Green Update–>Volt Production Going Up, Value Going Down?

2011 Chevrolet Volt

The bad news first: Last week, Kelley Blue Book set the residual value of a $41,000 2011 Chevrolet Volt at “just over $17,000” at the end of a 36-month lease (that is, 42 percent).

KBB then uses some funny math to factor in the effect of the $7,500 tax credit, boosting the car’s value to 51 percent, better than the Toyota Prius or the Ford Focus. But a tax credit doesn’t lower the car’s MSRP, and there are too many variables involved to set an accurate residual value.

Consumer Reports noted

that fuel-efficient hybrids and diesel models often depreciate far less than most vehicles. And the Volt’s heavy dependence on emerging battery technology is another wildcard. GM has announced that the next-generation Volt’s battery will have twice the capacity and cost less, making the first generation cars obsolete when the new ones come out in 2015—like yesterday’s cell phone.

Gas prices are surely another wildcard. If they keep going up, so will used Volt prices.

GM Volt productionThe good news is that GM’s confidence in the Volt has led it to increase next year’s production of the car by one-third (from 45,000 to 60,000 units). And some comments by CEO Dan Akerson suggest it may go as high as 120,000 units in 2012.

The company is shutting down its Hamtramck plant for four weeks of retooling, which means fewer sales in June and July. GM says demand for the car is strong, but reported sales figures vary all over the lot—from 1,500 Volts sold from launch through April to 1,700 to 928. According to one site, GM will have produced about 3,300 Volts by the end of May!

Some 550 of these cars went to dealers as demonstrators, and the Volt has been sold in nine states, plus D.C. GM says by the end of 2011, it will be sold nationwide and in Europe, China and Canada.

All we can say is that the four weeks of lost production in June, while necessary, will likely push some prospective buyers into other vehicles. You can stretch demand (and interest) just so far.

The biggest problem with the Volt is its price. If GM can’t get the MSRP down significantly, it won’t matter how much capacity they expand.

Right now, Volt sales are lagging behind those of the Nissan Leaf. Do you see a trend there?

—jgoods

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2 Comments

  1. Look on the plus side– You’d have an almost limitless supply of DC current to drive those subs. Shucks, hook them up to horns and aim them out the back, and you could propel the car with the bass.

    As cars like the Volt and Prius age, you’ll find their values plunge when the cost of replacing that expensive (and limited life) battery pack. Add the complexity of an electric car added to the complexity of an IC car with a very costly and complex control system, and you’ve got a technical nightmare that will bankrupt anyone who have to fix one off-warranty.
    The Leaf, on the otherhand, does have the expensive batteries but since it’s a pure electric vehicle, it has a very simple and reliable control and propulsion system. The long-term cost of ownership should be much lower.
    In any case, there’s no financial advantage whatsoever to buying one of the expensive vehicles. The Volt is one of the least cost-effective cars on the market. Factor in the extra cost over it’s automotive equivalent- the little Chevy Cruse, and you’ve got an extra $25,000 in cost. With the Cruse getting around 30MPG, that $25K will get you about 6200 gallons of gas, enough to “Cruse” 187,500 miles. That won’t get you all the way to the moon, but you get the point. Now I’m not factoring in that gubment subsidy, because we are paying for that up front in out taxes. (you can bet it’s not being taken out of BIG OIL’s subsidy money.) The Volt is one of those government-industrial scams that looks great on paper but doesn’t pan out in the real world. I guess it’s OK as a bragging car for governments or others who could care less about getting value for their money, but it’s probably not sending the message to onlookers that buyers think it is.

  2. I wouldn’t mind buying a Volt, except for a couple of important things.

    1) The MSRP is still too high; hopefully GM can lessen the cost to consumers in the future. For $41K I could get a somewhat basic luxury car or a pickup truck like the F-150 (of course, both at the loss of fuel economy but at the gain of niceness or utility).
    2) As a car audio enthusiast, I’d want to greatly upgrade whatever stock sound system that comes with the Volt to something much nicer. Of course, in a plug-in hybrid like the Volt, my greatly increased sound quality (and volume if I choose) would come at the cost of reduced battery life (and therefore driving distance) between charges. Besides, I can’t imagine anyone doing that sort of customization to a Volt or any other hybrid or EV. It just seems awkward to have booming bass in a car built for efficiency and “greenness.” Could you imagine someone rolling down the street, subwoofers blasting some rap song, in a Prius? I didn’t think so.

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