Chevy Volt: Can It Survive GM?

Two momentous things are happening at General Motors (GM). One is GM's electric-powered car, the Chevrolet Volt, which might be a breakthrough machine if it debuts on schedule in late 2010. The other is the deepest financial crisis in GM's history, which threatens virtually every program underway at the huge automaker — including the Volt.

First, the money problem. One of the most overlooked stories of recent weeks is GM's decision to postpone nearly all of its new-product spending for the next two years, as Automotive News reported recently. GM won't confirm the details, but such cutbacks would be a drastic measure meant to preserve cash and help GM avoid bankruptcy, which many analysts think is likely by next year if car sales stay in a funk and GM doesn't raise cash from outside sources.

It's also an extremely risky move. As everybody knows, one of GM's biggest problems is that its cars have fallen behind offerings from competitors like Toyota (TM) and Honda (HMC). And even though sales are down for the Japanese automakers too, they haven't eviscerated new-product funding or given up on the future. So GM's spending freeze could erase gains the Detroit automaker has made against its foreign-based rivals in recent years and once again widen the gap between GM and Japan.

The Volt, for now, appears to be an exception to the cutbacks. GM executives say the Volt enjoys privileged status in Detroit because so much is riding on the car. Vice Chairman Bob Lutz, for one, has declared that the Volt "is about recapturing General Motors' technological leadership."

There's been a lot of skepticism in the industry about whether GM can really build a car that goes 40 miles on a single battery charge — much farther than the next-generation Toyota Prius will be able to go — without a lot of compromises that would kill the appeal of the car. But GM has been converting skeptics as it has revealed technical details and, now, an actual production version of the Volt.

The prototype Volt that GM has been showing off is a sporty four-seater with futuristic touches meant to draw in mainstream gearheads. The dashboard controls are touch-sensitive and set in a white console reminiscent of an iPod. Instead of standard gauges for speed and RPMs, there's a digital display that looks like the screen of a Sony PSP. Wind-tunnel engineering has made the Volt even more aerodynamic than a Corvette, critical for milking the most mileage possible out of the battery. GM says that recharging the car at home, through an ordinary household outlet, will cost less than $1 per day and drain less power than it takes to run a refrigerator.

But will the Volt survive if everything else at GM goes down the drain? Or if the company declares bankruptcy? In Chapter 11, creditors and a bankruptcy judge have a lot of say over corporate strategy, and it could get hard to justify large expenditures for a futurecar at the expense of mainstream offerings today.

Despite its allure — and the attention the Volt would get if it succeeded — GM officials admit it will be a low-volume car for several years, with sales of perhaps 20,000 per year. Would GM be able to justify spending on the Volt while, say, delaying the launch a mainstream compact car like the Chevy Cruze, which is also due in 2010 and could promise annual sales of 150,000 or 200,000? It stands to reason that GM has plans to use the Volt's electric-drive technology in other vehicles, which would be essential to justify the expense. But in Darwinian times, survival trumps nice-to-have, and in order to get to 2015 you have to first make it through 2009. Besides, if gas prices continue to fall, will drivers really care that much if the Volt cuts yearly gas consumption by 500 gallons?

If GM were healthier, these would represent the kinds of reasonable risks that global companies have to take in order to be competitive down the road. But GM is hurting, and the pain is going to get worse. A key test of the automaker's prospects is whether the Volt gets a jolt, like virtually everything else at GM these days.

Comments

[helplessobs...:]

Trying to build an all electric powered car for operation on the US Interstate Highways is doomed to failure. Electricity is a useful and reliable power source, but it must be drawn from the grid. A high priced car that is only useful as a souped up golf car suitable for urban neighborhood use will be rejected by the market. A natural gas powered automobile will meet America's needs and put $700B in the coffers of American business and workers. Who makes one, HONDA.

