14 August 2009

GM Hopes Volt Juices Its Future

Story by The Wall Street Journal

General Motors Co., outlining a raft of new vehicles designed to reinvigorate its lineup, said its much-awaited Chevrolet Volt is expected to get 230 miles per gallon in city driving.

The Volt is at the forefront of GM's efforts to win back lost U.S. market share with 25 product launches by 2011.

At 230 mpg, the Volt would dwarf the fuel economy of any mass-market vehicle on sale today, including Toyota Motor Corp.'s Prius hybrid, which is rated at 51 mpg in city driving. It also could deliver a big boost to GM's efforts to cultivate a green image, a key element of the company's restructuring.

The Volt is set for U.S. launch late next year as a 2011 model. The mileage expectation reflects new methodology for electric and plug-in hybrid cars being finalized by the Environmental Protection Agency that factors in electricity used to try to reach a miles-per-gallon equivalent. The intent is to allow consumers to measure the vehicles against traditional gasoline-powered ones.

The EPA said it hasn't tested the Volt.

The Volt is powered by a lithium-ion battery pack, with a range of about 40 miles, that can be recharged through a traditional power outlet. For longer drives, a small gasoline engine takes over, powering a generator that creates electricity to run the car's motors. The Volt's expected total range on one tank of gas is more than 300 miles, GM said.

Frederick "Fritz" Henderson, GM's chief executive, said at a media event that owners who charge the Volt daily could go days without the gas engine firing up. The U.S. Transportation Department says 80% of Americans commute less than 40 miles a day.

Mr. Henderson added he is confident the Volt's combined city and highway mileage -- the figure commonly used to gauge efficiency -- will be in the triple digits. "Having a car that gets triple-digit fuel economy can and will be a game-changer for us," he said.

GM Chief Executive Frederick Henderson, and the Chevrolet VoltGM's mileage estimate for the Volt promises to start a battle among auto makers as they rush to deliver electric cars, a segment that some executives believe could account for 10% of sales within four years.Nissan Motor Co. plans to launch next year the Leaf, a plug-in hatchback. On Tuesday it responded to the Volt news with a reminder that the Leaf would get a 367-mpg rating under the EPA draft guidelines. But unlike the Volt, the all-electric Leaf will need to be recharged when its battery expires after about 100 miles.

Mr. Henderson acknowledged the Volt's high price, expected at around $40,000, and lack of available public recharging stations are potential challenges. Even with an expected $7,500 tax credit the Volt will cost substantially more than the $22,000 Prius. Charging the batteries should cost owners about 88 cents on average, GM said.

The Volt will be unprofitable for GM at launch because of the high costs of its development and the batteries. GM is counting on economies of scale to make the vehicle profitable eventually.

The new GM board has said it wants management to accelerate product launches. Coming models include high-end compact cars for Buick and Cadillac, a convertible version of the Chevrolet Camaro and a revamped Chevrolet Aveo subcompact.

Mr. Henderson said GM remains on track to have positive net cash flow next year and post a net profit by 2011. He also said it intends to increase production as the "cash for clunkers" rebates boost demand for its vehicles.

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