GM Volt’s Price Induces Some Sticker Shock

GM Volt’s Price Induces Some Sticker Shock
The Washington Post
By Peter Whoriskey
Wednesday, July 28, 2010; A10

The long-anticipated Chevrolet Volt, General Motors' electric car, will cost $41,000, the company announced Tuesday, leaving consumers to decide whether its environmental appeal is worth a price far above that of similarly sized conventional autos.

Electric-car technology has been around for years, but the high cost to make the vehicles has prevented automakers from producing them for the mass market. The price announcements for the Volt and its electric rival, the Nissan Leaf, have been highly anticipated as a result. Nissan, the only other major manufacturer expected to bring such a vehicle to market this year, said the Leaf will cost $32,780.

GM and Nissan are relying on a $7,500 federal tax credit for buyers of electric vehicles to offset some of the added cost, and they're hoping that the allure of their novel power source will make up the rest.

"The Volt is a game-changing product," said Tony Posawatz, GM's vehicle line director for the Volt, which is expected to hit showrooms in November 2011.

Although the prices are high, enthusiasts say that electric cars can reach a large, untapped market for vehicles with little or no tailpipe emissions.

The Volt can travel 40 miles on its battery charge and an additional 340 miles on a gasoline-powered generator. The all-electric Leaf has a range of 100 miles.

During the 2008 presidential campaign, then-Sen. Barack Obama pledged to put 1 million plug-in vehicles on the road by 2015.

But some analysts said they doubt that electric cars can reach a broad audience in the near term. Hybrid cars took about eight years to reach the million-unit sales mark in the United States, according to Energy Department figures.

"I'm not sure the Volt is going to be a volume vehicle," said George Magliano, director of automotive industry forecasting for North America at IHS Global Insight. "The technology still isn't there to make them cheap. At the end of the day, the consumer pays a hefty premium to make a statement."

To move the industry along and bolster U.S. manufacturing, the Obama administration has put its weight, and billions of dollars, behind an effort to develop electric cars and batteries in the United States.

In developing the Volt, GM is seeking to fulfill its promise to Congress during the government bailout to move beyond gas-guzzlers. The company had been planning the Volt long before it neared bankruptcy last year, however, as an attempt to leapfrog Toyota in the quest for fuel-efficient vehicles.

The president has expressed optimism that automakers will be able to lower the price tag of electric-vehicle technology. Earlier this month, he suggested that major reductions in battery costs, one of the primary reasons electric cars are more expensive, are on the horizon.

"Because of advances in the manufacturing, [battery] costs are expected to come down by nearly 70 percent in the next few years," Obama said at the site of a planned battery factory in Michigan. "That's going to make electric and hybrid cars and trucks more affordable for more Americans."

Both the Volt and the Leaf will cost considerably more than rival gasoline-powered compact sedans, such as the Honda Civic or the Ford Focus, each of which costs under $20,000.

Price is only one potential barrier to mass adoption, however.

Consumers must also get accustomed to plugging the cars in at home. It takes hours to recharge the vehicles, and in the absence of a network of public recharging stations, drivers that run out of juice may need a tow truck.

Both Nissan and GM are planning relatively low production levels at first, especially compared with the more than 11 million vehicles expected to be sold nationwide next year.

GM plans to produce 10,000 Volts next year, and 30,000 in 2012, company officials have said. Nissan has indicated that it will sell about 25,000 Leafs in the United States next year.

As the only two major manufacturers preparing to mass-produce cars that can run on batteries, GM and Nissan are engaged in a debate over price and capability.

On purchase price, the Leaf is significantly less, though the leasing prices are very similar. The Volt will also be available by lease with a monthly payment of $350 for 36 months and $2,500 due at signing, the company said.

"The Chevrolet Volt will be the best vehicle in its class . . . because it's in a class by itself," said Joel Ewanick, vice president of U.S. marketing for GM. "No other automaker offers an electrically driven vehicle that can be your everyday driver, to take you wherever, whenever."