Monday, March 05, 2012

Temporary Volt Suspension Shakes Up Electric Car Market

Mar 2: Despite U.S. auto sales accelerating to the fastest pace in four years and $4-$5 gasoline now a reality, General Motors announced a temporary Volt production suspension which will result in layoffs for 1,300 workers. The reason is an over supply and weak demand. According to a CBS news article and data from, the company sold 7,671 Volts last year -- well short of its 10,000 target. And selling 1,626 in the first two months this year is far below the pace needed to hits its original 2012 sales goal of 45,000.
   An analysis by Edmunds seems to indicate that its simply a matter of price and economics. Edmunds points out that, "Even with gas prices rising and expected possibly to approach a national average $5 a gallon by summer, the Volt price level -- about $41,000 before a $7,500 federal tax credit -- remains a problem." Edmunds senior analyst Michelle Krebs points out that even at $5 a gallon, gas savings on the Volt (rated at the equivalent of 95 MPG in city driving and 93 on the highway) would take nine years to pay back the price differential over the similar-size Chevrolet Cruze. The Cruze is rated at 25 MPG city, 36 highway and has an average selling price of $19,656 according to Edmunds' data.
    Additionally, Volt sales stalled with news and Congressional investigations regarding Volt battery fires had broken out after the cars were crash tested. The National Highway Traffic Safety Administration pronounced the Volt as safe as gasoline cars, but CBS indicates that "the issue clearly put off some shoppers." In January, GM CEO Dan Akerson explained: "We did not design the Volt to become a political punching bag and that's what it's become." Akerson was referring to the widely publicized January 25, House Oversight & Government Reform Committee, Chaired by Representative Darrell Issa (R-CA), Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending, Chaired by Representative Jim Jordan (R-OH), hearing entitled, "Volt Vehicle Fire: What Did NHTSA Know and When Did They Know It?" [See WIMS 1/26/12]. 
    Oversight Chairman Issa released a statement on the GM announcement saying, "Even as gas prices continue to climb, President Obama's attempt to manipulate the free market and force consumers into purchasing electric vehicles like the GM Volt has failed despite the use of taxpayer dollars to prop up production. Now some 1,300 workers will pay the price for this misguided experiment. Domestic energy production remains underutilized because of President Obama's campaign to pursue 'green' energy and projects, and shift away from traditional energy sources. These decisions have hurt our economy and slowed our recovery."
    House Republicans have been critical of the auto company "bailout," the a federal tax credit of up to $7,500 per vehicle; and the Administration's emphasis on alternative energy vehicles. A Committee staff report indicated, "In the face of that political dependency, it is deeply troubling that public notification of the safety concerns related to the Volt was inexplicably delayed for six months – a period of time that also coincides with the negotiation over the 2017-2025 fuel economy standards. The necessity of a full explanation for NHTSA's silence concerning the Volt's safety risk has been compounded by its lack of cooperation with the Committee."
    NHTSA testified, ". . .we have concluded the agency's investigation and have found no discernible defect trend. The vehicle modifications recently developed by GM effectively address the issue of battery intrusion and they have included this modification as they manufacture new vehicles going forward. NHTSA continues to believe that electric vehicles show great promise as a safe and fuel-efficient option for American drivers."
    At that time, Akerson testified, "GM's Akerson testified, "We engineered the Volt to be among the safest vehicles on the road – earning an overall NHTSA 5 Stars for occupant safety and a Top Safety Pick from the Insurance Institute for Highway Safety. We engineered the Volt to be a technological wonder. . . In other words, we engineered the Volt to be the only current EV on the road that you can drive across town or across the country without fear of being stranded when the battery power is depleted. . ." He continued saying, "we will not change any part of the manufacturing process at our Brownstown, Michigan, battery pack assembly plant. We have tested the Volt's battery system for more than 285,000 hours, or 25 years, of operation. It's important to note, the battery cell design used in the Volt was not the cause of the incidents that prompted the investigation. . ."
    The CBS news article points out that, "The Volt's major competitor, the Nissan Leaf -- at $32,780 before the credit -- fares slightly better in this comparison with gas at $5 a gallon. The all-electric Leaf (the Volt has a back-up gasoline engine) would pay back the price differential over a Nissan Versa in five years, Krebs says. Leaf sold 9,674 in North America last year and 22,000 worldwide." Also, the 2012 Ford Focus Electric is the first five-passenger all-electric vehicle with a combined fuel efficiency rating of over 100 MPGe -- Just rated at rated at 110 miles per gallon equivalent (MPGe) in the city and 99 MPGe on the highway (105 MPGe combined). The Focus Electric has a base price of $39,995 before the $7,500 tax credit.
    The Pew Clean Energy Program's electric vehicle (EV) initiative which is working to identify and highlight state and local best practices that will help attract investment in clean transportation and promote smart EV policies said in a blog posting that its "clean energy economy research clearly demonstrates that policy matters: Where effective public policy exists, private investment and job growth will follow. Policies that lead to greater adoption of EVs can help drivers and businesses access low-cost domestic energy that is unaffected by the price volatility of the global petroleum market. By decreasing spending on foreign oil, consumers and businesses can choose to invest more money at home and help reduce the trade deficit. Domestic development and production of EV technologies also can ensure U.S. global leadership in a sector that will attract billions in private investment and create jobs."
    Access the CBS news article (click here). Access the Edmunds website for more information (click here). Access a release on U.S. record auto sales (click here). Access the statement from Rep. Issa and link to Committee background (click here). Access a Climate Progress posting and video on media and Republican criticisms of the Volt (click here). Access a DailyTech article on the Ford Focus Electric (click here). Access the Pew posting with links to related information (click here). Access the Republican hearing website for links to the testimony, staff report and video (click here). [#Transport/Electric, #Volt #EV #Energy #GOP]
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