2008 Oct 31 07:37 PM

[Philly Jim:]

Wagoner will bury GM and move to his favored China before the Volt makes it to the market in the "write-off" States of America. Can someone please introduce the concept of change to U.S. automakers? Why is the Ford family and Wagoner still controlling these cornerstones of American manufacturing when they have proven to be such abject failures.

2008 Oct 31 09:56 PM

[User 289693:]

The Volt and the electric vehicles is the only thing keeping GM's hopes alive IMHO. I was first in line to get one until they changed the prototype to the horrible production style, but will get one just to get off oil. No more failures in our cars, please. BTW, just bought the 35 mph Toyota, come on GM.....

2008 Oct 31 11:16 PM

[nibelung:]

20,000 units a year? 40 miles on a charge and $40K each.
This is GM's salvation?
Put a fork in it, it's done

2008 Nov 01 12:41 AM

[liack:]

anybody remember how the NEW GM Camaro was supposed to be da'bomb and how GM was going to milk its popularity for everything it could? ya...didn't happen. Their failure was fairly obvious when they couldn't launch the car in time for Transformers - The movie where the Camaro was the main character...and all that car required was a revamp of what a NA car manufacturer like GM is known for.

The "talent" at GM is not built for producing cars like the volt.

gg GM

2008 Nov 01 02:49 AM

[Alfermee:]

Question: why so much american are driven a japanese car? (honda /accura, toyota/lexus, nissan/infiniti)
the keyword is: "Quality Management" of the japanese cars companys and the low consume of they cars.

americans buy american cars....yes, if you still have the money for that.

its to early for the volt!
i want a nice hummer HX CONCEPT in "Toyota Quality" thats all i want.

2008 Nov 01 06:48 AM

[PeakOiler:]

Rick recently opined about Obama been helped inadvertently by corporate America (seekingalpha.com/artic...). Well Rick, maybe there's method in what you consider corporate madness.

Obama's number one priorty after he wins in a massive landslide is to address America's self-inflicted financial nightmare. Within his solution will be support for those corporations that enhance his vision of America's future, and that includes a green energy thrust and a rebuilding of the electrical grid to support that program. So to all you naysayers, GM is well positioned to benefit from Obama's drive to eliminate dependence on foreign oil. You folks need to look beyond the end of your noses.

2008 Nov 01 07:56 AM

[a. palmer jr.:]

I think one step we might consider to help make the electric car viable would be the return of the 55 mph speed limit. I know most people like to drive 75 on the interstates, but that is not going to get us off foreign oil!! America can't live in the past and expect to make it to the future.

2008 Nov 01 09:50 AM

[Ames Tiedeman:]

The new Camaro sounds far more interesting.

2008 Nov 01 09:50 AM

[In the indu...:]

Let's get real here. The auto industry has long been plagued by stagnation and at a price disadvantage for decades, due to unions, pension obligations and now soaring healthcare costs. It's hard to compete when at such a disadvantage. Add on bad management, an old boy's mentality that won't die, and US's greed for money and short term fix (0%apr financing). Then, we let the europeans and japanese produce here with huge tax incentives thus giving birth the to "local content argument," and THIS IS WHY THE INDUSTRY is a mess. The fact that cash flow is now choked and bonds are at junk status is not an excuse to show up in DC, with a cup in hand. As for the volt, there is no way 2010 is viable. without electric grid expansion in place and resolution of battery degradation issues, it's not happening.....I'd put my money into the chinese battery company that Warren has bought into.

2008 Nov 01 01:07 PM

[drone:]

The last GM product I owned was a 1954 Pontiac bought in 1966 for $290. It had lots of room and was great at the drive-in theater.

2008 Nov 01 01:31 PM

[fran:]

any body remember ROGER SMITH, SATURN, and the REBIRTH OF GM? how many years back? what's happened to GM in the interim years? DEJA VU what? AGAIN?

just what is the performance of this $40,000 device in bumper to bumper traffic with 4 passengers, A/C running full blast, at commute time in 100 degree temp-- Atlanta, Houston, Sacramento? or minus 10 degrees with full load, full heat, in Wyoming, N/S Dakota?

what do we really know about this "auto dynasty savior"? please tell all!

