Category Archives: Electric Vehicles

GM shutting down Volt production for 5 weeks…

It was annouced last Friday that GM would be shutting down production on the Chevy Volt for five weeks starting in mid-March until mid-to-late April. The stated reason was that there was too much channel inventory, about twice as much as a normal car.

There are a few problems with that outlook, in that the Volt isn’t a normal car. Its a specialized low-volume (for now) car. If a GM dealer only sells about 1 car for every 3 dealerships per month (3,000 dealerships, 1,000 cars a month), that would mean a dealership would either have zero or one Volts on their lot when the customer shows up to look at them. Not very pleasing from a customer point of view, “well this is the only one we have, and we wont get another one for 2 months, and all the other dealers in town only have one each too!” If you want the customer to have a reasonable choice of configurations, you’ll need about 3-4 cars per dealership, varied in color and configuration throughout the city. My local market has about 15 Volts (including 4 models that were originally demo units) for sale, some of which are still in transit to the dealer. My rough approximation is about 10 cars per million people in a metro area. So where I live should have about 20 cars for sale. This is also roughly a 4 months inventory. The problem with 4 months of inventory is what are you going to do when the new models come out in August or September? Take huge losses on 1/3 of your annual inventory? Not likely.

So what I’m expecting is that GM is trying to push down inventory to about 5 cars per million people so that when it comes time for the 2013 models to show up, dealers aren’t stuck with four or five really slow selling cars.

I’m somewhat optimistic that such an aggressive early push is hinting at some bigger, better things to come in 2013. By then, GM should be producing both the engine and battery cells domestically (Austria and S. Korea, respectively). GM has stated that the cost of freight for the battery cells is non-trivial, possibly in the range of $100-200/kWh. This would translate to a $1600-3200 cost per vehicle when the freight costs are factored in. Combined with the engine’s reduced freight costs as well, a $2,000-4,000 price cut could be in store for 2013, necessitating even deeper cuts in the 2012 Volt price to move them off the lot. Plus, the idea of a $29,950 price tag after rebate seems really appealing from a marketing standpoint — after tax credit it would be cheaper than the plug-in Prius, and the same price as the high end Prius, and all the comparisons with a loaded Civic start to look better.

EDIT: On April 8, GM announced that in the wake of record sales in March 2012 (including the one Volt I bought!) the plant will open one week early, on April 16 instead of April 23.

Prius Plug-In price announced at $32,000 before rebate

Toyota announced today that the Prius Plug-in, set to debut in March 2012, will be priced at $32,000 before an approximate $2,500 tax rebate. An upmarket version is available $39,500.

The total difference in price between the baseline Prius Plug-in and a Chevy Volt is about $2,100 after the full tax credits…

Chevy Volt 2012 – MSRP: $39,145 – 7500 = $31,645
Toyota Prius Plug-in 2012 – MSRP: $32,000 – 2500 = $29,500
Difference:  $2,145 (does not include any destination charges or other dealer add-on fees)

After realizing this, my initial position of leaning towards the Prius is starting to change back to the Volt because there is only a $2,100 difference in price. The difference goes up to $3,100 if you count the difference in cost between the $1000 base 240V 3.3kW charger for the Prius and the $2000 240V 3.3kW Volt charger. This choice is determined by several factors.

  1. Prius top electric speed The Prius plug-in has a top full electric speed of 62MPH, while the Volt is always electric when there is capacity in the battery. For me, this means that my 70MPH commute on the highway to and from work and to and from most of my friends’ houses means I’m using gas in the Prius because of my top speed. In the Volt’s case I’ll always be on electricity if I have the charge? Because of my large amount of highway driving the Volt holds some advantage here.
  2. Electric range is 15 miles With the Prius, the electric range is 15 miles and probably lower in cold and hot weather (e.g. most of Vegas weather). My commute is 15-16 miles, most of which is on the highway. So I’m inclined to think I’d have to charge at work in addition to home, so I’d have to work with the building manager to get a charging station.
  3. Weird charging port location This isn’t a deal breaker, but it does get under my skin a little – everyone else is putting their charging port up front near the drivers door.  The Prius puts its in the back right. So I’d have to walk around to the back of my car to plug it in twice a day. Plus in commercial shopping centers the charging stations are usually at the front of the car. Do cars always get backed into parking spaces in Japan?
When it comes to purchase or lease, again I’m leaning towards lease, however it really depends on the details of the lease. Some individuals are reporting lease rates of $500 or more, which isn’t such a great deal, while GM’s stated lease rate is $399/mo for 12,000 mi/yr.

