Batteries versus the Volt: Production constrained by supplies
Is it the car, or the battery?
hybridcarblog.com
Who plays a bigger role, GM or battery producers?
In my humble, but experienced opinion, the problem with plug-in vehicles has little to do with automotive technology. It’s all about the batteries. Even basic hybrid cars have faced serious supply-constraint issues that forced automakers like Toyota to develop their own supply chains for hybrid battery parts – which is why Toyota sells hundreds of thousands of hybrids per year while Ford sells just tens of thousands of hybrids per year.
And, already GM is facing a similar problem with the Chevy Volt.
While we’ve heard the reports before, some 250,000 people have expressed interest in the Chevy Volt. Unfortunately, only 10,000 Volts will be produced the first year, followed by 45,000 cars the following year. Consequently, GM is reportedly interested in increasing production, as much as doubling or tripling production according to AutoWeek.
Of course, can they afford to?
Before the Toyota Highlander hybrid launched, for example, more than 100,000 people expressed interest in that vehicle. It took several years, however, to achieve 100,000 Highlander hybrid sales. The hype outweighed the actual demand.
Obviously, the Chevy Volt is a whole different animal. For some, knowing that their foreign oil footprint is 0, at least in terms of gasoline consumption, is priceless. I’m one of those people, and despite my constant Volt criticism, I would actually consider buying a Volt.
But after a decade of hybrid and plug-in advocacy, I’ve come to realize that vehicles like the Volt offer very little short-to-midterm potential to fight foreign oil dependence. And, while my personal consumption is one thing, my real focus is total US foreign oil consumption, not just my consumption.
Anyway, while Highlander hybrid interest instantly waned, Volt interest is sure to stick around, at least to some extent. But if GM is already essentially selling the Volt at cost, can they afford to make a big battery investment too early?
Just because GM claims they might be able to sell so and so many Volts per year doesn’t mean that battery producers are going to accept that prediction on faith. GM will have to put down the Benjamins. Considering that GM is already into the Volt for a cool billion and profitability is nowhere in sight, how much more can GM bet on the Volt?
Suppliers, for instance, aren’t going to want to build out production for 100,000 Volts per year, and then have to quickly scale back to 50,000 Volts per year. Like any business they would rather ramp up production based on sustainable long term demand.
Will there be sustainable long term demand for 100,000 Volts per year?
Maybe, but such demand will probably require either massive government incentives – in the US or elsewhere – or a major battery breakthrough. Both are possible, but if one were making odds in Vegas, the odds wouldn’t be overwhelming.
Certainly, this conundrum isn’t surprising. It has defined battery-powered cars thus far. Still, according to experts, plug-in profitability is significantly centralized in lithium cell production – something that just doesn’t happen in the US.
Consequently, will the Volt ever be profitable without US cell production, or at least GM et al partnered production?
Is cell production itself far more important than the Volt?
Never have I doubted GM’s ability to build the Chevy Volt. Of course, never have I thought that the ability to build the Volt really meant anything. It’s never been about the car itself, at least not for me, it has always been about the battery. And, already, the battery is controlling GM’s every Volt move. |
