Study Finds Chevy Volt Isn't Cost-Effective

By Colin Bird

March 5, 2009

Development of the upcoming Chevrolet Volt has been a bright spot amid some bad times for its parent company, but should GM sacrifice future gas-powered cars and trucks for this plug-in hybrid? A new study suggests the answer is no.

The Carnegie Mellon University study suggests that a plug-in series hybrid like the Volt with a range of 40 miles on electricity isn’t an economically prudent choice for consumers, despite the fact that the car hasn’t been priced yet. It’s expected to cost between $35,000 and $40,000. Jeremy Michalek, the chief engineer behind the study, said he believes there would be no way to recoup the cost of the batteries, even if the driver never used a drop of gasoline over the Volt’s lifetime.

According to the study, the Volt’s steep price will hurt its chance of displacing the Toyota Prius, which starts at $22,000.

The study reviewed the cost of a single car’s batteries (which could be $16,000), recharging costs and CO2 emissions created both in making the battery pack and in generating electricity for home or commercial recharging. The study is also extremely skeptical about the long-term lifespan of the massive batteries required in the Volt. K.G. Duleep of Energy & Environmental Analysis Inc. said such batteries only last seven years in lab tests. GM has said it hopes to give the Volt a 10-year/150,000-mile powertrain warranty to alleviate such fears.

The cost-benefit of buying a Prius is still similarly debated, but despite relatively high upfront costs Americans buy that car in droves; it was the 13th-best-selling vehicle in the U.S. in January.

What this study fails to factor in is consumers’ emotional and ideological reasoning in their purchases. In green-centric areas like northern California, the ultra-clean Volt might be a certified hit among car buyers used to paying inflated prices for homes, who are willing to hunt out all things environmentally friendly.

A Volt would also be easily recognizable, loudly telling the world that you care about the environment and America’s independence from foreign oil, just by driving it around town. Factor in this emotional element, and we think GM’s stated goal of selling 10,000 Volts in 2011 and 60,000 in 2012 seems more than reasonable. In the end, the efficiency of batteries in a lab might not matter on the street or in a driveway.

GM Volt Cost May Limit Value to Drivers, Study Finds (Bloomberg)

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