2008 Nov 01 02:07 PM

[omnimoeish:]

If anyone has looked at Chevron's falling production levels year after year, it's very clear that in the next few years, oil imports are going to be much higher than 60%...no matter how many soccer moms decide to splurge on the SUV hybrids that increase gas mileage to an amazing 25 mpg. If all crap really hits the fan in the middle east, or our dollar value starts dropping like a rock (I'm sure you can think of more) provides true energy, we need the option at least, to be able to afford to keep our economy moving. Make no mistake, these are desperate times, but if there is no Volt, there is no America 5 years from now.

2008 Nov 01 02:12 PM

[DownOnMyLuck:]

Hey Peakoiler, can you name one tangible accomplishment of Obama that makes you believe he can solve all the world's problems? Did he make major, or even minor, improvements in South Chicago? Of course not. How is he going to "heal the planet and lower ocean levels" if he couldn't heal Chicago or lower the Great Lakes. It is sad that Americans are so fixated on celebrity and rhetoric that they don't require any evidence of accomplishment or ability.

2008 Nov 01 04:02 PM

[bill d:]

$1 a day ??? Less power drain than your refrigerator (unless you got one hell of a BIG refrigerator). Somehow the KW power output by the batteries will have a tough time being replaced by the KW drain used by your refrigerator.

You have a better chance of putting wheels on your refrigerator and getting a LONG extension cord = 20 miles oughta do it.

2008 Nov 01 05:49 PM

[drone:]

There are enough electrons flowing from McCain's negative campaign to power American cars through to the next election. From there, Palin could take Obama and the democrats into the next decade.

2008 Nov 01 06:03 PM

[neutrino23:]

The comparison to the refrigerator is clearly wrong. Refrigerators use about 2 kWH a day. That's good for ten miles.
Regardless, the Volt is a nice idea and I hope it works out for GM. The problem is trying to launch a totally new technology like this. Toyota didn't come out with the current Prius in one step. They went through several generations gaining experience along the way. GM should have been building something like this for years and selling maybe 5,000 or so a year to gain experience and to learn how to cut costs.

The Japanese companies do have some benefit in that Japan has a national health insurance, however, Toyota provides health insurance to their workers beyond that supplied by the national plan so it is not a cut and dried issue.

2008 Nov 01 06:34 PM

[PeakOiler:]

Fair question, DownOnMyLuck, Obama doesn't have any spectacular legislative accomplishments, but he's been right on the money on the less flashy bills he's introduced and sponsored/co-sponsored in both the Illinoisp and US senates (I won't go into boring detail). What he has done, though, is to inspire tens of millions of Americans and attract them to his proposals for change, and he's led the most sophisticated, successful, noble and honest campaign in the history of American politics. What you see and hear from his campaign will be what and how he directs this country. Things won't change overnight but they will change for the better.

Paul Begala, who followed Bush when he was the Texas governor, wrote a book in the year 2000 called 'Is Our Children Learning', in which he predicted pretty much every disaster that George W. Bush actual presided over during the past eight years. He said in 2000 that Bush would destroy America, and sure enough, Bush did destroy the country. I could write two books now: one for McCain which would be along the lines of the Begala book, and another for Obama, in which I would predict that Obama will turn this country around to be the shining example of democracy and capitalism that it deserves to be, where minority rights are protected, universal health care is set in stone, energy dependence is eliminated, the electrical grid rebuilt, and protective regulation added to the financial system, and much more.

Believe it, Obama will be considered one of our greatest presidents ever when he's done, if some crazy wacko doesn't shoot him first. Only in America.

2008 Nov 01 07:42 PM

[Douglas Kor...:]

GM had a 140-mile EV, using NiMH batteries, and 110 mile EV, using Lead-acid.

If GM were serious, it would just produce the EV1, which would always have sold like hotcakes (GM never offered it for sale).

