Can the Chevy Bolt Break The Glass Ceiling On Mass EV Acceptance?

Chevrolet says its Bolt EV has “cracked the code” toward far greater acceptance for an electric car, but whether it can sell in far greater volume is an open question.

How does one define “crack the code?” It’s akin to saying the Bolt EV hits the key wish list requests of many more fence-sitting consumers in terms of its price, range, and design.

And to be sure the front-wheel-drive compact crossover raises the bar quite a bit. Its 238 miles range is well above the minimum “200 mile” target set a few years ago that GM believed was widely desirable, and which Tesla said it was aiming for with its then Model E (now Model 3). And, the Bolt’s pricing below $30,000 after a $7,500 federal tax credit is reachable for many more intenders. Further, adding state incentives where available – and possibly eventual discounting and promos – the net value proposition could become even more attractive.

All this is for a commuter car with a subtle fun factor. The Bolt zips from 0-60 in about 6.5 seconds compared to about 10 seconds from a 107-mile-range Nissan Leaf, and it’s packed with innovative details, so what’s not to like?

Chevrolet showed the extra utility value of the Bolt while being shown to the media at Henry House in Portola Valley, California.  (Photo by Martin Klimek for Chevrolet)

Chevrolet showed extra utility value with an optional roof rack while showing the Bolt in January to the media at Henry House in Portola Valley, Calif. (Photo by Martin Klimek for Chevrolet)

Could the Bolt also “crack the code” on EV sales and break out to unprecedented highs?

In an interview with Steve Majoros, lead marketing director for Chevrolet cars and crossovers, it became clear the automaker is feeling confident about the engineering and design of its product.

What’s less apparent however is whether the Bolt can blow the ceiling off the 30,200 unit limit of the present sales record in its segment set by the Nissan Leaf in 2014.

Majoros refrained from making Bolt sales projections for 2017 as it’s rolling toward national distribution by September – nor is Chevrolet predicting 2018, for that matter, when the car will be available in 50 states.

Chevrolet was once stung by trying to predict more sales than actually happened with the 2011 and 2012 Volt, and since then its policy is to say it will meet demand, and do its best in marketing and dealer support.

Majoros’ ability to project Bolt market acceptance is otherwise tempered, he said, by lack of historical sales data. Unlike a Cruze or Malibu Hybrid or Equinox, etc., a 200-mile EV in this segment has no sales history, Majoros said.

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It’s expected Bolt sales will come first from enthusiast-consumers following this space, including people now with money down or otherwise talking to their dealers in advance of the Bolt even getting there. After everyone who wants one gets one, as the saying goes, Majoros said natural demand is to be determined.

“It’ll be interesting to see. We really don’t have a good sense; are the Bolt EV sales going to come from Prius, Volt, i3, Leaf, or just an internal combustion engine person that said ‘I’m finally ready?’” Majoros said. “We’ll see what happens here. We’ll have a much better sense after a year on where people are coming from, and what that may do to change up or maybe make us think a little bit differently about who we target or how we go after them. But I think we have enough general attention that we’re going to get people from across all those segments.”

Chevrolet has been credited with having a “first mover” advantage, but several factors stand as challenges to the “world’s first” 200-mile mass market EV in its segment.

Tesla Model 3

The Model 3 is expected to come in upper level trims first, meaning base models may be quite some time in becoming available. This is not so for the Bolt, which can be ordered with little time lag in a base LT trim.

The 215-plus mile range, $35,000 and up Tesla Model 3, with over 400,000 reservations, has strong public interest. It has so much in fact, that it threatens all by itself to suck a lot of the air out of the proverbial room following its second reveal this year prior to its sales launch.

Exterior styling is the top reason why many consumers pull the trigger on a purchase, and the Model 3 has a style that’s resonated with many, at a price that’s agreeable. The prototype 3 models shown appear to promise at least 75 percent of what one gets in the immensely popular Model S for half the price. It’s been said the Model 3 targets a different demographic than the utilitarian Bolt, but given there are no other sub-$40,000 EVs with over 200 miles range, it will by default be cross shopped by some.

Optimists and pessimists have fought over questions including whether the Model 3 will arrive on time and exceed or fall short of expectations – in terms of the car’s desirability, and quality control once on the road.

As for the timing, analyst Alan Baum projects 5,000 sales before the end of 2017 after a fall first delivery. More will be clear on the ultimate value proposition when Tesla reveals what one specifically gets for how much money as the options list adds up.

The Model 3 is expected to come in upper level trims first, meaning base models may take quite some time before they’re available. Baum says maybe two years from launch. This is not so for the Bolt, which can be ordered with little time lag in base LT trim. That said, first Bolt orders so far have been predominantly for the Premier priced from $41,780, and Tesla CEO Elon Musk has said the average Model 3 transaction price will be around $42,000.

