The Chevy Bolt Won't Make a Dime for GM

Toyota produces diverse vehicles for all economic and cultural seasons, creating space for the sort of incremental, hedged technological experimentation we see in the Prius, GM’s business model has been a paradoxical blend of conservatism and risk-taking.  It is not news that GM has long based its fortunes on big, gasoline-thirsty, profitable vehicles, essentially a single lineup that thrives in times of cheap fuel and in contexts where environmental regulation is not a factor.  What is not well understood is that when these conditions change, GM is typically wrenched from stasis and responds with ad hoc engineering virtuosity.  So it was with the EV-1, a technological marvel that was never introduced for sale and never intended to make money.

Alarmed by the sales success of the Prius in the mid-2000s, GM vice chair Bob Lutz hatched the Volt as a kind of technological leapfrog.  It was designed as the ultimate hybrid, a dual-mode plug-in equipped with a battery packing 15 kilowatt hours, more than 16 times as much as its counterpart in the baseline Prius.  That made possible a very long battery-only range (38 miles).

But although the engineering of the Volt was impressive, the car did not leapfrog the Prius in economic terms.  Arriving 15 years after the Toyota pioneered the hybrid market, only some 100,000 Volts have been sold to date versus the eight million hybrids of all types that Toyota alone has sold since 1997.

Reason:  The Volt provides much more battery than the user needs, adding cost and risk for consumers as well as the producer.  Much the same is likely to be the case with the Bolt.  Far from being a rational development of the Volt, as Davies claims, Chevy’s 200-mile EV is as much an impromptu response to existing BEVs, primarily Nissan’s Leaf and Tesla’s Model S, as the Volt was to the Prius. 

Indeed, the level of risk is far higher for the Bolt than it was for the Volt because no pure electric vehicle has yielded a profit to date.  The Leaf really is what Davies claims the Bolt will be—the first mass-marked BEV.  Some 200,000 have been sold, and yet it is still a loss leader.  The increasing popularity of the Leaf lease option shows that Nissan (with the help of US state and federal subsidies) is willing to shoulder the risks of large EV battery ownership for the time being as it searches for a way to cut costs, including a possible shift to cheaper battery cells made by LG Chem.

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