Will the Chevy Volt Survive Bankruptcy?

In the direct aftermath of General Motors filing for Chapter 11 this morning, the fate of the Chevy Volt remains unclear. The Volt, a plug-in hybrid that promises 40 miles of gas-free all-electric driving, is considered a Hail Mary pass for market relevance that the old GM never got a chance to throw. The ability to move forward on the Volt, to some degree, rests in the hands of the Obama Administration. The fate of the Volt also represents a potential conflict of interest for the federal government, which will need to balance its interest in leading GM toward financial viability with its political agenda to have US automakers produce the next generation of advanced fuel-efficient vehicles.

President Barack Obama gave little direct indication about the future of the Volt in his press conference this morning about GM’s bankruptcy. He did mention his administrations plans for a “green jobs training program” for US autoworkers and the federal government’s purchase of a fleet of cars (with an emphasis on high-mpg cars). Obama also mentioned pending legislation for a “fleet modernization program,” also referred to as “Cash for Clunkers,” in which consumers receive federal support for trading in old vehicle for new fuel-efficient cars.

GM’s chief executive, Fritz Henderson, was more explicit in his remarks following Obama’s presentation. Henderson said, “Between demand and the requirements of the law, the fuel efficiency of our vehicles is going to improve. I think the technologies we’re investing in, whether it’s the Volt, whether it’s hybrid technologies, whether it’s basic research, is all important to get that accomplished. Our objectives, both to the firm and the market, are in alignment not only with President Obama but with governments around the world with reference to having more fuel efficient vehicles.” Henderson said that GM is making its plans with the assumption that “we will see higher oil prices than we see today.” He said the company learned from 2008 that economic growth can produce “sharp increases” in oil prices.

Tough Decisions for “New GM”

The company will shed 21,000 union workers, close 12 to 20 factories, and close 40 percent of the company’s 6,000 dealerships. In this context, does it make sense to save an expensive future product that will lose money for many years? Questions about the Volt go beyond a simple “yes or no” decision. How many will be made? How much will it cost? How will it be marketed? When is it expected to turn a profit? In his press conference, Obama promised that GM’s board will “call the shots.” He said “the new GM, not the US Government, will make those [tough] decisions.”

The new GM will be 60 percent government owned, and though day-to-day decisions will not be made from the Oval Office, the administration has hand-picked Albert A. Koch to act as chief restructuring officer for GM, meaning that whatever emerges from the rubble could closely resemble the government’s vision.

During the 2008 campaign, President Obama repeatedly name-dropped the Volt and set a goal of 1 million plug-in hybrids on American roads by 2015. In his first address to Congress in February, Obama seemingly referenced the promise of the Volt when he pledged that a substantial portion of the plug-in hybrids of the future would be American made. Consumer tax incentives issued as part of Obama’s economic stimulus package were identically aligned with the technical specs of the Chevy Volt.

But with fuel prices considerably lower than they were last summer and no guarantee that the Volt will hit profitability for several model years, it’s not clear how the vehicle might fit into GM’s immediate plans. Scheduled for a 2010 release—with a sticker price of around $40,000—it’s unlikely that the first wave of Volts will be much more than niche products. Obama’s Presidential Task Force on Automobiles said in its assessment of electric cars and GM’s restructuring plans that “while the Chevy Volt holds promise, it will likely be too expensive to be commercially successful in the short-term.” Anonymous sources on the task force though, promised Bloomberg News that the administration has no plans to cancel the Volt.

Image Versus Profitability

With the market for cars down across the board, estimates of the size of the first run of Volts have fallen from upwards of 50,000 to as few as 11,000. Like the Toyota Prius gas-electric hybrid before it, the Volt is more likely to start out as a curiosity, and as the sticker price drops—and gas prices rise—to spread from trendier urban areas to the heartland.

From GM’s standpoint, even if it isn’t a huge seller for the first few years, the Volt offers several advantages. With CAFE standards about to begin a steady climb, the Volt’s underlying technology could help the company meet the tougher standards—although probably not for several more years. The specialized components and systems found in the Volt’s powertrain are likely to factor into future plug-in vehicles. As production increases, the cost of plug-in cars is expected to become more affordable.