Although Chevrolet rushed a first few Bolt deliveries in Fremont, Calif. under Tesla’s nose in December, its timing this year is otherwise just a few steps ahead of the Model 3, so how this affects Bolt sales remains to be seen.

2018 Nissan Leaf

Nissan IDS Concept with 60-kWh battery.

Nissan IDS Concept with 60-kWh battery. Some believe design cues from it will find their way to the next Leaf.

A similar story goes for the Nissan Leaf, and its front-wheel-drive hatchback layout makes it more a direct competitor for the Bolt.

There is plenty of interest for the follow-up to Nissan’s original pioneer since 2011 in the vehicle segment in which the Bolt has it for now upstaged.

CEO Carlos Ghosn has said the Leaf will be competitive with the Bolt, and with over 250,000 sold worldwide, it will be coming in as an evolved second-generation incumbent from the Japanese automaker.

Other Competitors

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Several more 200-plus-mile EVs are in the works, if not for this year, then within the next 2-3 years by decade’s end.

These include cars from Hyundai, Kia, Volkswagen, Ford, and more to come.

Since the Bolt is being presented as an ostensible mainstream alternative for all but cross country driving due to lack of charging network and only 50-kW fast recharge capability, it actually faces competition from all cars, not just EVs.

These include hybrids and plug-in hybrids – even its own Volt sibling – not to mention any other loosely comparable car that offers a value to the mind of individuals weighing whether they want to go with a first-year EV from Chevrolet.

“The crossover segment is certainly hot, and the Bolt could be considered a crossover, albeit a small one,” said Baum. “There will be a fair amount of competition in this and larger crossover segments going forward.”

Brand Challenge

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If you have not gotten the memo, the “New GM” is producing far-better and more competitive cars than some remember from decades past.

And for this new GM, the Chevrolet Bolt is a symbol of technological leadership with which CEO Mary Barra has said the company wants to show the way. That means corporate pride is riding on the new car, and that ought to lend reason for faith in the Bolt as a well-engineered and effective car which by all indications so far, it is.

GM wants the Bolt – that’s also paving the way with its autonomous and ride sharing efforts – to succeed, and be the forerunner of a new chapter in the company’s history.

This said, Majoros acknowledged old stigmas can die hard. Some people have been turned off by Chevrolet, some by GM in general, some by anything domestic.

We asked whether it would be a simpler matter to sell 75,000 Bolt EVs per year if the car had come from BMW.

“Working on the Chevrolet brand has been paramount for us,” said Majoros. “Again, not there, but much better than where we’ve been, but to your point, it takes time.”

And time rebuilding consumer trust has been spent already. GM has sold over 100,000 Volts with an even more complicated powertrain and drive unit than the Bolt’s. Its battery cells have had only two problems per million, and no battery packs have needed replacement under premature range loss warranty. The Volt has garnered some very vocal fans attesting to what a marvelous solution it is for them.

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That said, some consumers are more inclined to give benefit of the doubt to a newcomer like Tesla because it has created some stellar cars, lacks any dirty laundry to speak of, and the company is presented as much as a mission and cause as a for-profit business. This is true even though it has had numerous documented issues with the Model X, some with the Model S, and it’s widely agreed it will face huge challenges ramping from niche to mass marketer pushing as much as 10-times the volume in just a few years.

Nissan too may get a broader pass by the GM-jaded, given who it is, and where it originates. Depending on what its closely guarded secret – the new Leaf – presents, it stands to prevent a certain number of sales for the Chevy Bolt.

And other brands too – Hyundai, Kia, BMW, VW, Ford, etc. – also will face the Bolt not just with products, but the reputation of the company that backs them, and their respective brand recognition values also stand to dictate how the Bolt ultimately fares.

Dealer Support

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Chevrolet dealers must opt in to sell and service the Bolt, and GM says it has a numerical advantage with more such dealers than Tesla has stores and service centers, but there are two sides to this story.

“Even with Chevrolet’s strong dealer footprint, only a portion of the dealers have opted into selling and servicing the vehicle,” said Baum citing investment in equipment and staff training that may make some dealers shy away.

Further, anecdotes have been plentiful of unmotivated Chevrolet sales people during the past six years of offering the Volt. Dealers are independent franchises, and how they come across is largely a reflection on them, despite GM’s prodding and support.

There are however also bright spots, and some Chevrolet dealers have sales specialists who do understand the product and the customer, and this is expected to increase as the market grows.

Majoros said one of the reasons why the Bolt is rolling out at the pace that it is, is because Chevrolet wants to ensure a quality experience. It needs sales and service personnel trained, ready, and is doing all it knows to prevent disappointments.

