General Motors recently announced that it will halt production of the Chevy Volt plug-in hybrid for up to five weeks due to poor sales and rising inventory numbers. In February GM sold 1,023 Volts, but at the end of the month the automaker still had 6,300 Volts in its inventory. Even worse, GM hopes to sell 45,000 units this year, but only selling 1,626 units in the first two months of this year is not exactly the pace that the Volt needs to set to meet that goal. Low Volt sales have been partially attributed to negative attention the vehicle has garnered over the last few months, as safety concerns rose over battery fires and Republicans turned the vehicle into a political punching bag.
Lacey Plache, Edmunds chief economist stated, “The oversupply of Volts suggests that consumer demand is just not that strong for these vehicles. The price premium on the Volt just doesn’t make economic sense for the average consumer when there are so many fuel-efficient gasoline cars available, typically for thousands of dollars less.” With a starting price at $39,145, before the $7,500 federal tax credit, the Chevy Volt is not cheap enough for many families. Even though gas prices are getting closer and closer to $5 a gallon, many buyers are flocking to cheaper, less complex models like the Chevy Cruze and Honda Civic, which are still very fuel-efficient.
In 2011, General Motors hoped to sell 10,000 Volts, but only managed to sell 7,671 units. Now that GM has excess inventory of the Volt, GM has informed its 1,300 workers at its Detroit-Hamtramck assembly plant in Michigan that it will shut down production for five weeks, starting on March 19th.
GM spokesman Chris Lee stated, “We need to maintain the right inventory levels and continue to meet demand.”
Although the Volt’s price may be a factor that has kept many buyers away from the plug-in hybrid, bad publicity around an investigation by the National Highway Traffic Safety Administration regarding the safety of the Volt may be another issue. At the end of last year, NHTSA opened an evaluation of the Volt following a severe-impact lab test on a battery pack that resulted in an electrical fire six days later. Following the investigation, GM made more enhancements to the Volt’s structure and battery coolant system to prevent the possibility of an electrical fire during a severe crash.
Volt sales may not be at the pace that GM hoped, but new government subsidies may make the Volt more attractive. President Obama is hoping new subsidies for green technology will be approved by Congress. One of the new subsidies will increase the federal tax credit for the Volt from $7,500 to $10,000. GM also just released a new Low Emissions Package for the Chevy Volt that qualifies buyers in California for a $1,500 tax credit. Lastly, the Volt was also named as the 2012 European Car of the Year, this week at the 2012 Geneva Motor Show.
In this tough economy, price is clearly a huge factor for most buyers, and electric vehicles across the board sell at much higher prices than fuel-efficient cars from the same makers. Nissan reported low sales on the all-electric Leaf, as well. But poor sales of electric vehicles should not be misconstrued as a sign that EVs are failing in America. The Environmental Defense Fund points out that both the Volt and Leaf sold better in their first year than their hybrid counterparts first did. “When the Toyota Prius and Honda Insight were offered as the first commercially available hybrids in 2000, only 9,350 cars were sold. By the end of their first year, over 17,000 Nissan Leafs and Chevy Volts were sold.”
With gas prices continuing to rise and EV innovation continuing to move forward, the future of the electric car is bright. “Whatever politically motivated attacks may be aimed at EVs, and whatever shortcomings these revolutionary new vehicles may display, one thing is certain: the move to EVs represents a rebirth of confidence in American innovation, workers, and competitive manufacturing,” writes EDF. “It also marks an irreversible national commitment to building a cleaner, more fuel-efficient transportation system for a prosperous American future.”