Just add-on a genset, and you have an instant VOLT, a PHEV-100 (the VOLT hoax would be only a PHEV-40).

It's promised for 2011, which means, the other side of the Moon. GM's fate will be decided long before then, and it will be either irrelevant, or stillborne.

GM is still LYING about the EV1, and forbidding those who restored gutted museum copies (40 shells were donated) from restoring it to all-electric running condition. GM suppresses the WWU EV1, which drove into the RenewableLA expo.

2008 Nov 01 11:05 PM

[Alfermee:]

okay my dear americans, first of all come down and face the facts.
the barrel oil is on 65us dollar. the dollar value went up 15% since the "subprime-crisis".
who is the winner and how is the looser of this global-crisis???
okay let me tell you (me a swiss citizen / europe)
the winner of this crisis will be america!(you can be happy that your president is bush! paulson,rice and bush did a f*****g good job.)

more and more worldwide invester will put they money in dollars.
the greenback is back as the number one money value. the euro is going down..........
the people that lost they home in america, they will spit in the hands and they will pull out the wagon out of the dirt.
in europe for example they will keep on working 35 hours in the week and want more salary....

america is a great nation! i belive in america.
andre / switzerland /europe

On Nov 01 02:12 PM omnimoeish wrote:

> If anyone has looked at Chevron's falling production levels year
> after year, it's very clear that in the next few years, oil imports
> are going to be much higher than 60%...no matter how many soccer
> moms decide to splurge on the SUV hybrids that increase gas mileage
> to an amazing 25 mpg. If all crap really hits the fan in the middle
> east, or our dollar value starts dropping like a rock (I'm sure you
> can think of more) provides true energy, we need the option at least,
> to be able to afford to keep our economy moving. Make no mistake,
> these are desperate times, but if there is no Volt, there is no America
> 5 years from now.

2008 Nov 02 12:21 PM

[gybognarjr:]

The Volt is mainly PR work, to show that GM can be in the forefront of technology. However, for the last few decades, as well as today and in the near future, GM is the prime example of mismanagement and lack of direction. Hedging bets, by lobbying against laws on one side while making half hearted efforts to meet them and achieve nothing between is their way of business. GM wasted billions by throwing money and technology out the window. Changing the shape of bumpers and fenders, taillights is their method of design, which worked until about 1960. It is time for GM to close the doors, they cannot compete today.

2008 Nov 02 04:07 PM

[crusaderjd:]

User 279697 is absolutely correct when he/she wrote: "GM had a 140-mile EV, using NiMH batteries, and 110 mile EV, using Lead-acid. If GM were serious, it would just produce the EV1, which would always have sold like hotcakes (GM never offered it for sale). Just add-on a genset, and you have an instant VOLT, a PHEV-100 (the VOLT hoax would be only a PHEV-40). "
I saw an Electric Rav-4 and I talked to the Edison Electric worker driving it. He said he could drive it 80-100 miles before needing a charge. He told me that Edison leased them and that Toyota wanted them back afterwards. I wanted info on buying them, which he said wasn't allowed.
Right NOW conversion companies in the City of Commerce are modifying Prius Hybrids to get over 200 miles on a charge from Litium-Ion batteries without incident. The conversions cost $10,000 to $15,000 each. Interestingly Toyota is voiding the warranties on such conversions. It is as if Oil Companies are dictating the rules to Auto manufacturers. They all probably know these high prices are manipulated and will down and stay that way for a while, meaning they don't have to make electric cars. I just filled my Prius tank with $23, the gas I bought cost $2.69-9 cents per gallon. That will last me two weeks because I use my cruise control on both the streets and highway. The cruise control accesses the electric motor at 24 miles and above, but if you use your gas foot pedal, the Prius mainly uses the gas engine.
There is an interesting hole cutout ring in my Prius front bumper, it is made to install a plug-in cord to recharge the battery but isn't offered in the US.
The Tesla electric car gets well over 200 miles from it's batteries while the technology is quite crude, with the exception of the Lithium Ion battery, invented to operate Laptop computers. Putting High Output Solar cells on the roof, hood and trunk of an electric/hybrid car would give the batteries a charge while sitting in the parking lot all day. We drive to work, let the car sit all day, then drive home. This would use the free and clean energy of the Sun without burning anything. At home a solar powered recharger could be used to recharge an electric car batteries.
The Smart Car, a two seater, was supposed to have an all electric plug in for sale by Sept. 2008, but didn't show up.
In the meantime, every auto maker has turbo chargers and can make a truck, SUV, Van, or car to run on Natural gas. Go on their websites and you will see you can order such clean cars now. Sometimes a fully clean burning vehicle can use the Car Pool lanes. No need to wait. So why don't the auto makers make hybrids that burn natural gas to produce the electricity to run the vehicle? about $1.40-$1.50 a gal. to do that.
We have everything we need right now, but the auto builders don't want to use them. Odd when their very existence is at stake. -- Crusaderjd

