GM's Plan to Save the Chevy Volt

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When General Motors (NYS: GM) CEO Dan Akerson went before a congressional committee to defend the Chevy Volt yesterday, he didn't mince words: "Although we loaded the Volt with state-of-the-art safety features, we did not engineer the Volt to be a political punching bag. And that, sadly, is what the Volt has become."

Republicans on the committee were seeking to make hay out of what they described as an "unnatural relationship" between the Obama administration and GM, one that, in their view, may have led safety regulators to delay reporting a risk of battery fires in the Volt.

GM has fixed the problem with the Volt, and those regulators have declared the car safe and ended their investigation. But the effort to repair the public relations damage to the car, and to GM, is just beginning.

The fuel of the ire against GM
How did the Volt, an innovative plug-in hybrid sedan that should be a symbol of American ingenuity, become a "political punching bag" in the first place?

In some ways, the Volt is simply in the wrong place at the wrong time. It's an election year, opponents of the administration are looking to score points wherever they can, and the Volt happens to come with baggage that rankles some voters:

  • It's an electric car. President Barack Obama has sung the green praises of electric cars, and his administration has made money and resources available to hasten their adoption. As with anything that comes across as the government imposing social change, this effort has generated something of a backlash. The Volt -- a very visible and very American green car -- has become a focal point for that backlash, not least because some have slammed the government loans and grants that helped make the Volt's technology possible.
  • The bailout still rankles. Ford (NYS: F) makes hybrids and electric cars, too, but those don't generate the ire that surrounds the Volt. GM faces flak because of resentment around its 2009 bailout, which some see as a waste of taxpayer dollars -- and which Ford (heroically, in the eyes of some) avoided.
  • Special treatment is implied. The government still owns about 26% of GM, a legacy of those 2009 auto-industry bailouts. That gives Obama's opponents an opening to suggest that the administration is giving GM special treatment to protect "its" investment.

That baggage is probably partly why the Volt missed its 2011 sales goals and why the General has rolled back its ambitious targets for 2012. Overcoming that baggage won't be easy. But GM is determined to try -- and Akerson's testimony yesterday was the opening shot of its new campaign.

GM's campaign to save "the car America had to build"
Akerson's testimony was accompanied by a full-page ad in major newspapers in which he said he "couldn't be prouder" of the hybrid Chevy. And there's a new TV commercial -- which ran first on Fox News -- that calls the Volt "the car America had to build."

These are the opening salvos in what is likely to be a major, months-long campaign to reposition the Volt as a worthy vehicle that Americans should get behind. But that's likely to be a tough slog for the General, for a few reasons.

First, while the National Highway Traffic Safety Administration has declared the Volt to be safe, the political kerfuffle is likely to go on for a while -- it's an election year, after all. Second, and more to the point, the Volt, while still a really good car, isn't quite the "moon shot" it was a couple of years ago, technologically speaking.

Put another way, the competition is catching up.

Meanwhile, the competition marches on
Both Ford and Toyota (NYS: TM) have recently debuted plug-in hybrids that, while they arguably use simpler technology than the Volt, effectively function in the same way. Ford's upcoming Fusion Energi offers more features, more style, and probably more interior space with what is likely to be comparable electric functionality, and a comparable (or maybe cheaper) price tag.

Meanwhile, you can still get a Prius, or a conventional Fusion hybrid, for less than the Volt's asking price. And if you're willing to spend a bit more, you can reserve a Tesla (NAS: TSLA) Model S -- a bigger, more stylish, and more luxurious car that's completely electric, with good range.

While the marketing campaign is clearly necessary, it's unlikely to be enough to generate the kind of sales GM has hoped for with the Volt. Some innovation, some refinement -- and a price cut -- are going to be needed to meet the competition. All of that is probably on the way. But with GM's product-development teams already working on other critical programs, those refinements may not arrive for a while.

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