Will the Chevy Volt Revolutionize the Automotive Industry?

In late fall of 2010, General Motors will be launching the Chevy Volt. The Volt is unique as it offers the environmental benefits of a standard electric car, without the limited range. Volts can travel up to 40 miles on electric power alone, before a gasoline engine kicks in to help recharge its batteries. Will the Chevrolet Volt revolutionize the automotive industry, or will it help fill a small niche market of green cars alongside other plug ins and hybrids?

To analyze the potential success (or failure) of the Chevy Volt one needs to examine both the economic costs (and savings), and vehicle features like size, performance, and availability.

*Vehicle Cost: The Chevy Volt is expected to have a list price of $40,000. However, all Volt purchasers will qualify for a $7,500 Federal Tax Credit, bringing the total cost down to $32,500. The Volt’s primary electric car competitor, the Nissan Leaf, is expected to have a list price roughly $7,000 less than the Volt’s. The most similar gas powered vehicle is the Chevrolet Cruze, with a price tag in the $20,000 range. Popular hybrids like the Toyota Prius and Honda Insight cost roughly $10,000 less than the Volt will. Clearly, if GM hopes to sell to more than just the first adopters, they will need to find ways to cut production costs and bring the price down.

*Gas Savings: The Volt can save customers $1,500 per year in fuel costs based on a daily commute of 40 miles. This represents the maximum fuel savings, as no gasoline is needed when the vehicle is driven up to 40 miles a day. A more reasonable estimate would be annual fuel savings of $750 given the fact that people will be driving more than 40 miles on certain days, and driving conditions will not always be ideal.

*Electricity Cost: It is generally accepted that Volt drivers will use 8 kW-h of energy when driving 40 miles. Assuming that the average retail price of electricity in the U.S is $0.11/kW-h, it will cost less than $1 per day to charge the Volt, or a little over $300 a year if the vehicle is fully charged every night. The first 4,400 Volt purchasers will be given free 240-volt charge stations, and in some cases, free home installation. This will give Volt owners the option of charging in a standard 120-volt wall socket, or decreasing the charge time and using the 240-volt charge station. Charging using the standard 120-volt outlet will take up to 6.5 hours, and using the 240-volt charge station will cut the charge time to 3 hours. The 240-volt charging stations have a market value of anywhere from $1,000 to $2,000. General Motors recently announced that there will be an 8 year or 100,000 mile warranty on the battery. GM expects the battery to last 10 years of 150,000 miles.