GM's Price Cut Won't Save Volt's Sales Jolt

GM's Price Cut Won't Save Volt's Sales Jolt

True to his word, General Motors CEO Dan Akerson is cutting the price of the 2014 next-generation Chevy Volt by $5,000 so that once the federal government kicks in its $7,500 tax credit, the starting price could start as low as $27,500.

Earlier this year, Akerson said the fact that GM was losing money on every Volt sold wouldn't deter the automaker from producing even more of them and cutting their price further, anywhere from $7,000 to $10,000. Since the actual price cut is less than what was originally scheduled, it suggests there may be more cuts coming in the future if it doesn't juice sales enough.

Through July, GM has sold 11,643 Volts, some 9% more than a year ago, but July sales were 3% lower year over year and 34% less than they were in June. In contrast, Nissan has sold 11,703 Leafs so far this year -- that's 20% more than it sold in all of 2012!

While Toyota has sold virtually the same number of Prius Plug-Ins through July that it did in the same period last year, other alt-fuel vehicle makers are recording greater sales now than in 2012. Sales of Ford's electric Focus are 53% higher at 1,050 than what it sold in 2012, while Tesla has sold nearly four times as many Model Ses.

Consumers have a lot more choices in alt-fuel vehicles today than they did last year, with Inside EVs tracking 14 models from major auto manufacturers this year compared with nine a year ago. That could partially explain the faltering interest in Volts, but it makes Akerson's assurances that it would eventually turn a profit on the vehicle harder to believe, particularly if they're cutting the price.

With around 200 million shares of GM stock still owned by the government, the price would still have to more than double in value for taxpayers to break even from its bailout. Yet that's going to become ever more difficult to do as GM pours more money down the rathole that is the Volt.

GM needs the Volt to compete more effectively against the cheaper Leaf, which starts at under $29,000, and BMW, which will soon be offering an 80-mile to 100-mile electric i3 at around $41,000. A price cut might do that, but it could undermine the whole effort, too, and it certainly puts off any hope the taxpayer will get any relief from its handout.

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