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General Motors Corp. on Tuesday announced the price tag on its hybrid Chevrolet Volt due out this fall, hoping to blaze the trail for an up-and-coming U.S. electric car industry and entice buyers to take a greener route.
The extended-range electric Volt, running on battery power and a small engine, will be priced at $41,000 and will qualify for a $7,500 tax credit. The price is close to analysts' $40,000 estimate, but significantly higher than the $32,780 cost of its competitor, the Nissan Leaf.
GM justifies the price difference with the Volt's significantly better driving-range benefit: The Volt will run for 40 miles on battery power and then a small gasoline engine will kick in as a generator, powering the vehicle for another 300 – 400 miles.
The Leaf, the first mass-market car to run entirely on battery power, will go for only 100 miles before its battery needs charging.
"People are looking for a real car, not just an electric car," GM's North American marketing chief Joel Ewanick told the Financial Times. "That's a significant difference between us and our competitors."
GM hopes to quell consumers' "range anxiety" with its series-hybrid Volt and beat the Leaf as the top electric car option in a burgeoning U.S. green car market.
"The Leaf is a second or third car," Jesse Toprak, vice president for vehicle trends and insights at TrueCar.com, told The New York Times. "The Volt can replace your existing commuter car or even your family car, if you don't have a big family, and do just fine."
To charge, the Volt battery connects to a 120-volt outlet and each charge would cost owners about $1.00 to $1.50, depending on electricity prices. The battery is under warranty for eight years or 100,000 miles. Nissan is expected to offer an identical warranty.
GM is taking orders for the Volt, which will be available at limited dealers in November. Consumers also have a lease option for $350 a month over 36 months, where the leasing company gets the tax credit and applies it to the total leasing price of the car. Car industry experts are expecting about 60% of electric cars to be leased.
GM plans to build 10,000 Volts by the end of 2011 and 30,000 by the end of 2012 – and dealers are already seeing lengthy waiting lists.
"Between this year and next year we're only getting 10 or 12," Yale Kahan, general sales manager at Boardwalk Chevrolet in California, told The Times. "We've already got more orders than we've got cars."
GM's closest competition comes from Nissan, which is aiming to become the world's biggest electric-vehicle producer and is scheduled to enter the U.S. and Japanese car markets in December. The Leaf already hit 13,000 preorders in May.
Nissan also scored a sale with Enterprise Rent-A-Car to deliver 500 Leafs by January 2011 and sealed another deal with Hertz (NYSE: HTZ). The company said the deals will "allow us to get a fair amount of exposure and to get the car into the hands of some individuals who might not otherwise have considered it."
Still, experts expect the Volt's range capabilities to draw more consumers than a short-range option.
"The Volt is a much more usable vehicle" than the Nissan Leaf, Aaron Bragman, an analyst at IHS Automotive, told USA Today. "It's clearly the winner."
GM does not expect to earn a profit from early Volt sales, but instead is hoping the new models build a strong, desirable reputation for electric cars that will generate robust consumer demand. As technology becomes less expensive, carmakers hope to see a substantial earnings increase in the next few years.
Electric Car Market Powered By Government Funds
Carmakers are counting on the $7,500 tax credit to entice consumers into the electric car market. The credit will be reduced for each manufacturer's vehicle after 200,000 qualifying vehicles are made, and then will be phased out over a year.
At the National Academy of the Sciences' advanced battery conference in Michigan this week, the state's governor appealed to the U.S. government to continue to include electric vehicle incentives in energy legislation to help kick start the electric car market.
"We need some help from Congress," Governor Jennifer M. Granholm said at the conference. "This includes passage of legislation expanding the advanced energy manufacturing tax credit. We also have to continue to offer federal tax credits to consumers who purchase electric vehicles until the cost of manufacturing lithium-ion batteries is comparable to that for internal combustion engines."
U.S. President Barack Obama pledged during his campaign to put 1 million plug-in vehicles on the road by 2015, and in addition to the tax credit has earmarked funds for U.S. battery manufacturers.
Boston-based A123 Systems, Inc. (Nasdaq: AONE) received hundreds of millions in aid to set up a Michigan plant.
Michigan is becoming the unofficial "battery capital of the world," with almost $6 billion in battery-related public and private investment in the past two years. Sixteen battery companies have projects in Michigan and the Volt's battery will be built there.
President Obama is hoping that investing in the battery manufacturing will lead to lower costs for automakers and more affordable car prices for consumers.
"Because of advances in the manufacturing, [battery] costs are expected to come down by nearly 70% in the next few years," Obama said at the site of a planned battery factory in Michigan earlier this month. "That's going to make electric and hybrid cars and trucks more affordable for more Americans."
