GM's Not Unplugging the Chevy Volt ... But It's Low on Juice
Electric cars have been a surprisingly hard sell in this country, and the road ahead for them is about to get even harder.
General Motors (GM) is temporarily halting production of Chevy Volt vehicles. The Hamtramck plant in Michigan that pieces the battery-powered hybrid together will shut down by the end of next week, and will resume operations five weeks later. (Full disclosure: My wife just bought a new Volt. She loves it, so no buyer's remorse for her.)
This isn't the first time the country's largest automaker has put its Volt assemblers up on blocks. There was a prolonged shutdown during the holidays that didn't end until early February.
The Volt isn't selling as well as GM, environmentalists, and plug-in fans expected. News of the production pause is going to make things even worse. Consumers who were on the fence may think twice about snapping up these high-tech rides, fearing that they are on the verge of being discontinued.
GM is certainly not at that point yet, but these plant closures can become self-fulfilling prophecies. If the cars weren't selling well before the latest product halt, showrooms are going to have their hands full now.
Recharging Time
GM was hoping to sell 10,000 Volts last year. It fell a couple thousand short.
January was brutal. The company moved a mere 676 Volts. Negative press coverage about engine fires stemming from leaking battery packs after severe collisions spooked potential buyers before GM and regulators cleared the matter.
GM finally seemed to be turning the corner last month, moving 1,023 Volts in February. With gas prices inching higher -- and most industry experts projecting the pain at the pump to escalate heading into the busy summer travel season -- it seemed as if the Volt was ready for its time to shine.
Shutting down the plant for five weeks clearly sends an entirely different message.
Driving a political bumper sticker
Electric cars have been slow to catch on. Nissan (NSANY) sold just 478 of its all-electric Leafs last month. Tesla Motors (TSLA) -- the California company that most associate with plug-in electric cars -- has sold just 2,150 of its flagship Roadsters since hitting the market four years ago.
However, neither company is under the same kind of scrutiny as GM and the Volt.
For better or worse, GM has become a hot political topic given its role for joining Chrysler in accepting the government bailout offered during the darkest recessionary stretch. "Government Motors" is a popular punch line for conservatives -- and the Volt has become the punching bag.
GM spent hundreds of millions of dollars in developing the unique car that uses electric power to go roughly 40 miles between charges. A nine-gallon gas tank provides roughly 300 more miles of range when electricity isn't enough. Many conservatives also aren't happy that buyers of the pricey $40,000 car get a $7,500 tax rebate -- the same deal provided to Leaf and Tesla buyers.
Ford (F) and Toyota (TM) are working on all-electric versions of some of their more popular vehicles. They, too, will be eligible for the tax rebates, though you can be sure that the Volt will continue to be the vehicle in conservatives' crosshairs.
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Playing politics isn't necessarily a bad business strategy. Between Fox on the right and MSNBC on the left, there are clearly big enough markets to be found in catering to one side or the other. But with all the partisan acrimony, it may surprise people to learn that there are fewer than 10,000 Volts on the road.
The Chevy Volt seemed to have cracked the "range anxiety" fear that kept mainstream drivers from embracing all-electric rides. What does a Leaf owner do if a trip requires more than 100 miles between charges? Tesla offers more powerful batteries, but even Tesla's more affordable Model S that hits the market this summer still starts at a hefty price tag of $50,000.
GM's solution is a car that provides an all-electric ride for most daily commutes but offers gas-fueled convenience for longer treks. This should be the Volt's moment to shine, especially when both sides of the political fence can probably agree that relying less on foreign oil is in this country's best interests on several different levels.
Unfortunately, GM either isn't convinced or drivers have decided that the premium they pay for electric will take too long to pay off. Until either side revs up the confidence, the Hamtramck plant will continue to face range anxieties of its own.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Ford. The Motley Fool owns shares of Ford Motor. Motley Fool newsletter services have recommended buying shares of General Motors, Tesla Motors, and Ford Motor, and creating a synthetic long position in Ford Motor.
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