Chevy Volt PHEV20? It’s more likely than you think…

There has been talk in the last several weeks about GM’s goal to reduce the cost of the Volt by $10,000, from the current $41,000 MSRP. The means by which they reduce the cost are kind of fuzzy. General terms have been mentioned – redoing the interior, making standard features into optional items, mass production, and possibly even cutting the battery to a 20-mile range instead of 40. The goal would be to deliver a car, that after incentives, would be approximately $27,000 MSRP*.

The first seem entirtely plausable, but probably don’t contribue significantly to the bottom line. Redoing the interior can be done in such a way that it does cut costs – replacing the capacitive touch interior with buttons like every normal car out there, shrink the center stack display (keep the width but switch it to 16:10 widescreen instead of 4:3), looking for off-the-shelf parts and adapting designs to them instead of having to order any semi-custom or custom parts (re-using parts from other cars). But I would estimate they probably couldn’t save more than a thousand dollars this way. Moving some of the more expensive features to options (like the Bose audio system) helps too, but its rearranging the deck chairs, its not fundamentally making the technology any cheaper. Moving to mass production helps – when you factor in overhead and capital costs (the machines, training, supervisors, QA, etc), mass production does help spread those costs out over more vehicles, reducing per-unit costs.

That last option – cutting the battery in half – might seem like killing the main purpose behind the vehicle, but it seems a lot more plausible when you consider the use of plug-in stations at people’s offices. Even in the summer, energy usage in the morning hours (before 10A) are still considered off-peak, so you could recharge the entire, smaller, battery before on-peak charges started. Going to a smaller battery would mean that GM would need to alter the characteristics of the battery – more power and less energy storage per kg of battery material. There are two main issues with shrinking the battery pack in this way – the power output of the battery pack and the cycle life. Power output is governed by the rating of the individual cells as well as the number of cells in the pack. The cycle life would have to compensate for the batteries being recharged twice or even three times per day instead of once at night.

Reducing the battery pack would also reduce the federal rebate – from $7,500 to $4,600 ($2500 + $417 for each kWh above 4kWh). If you’re cutting the price by total vehicle price by $10,000 but losing $2,900 of the rebate, your effective cost reduction is only $7,100. However, this would still push the after-rebate price down from $33,500 to $26,400, or the price of a nicely equipped Toyota Prius. The 2012 plug-in Prius is expected to have a price in that rage, but it is unknown if that included the $3,000 rebate or not (its likely it did – I’d estimate the full price of a Prius plug-in at around $30,000).

The sticking point appears to be the battery. GM would need a batter that is more capable that what is available today, but only by a little. By the end of 2012 or sometime in 2013, such batteries will be available and probably have markedly decreased cost over batteries of today (mostly due to the large quantities in which they will be produced – Toyota will likely be using a similar type of battery, but with less stringent requirements since batteries only provide partial power in the plug-in Prius – up to 62mph and normal acceleration).

The success of a 20-mile range model is highly dependent on building a charging infrastructure outside of people’s garages. Offices and shopping centers will need to build the necessary infrastructure to handle vehicle charging, as well as utilities monitoring and managing the charging using the smart grid. But if the infrastructure materializes, why not use it to it’s fullest while accelerating the use of electric vehicles and reducing oil consumption until batteries are cheap and plentiful.

And it’s definitely better than filling up once a week at $4/gal!

* MSRP is only a suggestion – some dealers have tacked on $5,000 or more onto Volt sticker prices because of their limited quantity and uniqueness