2008 Nov 02 07:27 PM

[Corrector:]

On Nov 02 07:27 PM crusaderjd wrote:


> There is an interesting hole cutout ring in my Prius front bumper,
> it is made to install a plug-in cord to recharge the battery but
> isn't offered in the US.

Not quite, that is where you screw in the towing eye bolt. Read your owner manual.

2008 Nov 02 10:05 PM

[Chevy man:]

You guys need to watch "Who killed the electric car". Its not that the auto manufatcurers can't or don't want to make the vehicles: They did in the early 90s. GM lead the effort with the release of the EV-1 and leased through Saturn. This electric car was leaps and bounds ahead of the ALL of auto manufacturers. The new Chevy volt is capitalizing on technology developed for the EV-1. The biggest differences are the batteries. They are smaller and lighter allowing for more space in the cab for passengers and greater range due to the lower weight of the vehicle.
I am anxious for the release of the Volt. This is the first I have heard of the low production volume and am surprised. GM will be supplying the Power train of the Volt to other manufacturers (Ford for one) - I wonder why they are targeting a 20,000 unit production run per year?
It may have to do with consumer habits/spending. When the Prius first came it had very low production numbers. Numbers are higher now but Hybrid cars (like the Prius) still account for a very, very, very low percentage of cars sold annually (for all mfrs).

2008 Nov 22 01:13 PM

[Joe Brown:]

EV's are THE trend of the future. Understand that we spend trillions every decade importing oil, plus another several trillion in the last decade on a war to support oil interests. It's not worth it, and can only get worse. Look at what Russia is doing to Ukraine right now- they shut off their natural gas. I seriously doubt this is the last time we see something like this. If it happens to us and we aren't ready, we're not just screwed, we're stupid for not planning ahead for energy independence.

Once the public is informed of the genuine superiority of EV's, they shouldn't have any problems adjusting. The design is actually simpler and more elegant. They are capable of delivering Way more horsepower, are drastically less likely to break down, and are cheaper to fuel, by far. And the energy is generated right here in the US. GM seems to be trying to hamstring the benefits of EV's by introducing a $40k model- I can't understand why. Eventually someone will develop an EV that is accessible to someone making the average national salary, and at that point the efficiency-recalcitran... Big 3 will go belly up for good.

EV's have been a reality since at least 1916. That they aren't the vehicle of choice now (they aren't even available!) can only be the result of suppression. We aren't in a situation where we can suffer the fools who impose these conditions on us any longer!

Jan 06 10:42 PM

[User 371525:]

i agree 1000%

On Oct 31 11:16 PM User 289693 wrote:

> The Volt and the electric vehicles is the only thing keeping GM's
> hopes alive IMHO. I was first in line to get one until they changed
> the prototype to the horrible production style, but will get one
> just to get off oil. No more failures in our cars, please. BTW, just
> bought the 35 mph Toyota, come on GM.....

Mar 07 05:39 AM