Featured 2016 Chevy Volt Attack Ads target LEAF, Prius!

As top dog, Lutz should have understood the economic fundamentals of these things. He almost certainly knew battery prices would fall significantly for many years from the day he made the announcement in 2007, and he probably factored this into his own imagined extinction type of price curve.

He helped create the PHEV vehicle subsegment. But while the BLS does not report this subcategory index, it does not make the negative inflation in this subsegment any less real. We will have to disagree about the relevance, but I find it quite relevant in this situation and with PHEVs and BEVs in general.

Jeff, I have a lot of respect for your knowledge on the Volt and this segment of the car market in general. Heck, you've proven your depth of knowledge to have the privilege to report to the rest of us from a major green car website (congrats!, btw ).

I thought it was usbseawolf2000 who brought up the $6k price drop and was making the point in nominal (2007) terms. Even so, to be fair, he probably was off a bit, by $1k. I think you were saying there was a $7k nominal price drop from the initial $41k (MSRP + destination). I think John was referring to the comment Lutz or another executive at GM made in 2007 about the Volt costing "easily less than $30,000.”

$7k is a substantial price drop, even if the initial price call was way off. This is especially impressive and commendable if that drop reflects true cost improvements passed on to the consumer (as opposed to theoretically starting at an artificially marked-up high price of $41k and/or selling at a loss currently, if either of these are even true).

So there is the nominal argument, the inflation argument, the deflation argument; and probably, depending on what side of the fence one is on, the other guy probably looks like the fan boy!

 

Oops, you're right. I confused myself about who said that.

So, after all this you aren't going to take a position of your own on whether the $10,000 (or is it $7,000) 2011 to 2016 price reduction or Lutz's $30,000 price target is more reasonably stated today in nominal or inflation adjusted terms?

 

This is why I posted earlier that:

The Volt has mainstream sub-$30,000 pricing today as long as the credits and rebates persist. Various other factors have held back Volt sales until now. At some point, credits will end and the Volt and Bolt etc. will be relatively less competitive because of that for a while.

I think the Volt will do okay as long as it remains unique with its 50ish mile EREV range together with a full-power refined range extender. And eventually, government and the market will put appropriate climate change market price signals on gasoline-only cars so that Volt can be fully competitive without regard to its much better EV driving quality.

 

Reasonable arguments on both sides. But if forced to chose between nominal terms, or headline CPI, or new vehicle segment inflation, I would go with nominal in this case.

I think new vehicle segment inflation could be applied to a new Civic or perhaps a new Prius but would be cautious about using it in the PHEV/BEV subsegment.

My take is that when Lutz made his statement he knew that at some point in time, battery system cost deflation would very likely reach a point to achieve the sub-$30k nominal goal. He had good reason to believe the battery system component prices of the Volt would behave to a significant degree the way consumer electronics have long done. Was he overly optimistic, I think we can all agree on that.

As it turns out, there continues to be battery price deflation, but not at the rate most of us would like – certainly not at Moore’s law speed.

How much of what Lutz said was marketing hyperbole, it’s hard to say. He’s certainly not alone at missing price/timeline forecasts, such as how we keep hearing that affordable BEVs are just around the corner, like the Tesla Model III – these vehicles just keep getting pushed back and/or their price doesn't pan out.

 

The concern was always: too little, too slowly.

 

I can agree that the issues are somewhat subtle but I think that only stating prices in nominal terms in 2016 when Lutz was discussing 2011 model year targets back in 2007 tends to be misleading. Same for the $30,000 MSRP target.

Will we still be discussing it in 2007 nominal dollars in 2021 when the 3rd gen Volt comes out and will that be reasonable? What about in 2026?

 

With each new Volt generation that gains new features, the nominal argument loses more and more value.

But until we have inflation/deflation numbers in the PHEV/BEV segment, the other measures are even worse, IMO.

 

Hi Jeff,

Please don't take my paranoid musing as anything but an impression about the 'open' Volt and earlier 'two-mode transmission' and auto-stop 'hybrid' releases:

In the 1980s, there were a lot of "Beta" software releases. Nominally free, these demo floppies were handed out to the computer press and computer clubs to suppress sales of their competition. But too often, "Beta" became the software equivalent of a Potemkin village. That was the unspoken message I got from Lutz back then as he was trying to counter the real Prius with 'smoke and mirrors.'

There were great write-ups about the 'two mode' transmission and then I saw my first illustrated, cutaway. They had shot-gunned some motors into a hydro-mechanical transmission. So I was not surprised when GM sold their White Plains MD transmission plant that built the 'two mode' months after the first 'two mode' transmissions were available in the Tahoe and pickups. The 'two mode' was a "Beta" just like their auto-stop, 'hybrids.' I still remember explaining to newbies at GreenHybrid why the GM 'hybrids' were never going to achieve Prius performance.

