Tuesday, August 11, 2009

The Volt May Drain GM's Battery

There was much hype in the press today about the Chevrolet Volt, GM's new hybrid car. GM is claiming the Volt could get 230 MPG. That certainly would be impressive mileage, but it won't matter if the car isn't commercially viable. In spite of claims the Volt will save GM, this car is unlikely to accomplish much besides driving GM deeper in debt. The Volt will not met the November 2010 launch date because of technology issues. It will come with a price tag of $40,000 and GM will lose money on every sale. GM's much heralded "future" car will be a money loser.

Marketed as the model to turn General Motors’ luck around, the Chevrolet Volt is now facing setbacks. A GM report is claiming that the Volt’s range-extender hybrid technology will not be able to meet its November 2010 launch date. The report culled from its regulatory filing to the US Treasury also said that the Volt has not yet proven to be commercially viable.

It is likely that GM will initially sell the Volt at a loss, hoping that it would recoup the development costs in future-generation models as Toyota has done with its Prius. Majority-owned by the US Treasury, GM has been seeking loans from the US Department for Energy to help it develop advanced fuel technology vehicles. Unfortunately, it has had all three applications for a $5.7 billion share of the $25 billion fund denied. A fourth application is due this month.

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