Can the Chevy Volt Recharge General Motors?

The long-awaited GM car is the first in a new fleet of more affordable electric vehicles

By Brian Dumaine Wednesday, July 14, 2010
    • Roy Ritchie for TIME

    The Chevrolet Volt, GM's new electric car, on the production line at the Detroit Hamtramck assembly facility.

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    Initially, a shortage of charging stations could present a problem for drivers of the Volt and other electric cars, but the nation is quickly ramping up. Richard Lowenthal, CEO of Coulomb, a Campbell, Calif., start-up, says that over the next year and a half, his company will install some 4,500 charging stations around the country. "The typical car is parked 23 hours a day. You can charge it while you work and while you sleep." Lowenthal is installing most of his charging stations — rectangular boxes that are about the size of a parking meter, with a plug and cord — at office parks and homes. Corporations such as Dell, Netflix and beermaker Sierra Nevada have installed a few in their parking lots. Cost? About $3 per charge.

    A Chevy for BMW Prices?
    Although GM seems to have mastered the technology, its bigger challenge is the price. The Volt retails for roughly $40,000 — more in the range of a BMW than a Chevy. After the $7,500 federal tax credit, the price becomes a bit more bearable, and states such as California and Colorado will chip in a few thousand more. That still leaves the Volt in the high $20,000s to low $30,000s before options like leather seats are added. A Prius, which is a bigger car, starts at $22,800. The Volt does have a more finished interior and feels more powerful — electric motors deliver torque instantly to the wheels — but that's a big premium for battery bragging rights. And for those who want a 100% battery-powered car, the Leaf will sell for about $22,000 after subsidies.

    In Detroit, GM believes Volt drivers will run on all-electric most of the time. Each electric mile — it varies depending where you live — costs about 3 cents, compared with 10 cents for each gas mile. This saves a driver traveling 10,000 miles a year on battery power roughly $700 annually in fuel costs. Given that you can buy a similarly sized compact car for $10,000 less than the Volt, the payback time for the Volt buyer is about 14 years at current prices. Know anyone who drives a 14-year-old car? And that's with rebates.

    GM contends, not unrealistically, that volume will bring the car's price down dramatically over time. And that's crucial because it's not clear that buyers will be willing to pay a green premium for the Volt. When gas prices hit more than $4 per gal., car buyers stampeded to the gas-sipping Prius. The first few thousand Volts will fly out of showrooms, even with a $40,000 price tag. Says Brett Smith, a senior analyst at the nonprofit Center for Automotive Research in Ann Arbor, Mich.: "In this industry you can sell 10,000 of anything." It's the next 100,000 sales that really matter.

    For all the excitement surrounding the electric car, remember that this is a young, transitional technology that will take time to go mass market. In fact, the Volt is just one part of a broader green-technology platform. When in Detroit reporting this story, I drove an impressive Chevy Equinox powered by a hydrogen fuel cell. The company is also working on clean-diesel and natural-gas power trains.

    The way the Volt is designed, it could potentially be converted into a purely electric vehicle to sell into that market niche. While the Volt certainly won't dramatically improve GM's fortunes — or those of American taxpayers — in the short run, this car and the technology that drives it at least suggest that Detroit isn't dead. It's recharging.

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