News and Related Story Links:
- Money Morning News Archive:
General Motors Stories - Money Morning:
Hot Stocks: GM's Robert Lutz to Retire - Financial Times:
GM and Nissan sound the charge for electric cars - The New York Times:
GM Puts $41,000 Price Tag on the Volt
- The New York Times:
Electric Carmakers Focus on Incentives, Not Carbon Prices - Bloomberg:
Toyota, Nissan May Benefit From UK $67 Million Green Car Plan - USAToday:
Chevy Volt priced at $41,000 minus $7,500 tax credit - The Washington Post:
GM Volt's price induces some sticker shock - State of Michigan:
Office of the Governor
GM has always had the advanced battery technology to produce an electric car but their gasaholics won't let that happen. I point to the "other" lithium battery which they hold but won't produce. That battery would last approximately 23 years. However, if one follows these announcements of advancements in energy storage, charging rates, charging times and so forth, one begins to see that a truly "Manhattan Project" sized leap forward has already taken place in labratories but is being held up by investors and mega corporations like GM. The "Volt" is only one of their car lines. This belies the fact to which they claim to be committed. Gasoline engines are many times greater at generating problems, and cash flow, than electrics. This is a fact which hasn't changed in over a hundred years
The public is becoming aware of their double dealing, and the far future delegates them to a dust bin because they have broken the trust that a Brand Name implies. Substituting a lesser battery than one they possess, and projected to power the Volt for $44,000, and which has a fraction of usable life, is a cheat.
Okay jleman, what is this 23 year battery?
You should start up your own company to manufacture it. People would buy them like hotcakes and swap them into their cars etc.
The GM Volt appears to be a wonderful automobile according to the US government and GM’s marketing departments. However, I am leery of the cost issues, market focus, the operating and maintenance issues as well as the environmental concerns. The real market, like us folks will decide if this car is classic or lemon in the long run.
Beginning with the base price of $41,000 US Dollars and the marketing hype of $7,500 tax credit per vehicle, makes me wonder if we will be the guinea pigs and crash test dummies in buying and driving this new car. However, those 50,000+ Americans who have placed orders with GM probably want the exhilaration of being the first on their block to own one. I think that these purchasers are gullible in gambling their money and disinformation of the vehicle’s expectations.
GM has stated that the Volt has a limited electric range of 40 miles. My country golf cart can do better on a whole day’s charge and run 18 greens for a dozen clients giving you approximately 40 miles. I am also bewildered that the GM marketing department has not figured out whether the Volt can do 300 or 400 miles on the gas engine. I’m suspicious of that quote and I suspect that GM has not done enough to test and provide quality assurance on the vehicle to assure buyers of the Volt’s specifications.
Volt may flop due to several other pieces of information that consumers have forgotten to consider in the vehicles operations. Owners will ask, where and how do I plug the power cable into? Many apartments, condominiums and offices don’t allow for electric cables and receptacles placed in their garages. Furthermore, has the consumer considered the electric services that most homes currently have in their garages? Will homeowners need to electrically upgrade their garages by licensed electricians? Additionally lets question if the electrical utilities will have to upgrade their infrastructure services in order to accommodate the higher demands of electricity that public will request for all those electric cars. It seems to me that GM and the US government has put that liability and costs on the consumer.
With the environment worries in our society it seems that no one at GM or the US government has yet come out and said what kind of pollution levels this vehicle will produce after the gas engine kicks in. How does GM Volt compare to other gas powered vehicles i.e. gas savings, gas reduction, carbon monoxide and carbon dioxide emissions. Does anyone know? Has anyone at GM figured out what the energy requirements required to build the GM Volt? Many questions with no answers.
I feel that anyone who is thinking of buying the GM Volt should consider a lease or even renting the vehicle because of the many unknowns the vehicle poses. My gut feeling is that the Volt will spend much of its time in the garages of GM service bays throughout the volts lifetime. With the burden of repair, maintenance and overhauling the Volt’s generator, lithium battery and even the underpowered gas engine will frustrate the first time buyer. I wish them well.
Haven't you ever heard of copyright? Make the battery that GM has, and you would be sued out of existance. A lot of companies have great inventions that would do them out of a market. Why would they bring out an item that would bankrupt them? Once it is copyrighted it belongs to them, if they want to keep it out of the public's grasp then they are legally entitled to do just that. This "conspiracy" theory holds water, unlike most. Do you really think that GM would advertise the fact that they are hell-bent on screwing the consumer for ever. A lot of people have a lot of money riding on GM, including the US government.
And why only manufacture 10,000 Volts when there seems to be such a clear demand for so many more?? Can't GM make a profit on a Volt (sized like a Chevy Cobalt) at $41K per?? I myself own a Ford Escape Hybrid. It's a great car, and 34MPG for a small SUV is a great incentive for people to buy any such car. With demand rising, I don't see why GM wouldn't want to manufacture more Volts. Something seems a little amiss here.
If you will charge GM Volt battery at home and work, with electricity, which isn't cheap and clean, the life of battery set will be reduced drastically.
If you decide to buy an $8000 to $10000 battery set every 3 to 4 years buy a GM volt.
Overusing the hybrid car battery can dramatically shorten the battery life span.
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