That GM came out with Volt-2 was welcome and there is some evidence they are trying to put the same architecture in their other models. I don't fault the effort but the Otto engine in the Volt still suggests a shot-gun approach versus an integrated system. I find the Malibu hybrid more appealing because it addresses the heat-engine and drive train efficiency.

Bob Wilson

 

Lutz and Wagner have a lot on their plate:

• Killing the EV1 instead of a follow-up with NiMH
• Never building the Precept
• Complicit in patent sitting on NiMH
• The original 'two mode' transmission
• The auto-stop 'hybrids'
• Creating and killing Saturn
• Driving GM into bankruptcy

But the Volt-2 is an acceptable apology and Malibu hybrid sounds interesting.

Bob Wilson

 

Auto Li-ion batteries have been dropping in cost at greater than 7% per year. So we should price cuts on the Volt that won't cost GM when the incentives end.

The average new car price is over $31k. Granted, that is pulled up by fully loaded minivans and trucks, but as long as the Volt offers a higher level of class than the typical largish compact ICE car, I don't see it needing to get well below $30k to hit 'mainstream' numbers.

First, the Volt engine has wide range valve control, and has a near Atkinson cycle. Second, you don't seem to be factoring cost into the equation. For gasoline only cars like the Prius and Malibu, the ICE efficiency is an important factor for overall vehicle efficiency. For a bi-fuel like the Volt, in which the primary fuel doesn't use the ICE, the engine's efficiency is a smaller factor. It can be as efficient as the engine in those gas-only cars, but that would increase the ICE cost. Since it is the secondary power source, lower cost with the EV side improvements is more important for the car's success. Remember, 42mpg is close to the gen2 Prius numbers, and is far better than what most people accept from their car.

 

Hmm, I'm not buying the argument.

I think Lutz's $30,000 price target is implicitly relative to the general new vehicle market price so I think the new vehicle consumer inflation index should be used to adjust that target (versus the general car market) for any year after the initial introduction of the 2011 model year Volt.

I think the absolute price difference between the 2011 Volt and the 2016 Volt is an issue about the general value of money that might be spent on anything so it should be adjusted using the broad consumer price index so that the dollar amounts are consistently in today's dollars.

Views differ, but it was an interesting discussion and I learned some things about vehicle price inflation along the way. Thanks!

 

Goals don't. All the automakers need to deliver low-emission, high-efficiency choices. It's that simple.

Volt gen-1 was promoted as becoming a high-volume seller. That didn't work out. The question now is what to expect for gen-2. Recognize the same "wait & see" stance as before?

 

I don't know enough about the roles of individual GM executives through all of these corporate events but let's go through your list:

The original EV-1 used lead-acid batteries from GM's Delco subsidiary. Then they upgraded their packs to use improved lead-acid cells from an outside supplier (Panasonic?). In the final EV-1 revision they updated the pack to use NiMH which was also used by the Toyota RAV4EV and was adopted for the Prius hybrid battery.

My offhand memory is that GM aggressively sought out improved battery technology for the EV-1 and provided some of the funding necessary to productize NiMH -- that's how they ended up owning the patent rights to it.

All of the auto companies involved in the CARB-mandated BEV project of the late 1990's hated being forced into selling electric cars and they all worked with GM to kill the requirements. GM's EV-1 was the most efficient of the various cars, had the best acceleration, and was developed from scratch rather than as a gasoline car conversion like the RAV4EV. GM was also more ruthless about crushing the cars after they helped get the CARB mandate overturned. All of this focused the anger of the EV community against GM's cancelling of EV-1.

Ford and Chrysler never sold their PNGV prototypes either. These cars were like science fair projects. They proved the possibility of some approaches but were not polished consumer-ready designs. It isn't clear to me what the vehicle pricing would have been like to build the Precept at cost or with a modest profit. It isn't clear what the vehicle performance was like in all the various real-world conditions faced by production cars.

I totally agree that selling the NiMH patents in a way that they ended up with Chevron was evil.

Ain't nothin' wrong with the original two-mode. It's still selling well today from Allison Transmission to multiple bus manufacturers a dozen years after first going on sale. A later version was downsized into GM SUVs, pickups, and large vehicles from Chrysler, BMW and Mercedes between 2008-2013. That design was essentially identical to the bus design except that they added two additional clutches to the existing 2 clutches on the 3 planetary gear sets which gave them 4 instead of just 1 fixed ratio gears in addition to the 2 eCVT modes. The fixed ratio gears allowed for constant high output heavy duty trailer pulling which was deemed to be a requirement for some of the vehicles using the design.