More importantly, there’s the matter of image. If successful, the Volt could be to GM what the iPod was for Apple: a game changing product that generates excitement about the brand—something the company desperately needs. The symbolism of the Volt could play a role for the company’s future, but the much bigger and more immediate impact to the bottom line will come from GM producing a leaner and meaner fuel-efficient cars for its entire lineup. With the government now serving as a primary owner of GM, it’s likely that the car GM’s executives swore would save General Motors will at least be given a chance.


  • fred smilek

    I don’t think that the Chevy Volt will survive this crisis…and if they do good for all of them.

  • Paul Beerkens

    I hope that the Volt will survive.

    This is the only serious series hybrid that is being developed for large scale production. We really need series hybrid to get EV of a good start. With the current infrastructure there are too many excuses to not buy an EV.

    With a series hybrid I can do my 95% of trips less than 40 miles without having to worry about running out of juice on my longer trips or if I one day forget to charge my car overnight and I do not notice until the battery dies.

  • Samie

    The last paragraph says it all….

    Marketing in the auto world is huge along with steering personal preferences towards a car brand. Remember its not just about one model you make but your whole fleet of vehicles. Yes the Volt will be part of the new GM and if smart enough, they will develop a good working relationship with the Federal Government so they could have a relationship like the Japanese Government did with Toyota (Prius) a few years ago.

    One thing many forget in the love domestics or love foreign cars debate is that if a domestic car company moves towards EV’s and extended range hybrids, it can be a game changer in how some Americans perceive smaller cars or the thought of bigger engines always mean better in social status or speed…
    Changing thoughts about hybrids is important and can not be done by offering only good vehicles from foriegn car companies.
    This is how you take some political and macho attitudes out of this and move closer to where we need to go. Everyone should hope that the Volt survives and over a ten year period becomes profitable and a consumer favorite.

  • Phil Colley with GM

    Not sure how we can say this more clearly. Obama and the U.S. Treasury have “no interest in running GM” and will “refrain from exercising right as a shareholder except for the most fundamental matters” – straight from Obama’s mouth earlier. Nothing has changed with the Volt program and its development. We are going through a court-supervised sale of assets to rebuild GM, and our vehicle program decisions were made long ago as per our viability plan. The Volt remains on track for a November 2010 launch.

  • TD

    “This is the only serious series hybrid that is being developed for large scale production.”

    So a million plus Priuses don’t count as large scale production?

  • ex-EV1 driver

    TD,
    The Prius is a parallel hybrid and even worse, a Gasoline-Only parallel hybrid. The only source of energy for it is Gasoline. The power to the wheels comes either from the battery/electric motor or from the ICE (Internal Combustion Engine) through a power combiner. The battery can be charged only through the power combiner.
    The Volt is a Series Hybrid.
    The wheels are only driven by the battery/electric motor. The Battery can be charged either from the electrical grid (energy source is whatever source feeds the grid) or from the ICE/generator (energy source is Gasoline) as a backup that is readily available today.
    Most people who will drive a Volt will rarely use any Gasoline if they plug-in overnight since the average person does not drive more than 40 miles in a day.
    This is a HUGE difference.

  • Dom

    “”This is the only serious series hybrid that is being developed for large scale production.”

    So a million plus Priuses don’t count as large scale production?”

    Um… key words here – “series hybrid”… which the Prius is not.

    I fully expect the Volt to survive…

  • Stan Smart

    I hope to keep my Honda Accord Hybrid (which has been a gem of a car) another couple of years so I can trade for the VOLT !!!

    Can hardly wait …

  • Paul Beerkens

    Thanks for your reply Phil Colley.

  • pat

    Hi ex_EV 1,

    The Prius has re-generating braking system to charge the battery too. Have you driven a Prius lately!
    Since when Chevy becomes a luxury brand? USD $50,000 Four doors electric-car.
    I am driving a 2007 camry hybrid that burns less gas than my wife’s Corolla and cost half of that of the VOLT!!!!

    Wake up diehard GM fans..

  • Skeptic

    Y’all are a hoot! Surprise! There is no Volt. Never was. Vaporware, pure and simple.

    It worked, in that many execs got a cash bailout from me and you. Didn’t work in the business sense since they went bankrupt anyway.

    But the folks who cashed in (i.e. not the UAW and not the tens of thousands of regular folks there) got a lot out of the Volt.

  • Eric

    The hair-on-fire fear-mongering in this article is hilarious. It’s like the lawyer asking the defendant “For how long have you been beating your wife?” The conclusion is already determined before the question is posed.

