This week, Chevrolet announced that their new electric car, the Volt, will initially be sold for $41,000. The car represents a different direction for GM and incorporates a brand new electric powertrain. This is the car that has been highlighted as the future of GM and in some cases even positioned as the savior. However, judging by the initial pricing, I wonder whether GM will miss the mark and the US tax payers will be left holding the bag.
Background
The Volt is different from today’s hybrid electric vehicles like Toyota’s Prius, Honda’s Insight or Ford’s Fusion. These cars use a drivetrain that relieas on batteries and a traditional combustion engine. At low speeds, they run on batteries and the combustion engine kicks in at higher speeds or when the battery gets low. In contrast, the Volt is fully electric and relies exclusively on batteries and electric motors for propulsion. The batteries offer a limited range of about 60 miles and need be charged nightly. The car also incorporates a traditional combustion engine which is used to charge the battery and will never drive the wheels directly. The new design raises significant questions about car performance when the battery is depleted and battery life. Since this is brand new technology for GM and they are the first car manufacturer shipping in volume, the answers to these questions are not clear. As with all new technology, there is a substantial risk in purchasing V1.0 of anything and the Volt is clearly meets this criteria.
The current situation
Chevy will begin shipping these cars late this year, but the price is not competitive. $41,000 is a substantial premium to the competition which better the Volt in all categories except mileage. The following table illustrates some alternative car options and their prices.
| Car | Quantity | Extended Price | Mileage (City/Hwy) |
| Honda Insight Hybrid | 2 | $39,600 | 40/43 |
| Ford Fusion Hybrid | 1 | $28,825 | 41/36 |
| Toyota Prius | 2 | $45,600 | 51/48 |
| Nissan Altimus Hybrid | 1 | $26,780 | 35/33 |
| Lexus RX450h Hybrid | 1 | $44,275 | 30/28 |
| Infiniti G37 Journey | 1 | $34,450 | 19/27 |
The table shows the range of car models that could compete with the Volt and I am particularly amused that you can purchase two Honda Insight Hybrids or 2 Toyota Prius’s for about the same or less cost than the Volt. These are both cars with proven hybrid powertrains that offer compelling fuel economy. To be fair, the Volt will offer better mileage than either of these, but I do not believe that it will maintain the same leadership in quality, reliability and ergonomics.
Summary
I believe that the pricing of the Volt is troubling. Clearly there is little rational reason to pay a premium for a car with unproven technology and questionable reliability and quality. There is a small segment of the population who will pay a premium for the green benefits; however, if Chevy ever wants this car to become mainstream, they must reduce the price to better align with the competition. As it is, I think that the Volt is a status symbol and a rip-off. It is truly a car that only the most die-hard and wealthy tree huggers will love.
Jay,
Very nice post. Chevrolet has other hybrids and I hope that they’ve taken what they have learned from those and incorporated it into the Volt.
The price tag of $41K has me wondering if that is for the “base” model. If that’s the case with a few cosmetic packages (rims, sunroof, etc) the car will easily cross $50K.
It also makes me wonder that if the technology is new and/or different from current hybrids the cost to replace the battery will be astronomical.
I’m skeptical and interested in whom is their target audience for this car. I guess we shall soon see.
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Thomas,
Thank you for the comment and compliment. Regarding Hybrid experience, GM’s current hybrid technology is lacking and is behind the systems from Toyota, Ford and Honda. It is mediocre at best and they are trying to leapfrog the others with the Volt.
Regarding options, the Volt is fully loaded and so expect $41,000 to be the high end of pricing.
Regarding the battery, you make an excellent point and I wonder the same. The battery is critical in the Volt; it relies exclusively on the battery for just about everything. Traditional hybrids are designed to run with a battery and a motor and so can have smaller batteries. The charge cycle is also different since the traditional hybrid runs the motor frequently while the goal is to minimize motor use in the Volt.
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Just saw it for $45,000 with a moderate amount of options. I apologize but It looks cheap, reminiscent of a Hot-Wheels toy. It’s bling bling ugly, and the folks who buy Chevy’s will not be able to afford it, nor want to invest into new technology that will probably have too many bugs. Hopefully this will pave the way to cheaper hybrids but I doubt it.
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Hi and thank you for your comment.
It is certainly over-priced and prices have to come down significantly. I continue to wonder how the car is selling and whether GM is achieving their objectives. Of course, the recent news about elevated fire risk with the car does not help GM’s case. Hopefully they will get it sorted out, but if they don’t, the competition will.
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Companies can get a feel for sales based upon pre-orders. Not guaranteed, but sure beats NO ONE pre-ordering the Volt.
I even have friends pre-ordering them based upon the favorable lease rates, which are far below what a car payment would be if they bought.
My brother would save about $150 a month in fuel costs because of his long commute (even if he had to dip into using gas everyday). His old clunker is costing him an annualized average of $150 a month in repairs, too.. Not having airbags is also a problem of safety for my brother, and the Volt has a great airbag arrangement for safety.
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Hi and thank you for your comment,
I agree about pre-orders; however, I believe that a price is required to accept pre-orders. (I cannot imagine anyone pre-ordering without know the price of what they are buying!)
Your point about lease rates is a good one; leases provide an effective method to subsidize the purchase price. Many manufacturers use leasing as an effective means to test new car technologies on a small scale.
Regarding your brother, there is no doubt that he will save on monthly fuel with the Volt, but the real question is the net savings compared to the other cars listed when factoring in purchase price. I believe that given a typical length of ownership that he will get a better return by purchasing the Prius or Insight. Both cars come with lots of airbags too.
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