GM's 'Plug-in Volt' Could Be Its Biggest Advantage

Dec. 3.08 | About: General Motors (GM)

Not only did General Motors (NYSE:GM) CEO Rick Wagoner make the mistake of using a corporate jet to fly to Washington in search of a government bailout, he also failed to emphasize to House members probably the biggest reason bolstering cash-strapped GM looks like a good idea for all Americans.

GM recently told Phil Reed, the highly-respected consumer advice editor at Edmunds.com, that it expects its plug-in hybrid electric vehicle (PHEV) the Volt to require only about 80 cents worth of electricity to go 40 miles. And that’s in California, which has some of the highest retail power prices in the U.S.

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Even with regular gasoline in the U.S. now selling at a national average of less than $1.90 a gallon, even a fuel-efficient car getting about 25 miles to a gallon of gasoline would still need very roughly about $2.50 worth of gas to travel the same distance. In short, if GM’s 80-cent prediction is accurate, most U.S. motorists should be able to save roughly about two thirds on fuel costs when they “fill up” a Volt with enough electricity for the vehicle to travel its full 40-mile range in all-electric mode. That’s more miles than many Americans travel in a day’s time.

Reed, whom EnergyTechStocks.com has found to have an uncanny ability to predict car-market trends, believes the plug-in Volt “is the one thing that will get people back to GM.” He further believes that the Volt will be a hit with consumers, not just because of its fuel saving, but also because of a sleek design that will make it popular with “guys who want to turn people’s heads.”

Sharply lower fuel costs aren’t the only big cost advantage the Volt will enjoy compared to ordinary vehicles that Wagoner failed to highlight. According to Reed, something else about the Volt “is going to be absolutely amazing” to people when they find out what it is.

Reed is talking about the lower cost of maintaining a plug-in vehicle such as the Volt. Given the unpredictability of power costs relative to gas prices, Reed says that maintaining a plug-in Volt could turn out to be the Volt’s biggest long-term advantage.

Disclosure: no positions