    There has been zero evidence to cause one to suspect that the Volt will be cut. GM just recently reiterated their commitment to go ahead with the car. And let’s not forget the heat they’ve been taking for prematurely killing the previous electric car (even though then they had good reasons to). And with the new mileage standards put into place last week, how could they possibly reach them without the Volt?

    The $40,000 price tag is reduced by a $7,500 tax credit to just over $32,000. Don’t you think the price of gas is going to be quite a bit North of $2 a gallon by the time the Volt’s production numbers get to any size at all (if Opec gets its way)?

    On what basis was the question raised in the first place? Other than wanting to stir up controversy score a lot of hits?

  • Skeptic

    Is that this week’s hype? That it’s a true gas-electric, in that it’s really an electric car with various ways to charge the battery? ‘Cause that’s not what it was last month or last year!

    Of course, you can change the total direction of a product like the Volt when it doesn’t really exist.

    You can read all about it in the report of the 2014 congressional investigation.

  • Joe

    Buy a FORD they did not take any bail-out money and that makes me want to buy a FORD of a GM product anyday!

  • Willfgfg

    Honda FCX !!!!!

    hydrogen gas station thats all we need!

  • I Don’t Get Hydrogen

    Must be honest here… I don’t understand hype of hydrogen that can’t be accomplished by electricity. I mean why add another step to the energy process which will result in another way to lose energy. It’s like trying to insert a middle man to use energy. Granted there may be some advantage of H2 such as faster refill, but I can’t see that being a problem that will be cheaper to solve through battery development/swap, rather than keep throwing money at a hydrogen future we are unsure of.

  • sean t

    Where is Bryce? We need his opinions on this. Everyone knows that the Volt is his dream. Good luck Bryce.

  • Halo9x

    Looks like I will be driving my ’07 Prius longer than I expected. I really like the idea of the Volt and truly hope it succeeds but it will have drop in price considerably before I can afford one. Till then, the Prius is my car of choice. As for the FCX from Honda, I think it is a great vehicle but once again it is an expensive solution in search of a problem.
    You can’t buy one. Why? Because it costs $100K! Furthermore you can only drive it somewhere in southern California and maybe a few other places. Neither the Volt or FCX have the range of a Prius (535 miles @45 MPG) and gasoline is going to be around for sometime to come…

  • Where is Bryce?

    The only one who can defend GM in a world of Toyota lovers. Was he a GM Employee?, One wonders

    Agree, best of luck Bryce

  • David

    If the Volt is killed then GM deserves to die and the current administration deserves to be voted out on it’s tail. Isn’t it that kind of short-range, next-quarter-only thinking that got us INTO this mess?

  • DaveR

    ex-EV1 driver,
    Let us not get into an argument over which is better, the Prius and parallel hybrids or the Volt and series hybrids. Each is good and they meet the needs of different customers.

    Me, I have owned a Prius for nearly 4 years now and estimate that I have already saved between 650 and 800 gallons of gasoline vs. what I would have used if I had gotten another vehicle. The Volt, even with a generous tax break is outside my price range.

    In addition, Toyota plans to introduce limited quantities of of plug-in Priuses next year. It will still be a parallel hybrid, it will not have the same electric range of the Volt and it will not operate in as an EV only. But since it shares the same platform as the regular Prius and most of the same components, it would probably start at under $30,000 before any subsidies.

    Again, more choices are good. Both series and parallel hybrids are good, as are standard and plug in hybrids. Each meets the needs of different groups of people, so if all are available, more people would purchase hybrids vs. the alternative and more gasoline would be saved.

  • Need2Change

    The Volt must survive for the reasons stated in the article.

    But also for every one Volt sold, GM will be able to sell two to four Camaros and keep under an average of 40 mpg in regards to CAFE.

    Some predict that economy cars will increase in price so that dealers can have greater profits. If however, Americans continue to desire large powerful cars, an alternative scenario is to increase the price (and profit) of large, low mpg cars, e.g. Chrysler 300, Taurus, Impala, SUVs, etc., and keep the price of economy cars low to help the average mpg for CAFE.

  • Mike77

    The Volt will survive and so will GM. I think that much is clear. How successful will the Volt be is the question. There is already SOOO much hype about it already. It will be the first plug in as well and will have the “cool” label put on it right away.

