The Chevy Volt sales mandate

What’s wrong with the Chevy Volt?

Millionaire Senator Carl Levin received a $7,500 taxpayer subsidy to buy his $40,000 Volt – but even with that generous subsidy, there just aren’t enough eco-one-percenters willing to pay a $12,500 premium to buy what is essentially a compact Chevy Cruze Eco (starting price $20,000, gets 33 mpg) or a $7,500 premium to buy a Chevy Cruze Diesel ($25,000, 37 mpg). The Volt is made on the Cruze platform.

No wonder sales of the Volt – and its electric cousins – haven’t met government expectations. Nevertheless, the government must be obeyed. After all, President Obama has expressed his wish that 1 million electrics be on the road by 2015. Whether consumers want them or not, governments such as California’s (and the feds by 2025) will soon require that automakers meet strict zero-emission sales quotas or 52 mpg fleet averages.

The goal with electrics, in other words, is not profit but sales.

So this week Chevy announced that it is slashing its Volt sticker price by a whopping $5,000. The move follows similar cost price cuts by Nissan and Ford on their electrics.

“We have made great strides in reducing costs as we gain experience with electric vehicles and their components,” said Chevy vice president of sales Don Johnson, hoping that higher sales volumes will reduce production costs. But though Chevy refuses to say how much it is losing on each Volt, Fiat CEO Sergio Marchionne long ago let the cat out of the bag – revealing that his company is losing $10 grand per electric Fiat 500 produced.

Volt sales in July were 3.3 percent lower than July 2012, totaling just 1,788 units in a hybrid-electric market where fully half of sales go to the iconic Toyota Prius. If the game is sales to satisfy artificial government numbers, then Chevy hopes the lower price will steal away Prius customers.

“Automakers are going to have to sell these vehicles in higher volumes to meet future fuel economy standards,” auto analyst David Cole told the Detroit News (only 41,000 electrics cars were sold in the U.S. through June – just a half-percent of all new vehicles sold).

BMW CEO Norbert Reithofer revealed to the Wall Street Journal last week that 30 percent of its sales will have to be plug-in hybrids and battery electric vehicles by the year 2025 “to comply with coming government emissions mandates.”

Let’s hope GM can make enough on the vehicles consumers really want to remain profitable.

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