Tuesday, July 27, 2010

Chevy Volt Cost - Automotive Industry Revolution

Chevy Volt Cost - Automotive Industry Revolution

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.

*Vehicle Size and Comfort: The Volt seats only four. Part of the lithium-ion battery pack runs between the seats, so the rear of the car offers two bucket seats instead of one traditional bench seat. The Volt has a trunk size of 10.6 cubic feet. This is over 30% smaller than the Toyota Prius' trunk and slightly smaller than the trunk of the Honda Civic sedan.

*Performance: The Chevrolet Volt will have a top speed of 100 mph, and has the equivalence of a 150 horsepower engine. It is estimated that the Volt will be able to go from 0 to 60 mph in 8.5 seconds. Because of where the lithium-ion battery pack is mounted, the car has a very low center of gravity, giving the car a sporty feel around corners.

*Availability: GM is expected to have 10,000 Volts available for sale by the end of 2011 and production for calendar year 2012 will be 30,000. Initially, the Volt will only be available in California, New York, New Jersey, Connecticut, Michigan, metro Washington DC, and Texas. The Volt will be available nationwide by the end of 2012.

At $32,500 (with the Federal Tax Credit) many potential car shoppers will view the Volt as too expensive, even given the fuel cost savings Volts will achieve. Unless production costs come down, which will in turn drive down the MSRP, it is expected that the Volt will help fill a small niche market for now. In addition, it was recently announced that Toyota would be cutting production in Japan by roughly 20% because the Japanese government would be ending subsidies on purchases of "eco-cars". If the U.S. government decides at some point to end the $7,500 tax credit on purchases of the Volt that will definitely have an impact on Volt production and sales.

Lowell Bike is a co-founder of http://www.myautotips.com/, a leading provider of information and advice through all levels of the automotive lifecycle. With over 8 years of experience in the automotive information field the author is in a unique position to provide money and time saving tips for car buyers, sellers, and owners. Visit http://www.myautotips.com/ for great advice today!

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