    That plus it will be from GM and American company which all of a sudden is “cool” again with Obama running the show. You want to talk about Marketing and creating a buzz, it’s already been created. I wouldn’t spend 1$ on advertising it. Use Obama and the media to go ahead and create the buzz and sell the product. And people like us that care enough to comment on the article.

    If they get it down to $30K with tax credits it will sell like hotcakes.

  • Mike D

    $40k minus 7500 credit is $32,500. IMHO it will still sell like hotcakes at that price even.

    Enough about it not being cost effective. LOW DEPRECIATION and $10,000+ saved in gas over the course of 10 years, even if gas only stays at $2.50 a gallon, makes the Volt very cost effective… toomany people are stuck on the pre-credit sticker price and don’t even factor in all the savings…

  • Max Reid

    Reduce the battery range from 40 to 10 miles
    and sell it for 30K.

    If we drive 10 miles/day and 300 days/year,
    we can drive 3,000 miles/year on battery and
    thats 25% of the distance driven in a year.

    Many people will buy Chevy-Volt, 40K is just too much.

  • Samie

    As I said above everyone should hope that the Volt becomes successful. GM may or may not be successful out of bankruptcy but I feel they need to do the following:

    We will see if they commit to a full product line and stop renaming models every few years or adding new brands to sell like say a new Opel brand in a few years. Also I wonder what is the point of Buick and GMC? I never understood the price positioning of those brands. Example 32k Volt (after rebate) shouldn’t we be talking about the Buick Volt? Also selling the poor mans performance cars like the Camaro or Mustang is silly and plays into dumb ego trips that got many into huge SUV’s and the no-need V8 Trucks before the downturn (Diesel or V6 are better options depending on usage) EV’s or some hybrids in the future will wash away some of the Camaro types as more people will understand Torque not HP is what most consumers think as power. Sorry I’m not from the muscle car generation and it brings a negative image when I see a Mustang or now Camaro on the street, though I tell myself not to judge… Would you laugh if Toyota decided to come out with a SS Camry, probably yes. If GM is smart I suspect in the next few years, Buick will be dropped from the North American line-up & GMC will be known as the larger SUV and Truck brand of GM with Chevy selling only the cross-over SUV’s, standard trucks, along with compacts and sedans & Cadillac repositioned to actually compete strongly against Lexus and the BMW’s of the world

    The same players, minus one w/ new rules to the game but we will see if they try to go back to their old ways, signs point to a cloudy future but we will see….

  • solargroupies

    With Bob Lutz, a person who still doesn’t believe in climate change, at the helm of the Volt program, how could a new paradigm of plug-in electric technology vehicles possibly thrive and survive?

    We need new thinkers and active learners who can pull this off, not relics from another, failed age that will ensure we stay in this mess. My money is on the innovators, who have been making successful hybrids for awhile, IF AND ONLY IF gasoline prices climb again, and/or consumers wake up and start demanding green cars.

  • Indigo

    But… The Volt doesn’t exist. It’s vaporware.

  • sean t

    solargroupies,
    Is Bob L still there? I thought he’s gone. Otherwise, it’s a disaster for the new GM.

  • simon@syd

    Im not sure about the series hybrid thing. once you’ve used up the battery, does that mean your car reverts to being just a petrol driven car? Wouldnt it really struggle after the battery has been used? The transmition of power from a very small gasoline engine, to eventually the wheels (through the electric engine) – the ICE engine at the beginning of the whole series is going to have a big load on it.

    Would it be a case of, once the battery is discharged, the ICE engine is only good enough to “get you home”… I guess it depends on how big the ICE engine is – but isnt the point of hybrid to have a small ICE engine?

  • Dom

    This article on MSN states that the Volt and other GM products like the Cruze are still on track for release:

    http://editorial.autos.msn.com/article.aspx?cp-documentid=1062918

  • JH

    I too still think the volt is vaporware….. BUT the new GM CEO was on NPR yeaterday afternoon….. he would not nail down a price but just said he hoped enough of Volt version #1 sold so they could come out with Volt part II and have it be cheaper.

    In essence – Volt will be “appropriately priced” to cover all research and development and then if it does not sell well or the price point is too high to sell now then Volt will not be produced or not go beyond its initial release.

