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GM's sticker shocker: $41,000 for Chevy Volt

The 2011 Chevrolet Volt at the Los Angeles Auto Show.

Jae C. Hong/AP Photo

General Motors Co. has gambled more than $1-billion that the Chevy Volt can boost its sales of smaller cars - and deliver a greener image to an 

auto maker best known for gas guzzlers.

To do it, the company will have to persuade its customers to pay a premium for the privilege of driving the Detroit company's signature electric vehicle. GM ended months of speculation on Tuesday by revealing a price tag for the Volt of $41,000 (U.S.).

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The price is close to what industry experts had predicted. GM stressed that the net cost to the buyer would actually be $33,500, if the full $7,500 benefit of a U.S. federal tax credit were applied.

That is still well above the cost of Toyota Prius hybrid, which sells for about $25,000, and Nissan's electric Leaf, which costs about $33,000, before tax credits.

But will the Volt sell?

GM started taking orders online on Tuesday, and buyers can visit dealers in one of the seven selected trial areas in the United States, including California, New York and Michigan.

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The vehicle will likely become available in Canada in 2011, when GM plans to launch it in international markets.

But GM's early production estimates are modest - the 2011 run will max out at 10,000 cars, and 30,000 vehicles will be made in 2012 - and some say the sales expectations should be, too.

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"As long as it's going to require government subsidies, it's going to have a lack of success," said Canadian auto analyst Dennis DesRosiers, head of DesRosiers Automotive Consultants. "You can't expect the taxpayer to subsidize consumers who want to drive one."

His skepticism comes from the problems auto makers have selling hybrid gas-electric vehicles. "We bought 16 million vehicles this past decade, and less than 100,000 hybrids," Mr. DesRosiers said about the Canadian market.

That doesn't mean he thinks the Volt is weak. The technology seems to work and GM has put together a good public relations package, Mr. DesRosiers said.

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But North American consumers just aren't that excited about efficient electric vehicles: Toyota's Prius may sell, but most hybrids languish on car lots, he said.

GM hopes the cheap cost of electricity will separate the Volt from hybrids.

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In an online question-and-answer session Tuesday, Volt vehicle line director Tony Posawatz said the cost to charge the battery overnight is about $1.50 (though electricity prices vary across the U.S.). That equates to less than $1 a gallon, he added.

However, the car's electric range is capped at 60 kilometres, which GM says is enough to cover the commute of about 75 per cent of Americans. After 60 km, a gasoline-powered generator kicks in to provide electricity, and GM recommends using higher-priced premium fuel.

The combined electric and gas power gives the Volt a total driving range of about 550 km. The Nissan Leaf, its biggest electric competition, will get about double the electric miles, but can't switch to gas power.

The Volt will be made at GM's Detroit-Hamtramck plant. By confining the rollout to the U.S., GM will be able to fine-tune any problems with suppliers and dealers. The hope is that it will also help GM rebrand itself as an environmentally friendly auto-maker. "The Volt is really about setting up the future, and how we can win and compete," Mr. Posawatz said in an interview with The Globe and Mail in March.

Despite the Volt's potential, Mr. DesRoisers remains cautious. "If hybrids' lack of success are any indication, it's a big hurdle."

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About the Author
Reporter and Streetwise columnist

Tim Kiladze is a business reporter with The Globe and Mail. Before crossing over to journalism, he worked in equity capital markets at National Bank Financial and in fixed-income sales and trading at RBC Dominion Securities. Tim graduated from Columbia University's Graduate School of Journalism and also earned a Bachelor in Commerce in finance from McGill University. More

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