GM plans to double the 2012 production capacity for the Chevrolet Volt to 120,000
Then hopes to triple sales of plug-in hybrids by mid-decade
January 26, 2011
General Motors Co. Chief Executive Officer Dan Akerson plans to double the 2012 production capacity for the Chevrolet Volt to 120,000 as he works to boost the plug-in hybrid’s sales, said two people familiar with the matter.
Volt output this year may increase to 25,000 from an original plan of 10,000, Akerson said earlier this month. GM now is working with suppliers to raise 2012 capacity from an earlier target of 60,000….
Akerson, who became CEO in September, wants to sell more of the $41,000 Volt and is pushing to use its Voltec gasoline- electric drive system for models sold by other GM brands. Akerson has said he wants GM to have more fuel-efficient models ready for a possible increase in oil prices to $120 a barrel.
“We want to stay sharply focused on technology,” Akerson told analysts at Deutsche Bank’s Auto Industry Conference in Detroit on Jan. 11. “We don’t want to be caught flat-footed as we were in 2008.”
Crude oil that year climbed to more than $140 a barrel and average gasoline prices topped $4 a gallon.
If it’s really true that GM is planning for $4 gasoline, as the Detroit News reported last week, then they have truly made a remarkable turnaround in strategic thinking. That alone would justify the Obama administration’s decision to save the company.
After all, serious consequences from peak oil are now unavoidable (see “Peak oil production coming sooner than expected“). Most every major company is pursuing EVs (see “Our cup runneth over with plug-in hybrids“). Indeed, electricity is the only alternative fuel that can lead to energy independence. It also happens that plug-in hybrids are a core climate solution.
Some conservatives, however, hate Obama so much they would be happy to see GM fail, but fortunately the Volt appears to be a solid vehicle (see Motor Trend slams Limbaugh for attacking the Chevy Volt: “Driving and Oxycontin don’t mix”: Car reviewers rave about GM’s PHEV while Rush fumes).
Here’s more news on the Volt:
Akerson told his executive team in early December that he wanted to boost Volt production and explore adding its drive system to several models with a goal of at least tripling sales of vehicles with that technology by mid-decade from the 2012 target, people familiar with the matter said at the time.
After exploring its options, the team settled on doubling capacity for the Volt next year, they said. GM is still evaluating the Volt’s technology for other models.
Higher output will allow GM to reduce the cost of the Volt’s drive and battery systems, helping it lower the car’s cost in future years, said Jim Hall, principal of 2953 Analytics Inc., an automotive consulting firm in Birmingham.
GM should be able to sell all of its Volt production as long as the government’s $7,500 tax incentive is in place, Hall said. The incentive expires after GM sells 200,000 of the car.
“The only way they will get cost down is with more production,” Hall said. “They are in a race to get costs down concurrent with selling 200,000 Volts.”
GM may announce the production increase at the Washington auto show next week, one of the people said.
The Volt can travel about 35 miles on a fully charged battery before the gasoline engine kicks in, giving the vehicle an additional 340 miles of range on a full tank of gas, GM said on its website.
The U.S. Environmental Protection Agency estimated the Volt’s energy use as the equivalent of 93 mpg in electric-only mode. In combined gasoline-electric driving, the EPA estimated the Volt would average 60 mpg, GM said. In gasoline-only mode, when the battery was drained, the car would get 37 mpg, GM said.
And here’s some fascinating reporting from the Houston Chronicle, “Demand looks good for Chevrolet Volt,” on the Volt’s early success in the oil capital of the country:
The first Chevrolet Volts have yet to arrive at dealerships in the Houston area, but already there seems to be demand for the electric vehicles.
Late last year, the Volt was launched in seven U.S. markets, including Austin, which received 20 of the electric autos. All were reserved by buyers, GM spokesman Craig Eppling said, so they spent almost no time on the lot before being driven away.
By late February or early March, a few Volts will arrive at Houston dealerships. The number of Volts each dealer will receive will depend on its size and sales, Eppling said….
Don Heihn of San Antonio bought his Chevy Volt in Austin late last year and is pleased with the vehicle.
“It just turned over 1,000 miles, and I’ve only used 5.6 gallons of gas. It performs really well,” he said….
Cheaper than gasoline
There is, of course, a cost to charge the battery of the Volt. But at present, the price of electricity is cheaper than gasoline.
And experts expect the price of gasoline to rise through the summer.
The inflection point for Americans appears to be between $3.50 and $4 a gallon, which we may hit this year. That’s the price at which SUV resale prices collapse, and people seriously begin factoring in gasoline prices to their car purchases. If we hit $4 in 2012, then it will certainly be a major campaign issue, but there seems little escape from even five dollar gasoline in the next few years, unless of course the global economy goes back into a deep recession.
When you are peaking in oil production, the only way to avoid higher prices is to destroy demand. That can be done through an aggressive clean energy policy, which conservatives have opposed for decades, or it can be done, temporarily, by a global economic meltdown, which was the Cheney-Bush strategy.
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