General Motors Co on Monday will unveil its next-generation Chevrolet Volt plug-in hybrid and is expected to restate a commitment to build an affordable long-range electric car, doubling down in a segment with scant sales and even skimpier profits.
Electric cars and plug-ins like the Volt account for less than 1 percent of the global vehicle market, and falling oil prices are widening the cost gap between electrified cars and petroleum-fueled internal combustion engine vehicles.
GM's current Volt has sold well below initial company projections and is a money loser, analysts say. The company doesn't disclose profits by model line. Last year, U.S. sales of the Volt fell almost 19 percent to fewer than 19,000 vehicles.
Fiat Chrysler Automobiles Chief Executive Officer Sergio Marchionne last May asked consumers to steer clear of his company’s Fiat 500e.
"I hope you don't buy it because every time I sell one it costs me $14,000," he said.
Still, GM and its major rivals persist in their efforts because without “zero-emission” vehicles and ultra-high mileage hybrids, they could fall short of meeting government demands to more than double fuel efficiency by 2025. In addition, California has set its own quotas for zero-emission vehicle sales, and China is pushing the industry for more battery-powered vehicles.
“We’re in for the long haul,” GM CEO Mary Barra told reporters last week at the company’s downtown Detroit headquarters. “I’m very excited about the new Volt.”
The new Volt, which will be unveiled ahead of the Detroit auto show this week, will offer customers an electric driving range of 50 miles, up from about 40 in the current model.
Steve Marjoros, director of Chevy car marketing, said GM will spend more to market the new car, which will launch in the second half of the year, and emphasize a fun-to-drive message more.
Barra’s predecessor, Dan Akerson, said in 2013 that he thought GM could cut Volt’s price - currently $34,345 - by up to $10,000 while making the car profitable. GM did not say how much the new Volt will cost.
Forecaster LMC Automotive expects U.S. sales of EVs and plug-in hybrids to almost triple to more than 339,000 in 2020 from last year. But that's still fewer sales - from dozens of competing battery-powered models - than Toyota Motor Corp realizes in a year from sales of its Camry or Ford Motor Co from its F-150 pickup truck.
Barclays only sees the global share of such vehicles hitting about 3 percent by the end of the decade. “The driver at this point would be more regulatory push than consumer pull,” Barclays analyst Brian Johnson said.
GM also plans to offer a new EV called the Chevy Bolt that would include a 200-mile electric driving range, something Akerson said in 2013 might “radically change the calculus” for EVs.
GM will get competition from Tesla Motors Inc, which is building a $5 billion electric battery plant in Nevada to meet what it expects will be heavy demand for its Model S sedan and for its forthcoming Model X SUV and Model 3 sedan that will be sold for about $35,000.German luxury car maker BMW, has spent almost $3 billion to develop its i-Series of electric cars.
The company has hinted at the scope of its plans by getting trademarks to number i9 for the series.
Nissan Motor Co, maker of the all-electric Leaf, is the leading seller of mass-market electric cars, and CEO Carlos Ghosn has stood by his bet on battery-electric vehicles,
even with gas prices falling. The Leaf, however, can travel only 84 miles between charges, according to government ratings. That distance is too short for many U.S. drivers.
Morgan Stanley analyst Adam Jonas doesn’t see EVs becoming anything more than a “rounding error” in the market, especially with low gasoline prices. He sees the vehicles as more goodwill PR than money maker.
“It’s just science lab stuff now,” Jonas said. “It’s not really for immediate commercial benefit.”
He believes that EVs will only succeed as fun-to-drive luxury vehicles, something that bodes well for BMW and Tesla’s higher-end models. More mainstream models like the Volt and Leaf, and even Tesla’s $35,000 car have less potential.