fuels by 2050, with business leading the way.
...
The only way to avoid these costs is to stop using oil, and RMI research shows a huge potential prize for doing so—the transportation sector alone holds a $3.8 trillion opportunity from oil not needed.

...

http://blog.rmi.org/Iran_electric_cars_our_stuck_narrative