Marketing and Advertising

Chevrolet is using multiple avenues to get the word out for its new whiz-bang electric car.

Ultimately, between social media, staged grassroots-level drive events, video spots, customer testimonials, and – yes, positive press in the media – the automaker is hoping to create positive vibes for the car.

Matching Tesla’s synergy on this score remains a challenge to say the least, and to a lesser extent, this is true of other brands which have a perceived better reputations.

And whether GM even believes it can ever explode consumer interest for a small car like the Bolt when consumers tend to like bigger cars is also up in the air, Baum said.

“The fact that GM is heavily marketing the vehicle to both its own mobility services and potentially others suggests that it believes the retail demand is somewhat limited,” he said. “Of course, the use in mobility services is designed to expose the vehicle to potential customers, similar to the approach taken by exposing vehicles to rental fleets.”

So maybe that synergy for a plug-in car from the Bowtie brand will happen at long last?

For years, Volt fans have lamented the company either lacks vision, initiative, or motivation to really sell that car, and they’ve offered suggestions for how to better get the word out.

To its credit, GM has tried many angles. It early on tried to explain the plug-in technology, but that often went in one ear and out the other for all but the technically savvy.

GM could also trump its documented strengths including quality record for the Volt and more, but that, Majoros said, could set it up for an “age old dilemma” of pounding people with facts who still don’t believe in Chevrolet.

Chevrolet has also tried saying in other ways what its products can do for people on a more basic level, and this general slant is still there.

Chevrolet’s “real people, not actors” campaign is one such effort trying to strike a responsive chord with a public it would like to trust it, become interested, and ultimately buy from it.

These new customers it aims to keep too. The goal is to change the legacy, and this is a work in progress.

Conflict of Interest?

Chevy Cruze hatchback.

Chevy Cruze hatchback.

Like other major automakers, Chevrolet is carving out a new market for an electric car that could shift customers’ minds away from buying one of its other internal combustion powered products.

The company makes the majority of its money selling trucks, SUVs, crossovers, and mainstream gas-powered cars. In these it is heavily invested, and so, if it were to price the Bolt so compellingly as to erode significant sales from itself, that could be an unwelcome dilemma.

Tesla CEO Elon Musk has said something similar of car dealers who stand to steal sales from their bread and butter cars if they push the features, advantages, and benefits of a completely different technology too far.

This discussion could go on to cite points and counterpoints, so it is an open question.

What’s more clear is Chevrolet, like all automakers, is veering into plug-in powertrain technology under the prodding of emissions and mpg regulations. It’s also incurring maximum costs at this stage.

Majoros said despite articles floating “hypothetical” questions of whether the Bolt is unprofitable, the automaker does not comment on that question.

Otherwise, GM is wading into a new market with a potential conflict factoring cannibalization of its own bread and butter models, costs, and ultimately it is doing it because it has to now that a budding market is underway.

This has opened the question of how much Chevrolet really wants to sell the Bolt en masse at this stage.

Majoros sidestepped direct answers to whether Chevrolet would like to sell, say, a hypothetical 75,000 units after the first year of 50-state availability in 2018, if such a thing were possible.

“I’d like to see what customer demand is going to be and we’ll do our best to fulfill that,” he said.

Ultimately the will to make the Bolt – ostensibly a mainstream solution – a mainstream seller is the prerogative of GM’s upper management.

At this stage, no one at GM is saying they will sell the Bolt in bunches like bananas, but if that happens, the company would be OK with that too.

Projections

At GM's current rate of plug-in sales, it could reach the 200,000 unit threshold to begin the tapering away of the federal tax credit in a year or two.

At GM’s current rate of plug-in sales, it could reach the 200,000 unit threshold to begin the tapering away of consumer federal tax credits in a year or two.

Given Chevrolet’s track record, other competition pending, and more variables besides, Baum does not believe the Bolt will sell beyond the limit of the Chevy Volt before it.

“I have spoken with GM engineers involved with the development of the Bolt and Volt who are justifiably proud of the technical capability of these products,” said Baum. “However, they are frustrated that the sales of these products have been below expectations given the marketing program.”

How many sales then could the Bolt see in a partial year for 2017? An estimated 21,000. Last year the second-generation extended-range Volt sold 24,739 in its first calendar year.

For 2018, the first year in which the Bolt is for sale in all 50 states, Baum projects 25,000 Bolt sales. And, for 2019, by which time there are expected several competitive models for sale, he projects 23,000 Bolt sales.

Of course anything could change to shift things, but this is the outlook at this point after weighing objective and subjective factors for a new car in a new market in flux.


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