GM May Make 60,000 `Volt' Electric Cars in First Year
Aug. 22 (Bloomberg) -- General Motors Corp. may build as many as 60,000 of its Volt electric cars for their inaugural year on the market, four times the sales of Toyota Motor Corp.'s hybrid Prius in its U.S. debut, people with knowledge of GM's plans said.
Production at that level may allow GM to sell the plug-in Volt for less than $30,000, said the people, who didn't want to be identified because the plans are confidential. The discussions show the Detroit automaker, racked by losses and U.S. sales declines, believes an affordable electric car will help spur a revival, the people said. Toyota's Prius can be bought for $22,175.
``If they were able to get 30,000 to 60,000 on the road in a year, it would be a huge leap in technology,'' said Brett Smith, an alternative-fuel analyst at the Center for Automotive Research in Ann Arbor, Michigan. ``It will be difficult, though, because there are so many barriers to making this happen.''
A high-volume debut for the Volt, designed to go 40 miles without recharging, would lend credence to GM Chief Executive Officer Rick Wagoner's strategy of using technological advances to gain ground on Toyota. The Japanese company has a decade-long lead with its Prius, a gasoline-electric car that is the world's best-selling hybrid.
GM shares rose 25 cents to $31.33 at 4:01 p.m. in New York Stock Exchange composite trading. The stock has added 2 percent this year.
``If GM can make a Volt that costs less than $30,000, you really could start to see significant demand,'' Smith said.
GM product chief Bob Lutz has said he wants to sell the first Volt by late 2010, and expects to have prototypes ready for testing early next year. GM spokesman Scott Fosgard declined to comment on plans for the Volt.
Sales of 60,000 units would vault the car past the Chevrolet Aveo as GM's best-selling high-mileage car. It took almost five years for the Prius to reach annual sales of 60,000.
Toyota has sold more than 800,000 Priuses, and the hybrid helped the Toyota City, Japan-based automaker earn a record $14 billion in its last fiscal year. GM lost $1.98 billion in 2006.
``We've got a technology that's established in the marketplace and has been reliable,'' said Irv Miller, Toyota's group vice president of U.S. communications. ``If anyone thinks the Prius of today is going to be the Prius of 2011 or 2012, they underestimate Toyota.''
GM said this month that it will jointly develop the lithium-ion battery needed for the Volt with A123Systems Inc., a privately owned battery-technology company in Watertown, Massachusetts.
Creating a high-volume, plug-in electric car with a lithium-ion battery within three years may be impossible, said Menahem Anderman, president of Advanced Automotive Batteries, an industry consultant in Oregon House, California.
A 60,000-unit target ``is totally ridiculous at this point,'' Anderman said in an interview. ``To reach that level by 2010, they'd need to be placing the orders right now.'' If GM proceeds with A123 as the main battery supplier, ``they would be doing it with a company that has no experience in high-volume manufacturing on such a scale,'' Anderman said.
To offer 40 miles of all-electric range, he estimates GM would need a battery pack that would weigh about 400 pounds. That would be seven times heavier than the nickel-metal-hydride pack in the current Prius. Added weight reduces fuel efficiency.
Higher production would let GM get volume discounts from auto-parts suppliers and put the $30,000 goal within reach, the people familiar with GM's planning said. The average U.S. vehicle sold for $28,450 last year, according to the National Automobile Dealers Association. The Prius, which doesn't come in a plug-in version and uses less-expensive batteries than those planned for the Volt, costs $22,175 to $23,070.
Demand for cars less reliant on gasoline is growing as automakers face stricter emissions rules around the world and the U.S. tries to cut its dependence on imported oil. In addition to funding the Volt, Wagoner is spending more than $3 billion on cars powered by hydrogen fuel cells and gasoline- electric hybrids like the Prius.
The Volt is charged at a household outlet and uses an on- board engine to generate electricity when the battery runs down during travel. The engine, powered by gasoline, diesel or a hydrogen fuel cell, only recharges the battery and doesn't drive the wheels. Its full range is about 640 miles on a tank of gasoline, about double the range of a typical car or truck.
Existing gasoline-electric hybrids such as the Prius and GM's Chevrolet Tahoe sport-utility vehicle use the electric motor only at start-up and lower speeds, and rely on engine power and friction from braking to charge the battery.
Toyota sold 5,562 Prius models in 2000, when it was on the market for part of the year. Sales tripled the following year and topped 60,000 for the first time in 2005. They totaled 110,565 units this year through July, making the Prius the 12th- most popular vehicle in the U.S., according to Audodata Corp., a Woodcliff Lake, New Jersey, company that monitors the industry.
Toyota has sold more than 1 million gasoline-electric autos since the first Prius went on sale in Japan in late 1997. The company is the biggest seller of hybrids in the U.S., the biggest market for the vehicles. U.S. sales of hybrids this year through July rose 52 percent to 217,433, with the Prius accounting for more than half the total.