Sunday, March 11, 2012

Has Chevy’s Volt Shot Its Bolt?

Excuse the poetry, but on March 2, General Motors announced that it was suspending production of its Chevy Volt, a nearly-all-electric car that was one of the most ballyhooed recent achievements of the government-resurrected (and still partly government-owned) firm. Earlier last year, GM announced its hopes to sell as many as 45,000 Volts in 2012. But after anemic sales of only about 1600 in January and February of this year combined, GM’s management decided they had plenty of Volts on hand and shut down the single production line in Michigan.

The last time the Volt was in the news was also not favorable. In some side-collision crash tests, some coolant apparently spilled onto the giant lithium battery in the vehicle and the battery caught fire. If you poke around YouTube and look for “lithium battery burning” you can see why this might have scared off a few consumers. Once lithium gets going, there’s not a lot that can stop it. Of course, the same can be said for gasoline. We’re used to people being incinerated in fiery gas-powered collisions, but not lithium-powered ones. Whether GM will really resume production in five weeks, as they say they will, only time will tell.

At somewhere north of $40,000, purchasing a Volt is nobody’s rational economic decision. I think it is safe to say that most, if not all, of those who have bought Volts have done so for reasons other than economy. Someone estimated that even if gas goes up to $8 a gallon, you would have to drive a 90-mpg Volt for nine years in order to make back your investment in fuel savings. There are 90-mpg motorbikes around, and they don’t cost near as much as an underwater house.

No, the main reason anyone would buy a Volt—and the main reason GM makes the car in the first place—is that it counts as a virtuous act in the Canon of Worldly Virtues. A person driving a Volt has significantly, and rather ostentatiously, reduced his or her carbon footprint, thus infinitesimally postponing the looming climate-change apocalypse which is an article of faith for millions around the world. There are other reasons for buying a Volt which are less globally conscious. You may be an electrical engineer who simply thinks driving an electric car is cool. And fortunately for GM, a good number of such people are rich enough to spend $45,000 on a car that does basically what other cars do for $20,000. But rich people have all sorts of hobbies, and the government doesn’t subsidize giant corporations to cater to all of their whims.

The problem with the Volt is not technical—I’m sure they’ll fix the battery-fire problem to where the Volt is as safe in a collision as an all-gas-powered vehicle, if not safer. In trying to sell the Volt, GM is doing something analogous to pushing water uphill. It is in the nature of water to run downhill unless rigidly contained in a pipe. And it is the nature of people to spend their limited funds on vehicles that deliver the most performance—meaning reliability, reasonable fuel economy, and a certain level of comfort and safety—for the fewest dollars.

This is why the fastest-growing automotive markets in the world are in places like China and India, where most people don’t yet have cars and want to buy one. And it so happens that today, given the availability of fossil fuels and the state of the propulsion art, the most economical way to power a personal motor vehicle is with gasoline. So in emerging markets, gas-powered cars practically sell themselves. Government subsidies or tax exemptions are not needed.

Not so for electrics. Discounting the few hobbyists, driving an electric car makes sense only to people for whom ideology counts more than economy. To make this more realistic, I will use an example from my own moral rules. Suppose one day we woke up and all the grocery stores except for a few pricey mom-and-pop operations were taken over by the porn industry. To buy a loaf of bread, you would now have to walk through the equivalent of a sex-toy store. I am morally opposed to the porn industry, so in such a circumstance I would accept almost any inconvenience and even pay several times the porn-store food prices, to shop in an expensive mom-and-pop grocery store that didn’t also sell porn. (Yes, I know about Cosmopolitan—but try and find a grocery store anywhere that doesn’t carry it.)

The best I can make out is that to some people—and I suppose these are the kinds of people who buy Volts—burning fossil fuels is as repugnant to them as porn is to me. So they leap—or at least walk—at the chance to buy a car that burns much less gas than your typical car does. The problem GM faces is that there are simply not enough of those kind of people, at least not enough of them who are rich enough to put their money where their ideology is.

As I mentioned, the only way to make water run uphill is to pump it into a pipe where it has no choice but to go that way. And the only way in the present economic environment that GM, or anybody else, is going to sell a lot of mostly-electric cars is if the government forces people to buy them, either through expensive subsidies or quotas or some other form of compulsion. We have already experienced a form of government compulsion in the automotive sector in the form of the ethanol mandate. Gasoline has to have a certain amount of ethanol in it now, and while this was a short-term boon for the farmers, it severely distorted the food economy and some studies have shown that, when you include the extra trouble and expense of making ethanol, it may not save fossil fuel anyway.

As an electrical engineer, I’m sorry to hear that GM won’t be making Volts for a while. But in the larger scheme of things, it seems like the only sensible thing to do.

Sources: An AP story about the suspension of Volt production can be found at

No comments:

Post a Comment