    Even with a $7500 tax credit in a failing economy you have a ton of competition and with the history of GM it will be a tough sell to say – hey – yes we used top have planned obsolescence as part of our package but we really want to sell you this hyper fuel efficient car for $45K plus…. or you can go to Toyota or Honda and get a smaller hybrid for $21K …..

    GM has a plethora of battles to fight and after hearing new CEO say “priced appropriately” my guess is these will never see the light of day because they are too expensive to produce!

  • Bryce

    ah…sean t…..thanks for thinking of me. I do hope GM sticks to the Volt. I do see it as having great potential for future vehicles, especially larger ones. The new MRAPs for the military are toying with a type of series hybrid with the vehicle driven by electric motors with a smaller engine generating electricity.

    So anyways, I still hope to get a Volt once they come out, and according to most things we have heard on gm-volt.com everything is still on track. Actually, if you guys are interested, there is a test drive of the mule vehicle on that site and a few others. (ie jalopnik, motortrend, etc.)

    On a personal note, sorry I haven’t posted in a while, just I was finishing with the school year and was busy. It is summer now and am largely not very busy at all. Nice to be back. : )

  • Scott z

    Come now lets face it. GM has failed for a long time to produce much of anything beyond the norm. Between hear about their “Skateboard” and the Volt for so long I just assume they always lie. I never thought the Volt would see the light of a show room and this only seems to make it less likely.

    Right now it seems the only american company to have a clue is Ford. Now if some company would just produce a hybrid mini-van many would be happy.

    Oh I would like a new Hybrid-Diesel as well. If Volkeswagen can pull an average 40PMG with their new jetta imagine what can be done with a hybrid build.

  • hrskevin

    Not such a huge difference.

    The Prius can easily be modified to be charged from the grid, and Toyota already intends to mass market a plug-in version of the product. Even the original Prius drive system does not require the ICE to be running to move, unlike some other parallel hybrid systems.

  • Uncle B

    The Chev Volt is a bastard-child of old sheet-metal and grease-pit technologists with graying hair if any, last days in schooling in the 1930′s, entrenched in their beliefs by past successes, and young, brainwashed puppet engineers, allowed into GM’s once “Sacred Circle” of influence after considerable indoctrinations by American automotive schooling, and much too much screening, familial affiliations, and examinations. Aerospace engineering far surpasses anything they may have conjured up in the dying moments of a once great mechano-hydraulics and sheetmetal shaping empire of the “Cheap oil Era”. Expect great things to come from carbon fiber molding, advanced polymer composites and lighter stronger electric plug-in cars from the aerospace quarter. The old technology has been surpassed, the new technology will replace it. The transition will be fast and rough. China and it’s cheaper manufacturing techniques will play a huge roll. The Chev Volt will remain, as originally intended, and likened to the now scrapped EV-1, a games piece on old school’s drafting board, played for the survival of an age gone by, an attempt by bitter old men and aficionados, burnt badly by changing times, to maintain an impossible status quo, and marking the death of the piston-engined, gasoline driven sheetmetal and hydraulics wonders we all enjoyed very much! The electric car is here, three piece motor, recyclable batteries and plastic light weight bodies and all, and nothing can stop it from taking over completely in just a few short years! Don’t believe me, Google Tesla, Aptera, BYD, for starters!

  • tina miller

    Personally, I love love love my 98 Chevy Tahoe gas guzzlin SUV and hope to God that Obama doesn’t pass some law telling me I can’t drive it cuz I am killing some polar bear on an iceberg somewhere. I choose to drive what I choose to drive and don’t believe in global warming. Believe that it is some whooey crap that the govt spouts to scare everyone into submission. And I happen to have helped a Scientist on a research project within my college that debunks the whole global warming thing. He has financial backers that backed the machine and the creation of it. It measure the CO2 emissions and the results are so laughable about global warming that if he could get them published the entire planet would go wow have we been fooled or what? But everytime he tries he gets threatened, beaten down and I am surprised he hasn’t been buried alive by the govt. The govt will not let him get a patent. I had to scratch my head first at why. But then realized well cuz it would debunk Al Gore and all the global warming conspirators and then they people of America would completely lose faith in govt and thus the govt loses control over us. So I try and spread the word as much as possible about this. Maybe through word of mouth one day the govt will not have the ability to keep denying his patent and the world will discover the truth.

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