Toyota and Ford recently attempted to design a hybrid truck transmission to address similar requirements but their effort fizzled -- possibly because they couldn't come up with a better design than GM's two-mode?

The Malibu and gen 2 Volt are using a simplified version of this general two-mode approach patented back in 2002 that uses two instead of 3 planetary gears and that has only one fixed ratio gear in addition to the 2 eCVT modes.

You've probably already seen my articles on this (also published at HybridCars.com) but just in case:

Revenge of the Two-Mode Hybrid - GM-VOLT : Chevy Volt Electric Car Site GM-VOLT : Chevy Volt Electric Car Site

Gen 2 Volt Transmission Operating Modes Explained - GM-VOLT : Chevy Volt Electric Car Site GM-VOLT : Chevy Volt Electric Car Site

Yes, these micro-hybrids were mostly a distraction and a waste of time like BMW's auto-stop. The theory of obtaining some mpg improvement less than a full hybrid but at much lower cost is fine. The problem is that they hardly made any actual improvement.

My knowledge of Saturn is limited. The theory of starting up a separate division to allow experimentation with new ideas and marketing culture seems like a worthwhile notion for a large plodding automaker.

All 3 domestic US automakers had slowly built up excessive debt loads and overly generous union contracts over the decades but they could have continued on for many more years. The imminent bankruptcy was caused by the sudden body slam of the Great Recession in late 1996 and early 1997 when the housing market collapsed and Wall Street's ridiculous mortgage security shenanigans caused the day-to-day corporate debt funding markets to disappear overnight. The automaker's new car sales also suddenly collapsed in half in an unprecedented way and left a sudden glut of unsold cars. It should not be surprising that all 3 car makers faced imminent bankruptcy. Ford alone managed to avoid it primarily because they had initially reacted faster to the financial meltdown.

 

We'll have to agree to disagree on this point. The attraction of the PiP is it still has an efficient engine and drive train that is easily 20-25% higher performing than the Volt. Combined with a blended mode that allows minimum fuel burn during the engine warm-up, it is a winner for me.

Personally, I would prefer to see EV capability be an add-on, like a larger engine is an option in the gasser world. Hopefully the 2016 may be the platform to make that happen.

Bob Wilson

 

Gen3 Volt will be more expensive than Gen2 with $7,500 incentive. That is the problem. I expect massive sale peak toward of incentive expiration. After that, sales would crash, and the party is over.

 

You could say the same about the Prius HSD -- it just used 2 instead of 3 planetary gear sets and it was always in its single eCVT mode instead of adding a couple of clutches so it could reconfigure its power flow during high speed driving into a second eCVT mode. The 4 fixed gears on the non-bus two-mode were accomplished by simply adding an additional 2 clutches to the original design.

So, the only real difference between the HSD and the two-mode is the presence of clutches. As I noted in the first of the two articles of mine that I linked to in an earlier reply, Toyota has a recent patent filing that adds a couple of clutches to the gen3 Prius HSD which turn it into a "two-mode" variant with a dual EV motor mode making it somewhat similar to the gen2 Volt transmission.

Here is Toyota's "two-mode" HSD that has a design targeted for a future PHEV:
http://patentimages.storage.googleapis.com/pdfs/US20150005125.pdf

 

Somehow this has spun out of - was this bad internet ad - it was
to the volt, which is quite a different topic. Somehow many of the comments show baggage from the past.

Lutz was number 2 at gm, he was never number 1, that was rick wagoner. Both thrrough bull headedness and bad decissions drove GM to bankrupcy. I don't think we need to devine what Lutz was thinking as if he was the oracle of delphi and was putting out criptic messages.

Lutz was trying to recover from the inconceivably bad decission to crush the EV-1. Both he and wagoner regretted it, as it gave gm a marketing black eye. Most of the volt program came from ev-1 variants (A 4 seat version with the volts characteristic T-Shape battery, a version with a range extender). I'm sure Lutz thought the initial volt would be cheaper to make, sell in higher quantities, and be subsidized with a fairly big loss per vehicle. In 2009, Lutz was busted down to consultant, then thrown out of the company. The bankrupcy made selling the volt at a big variable loss a non starter. The drive towards bankrupcy also hurt the initial volt design as resources were not used, and management had to spend a lot of time just arguing not to kill the program, instead of making it the best car it could be. Its amazing the volt survived as well as it did.

When lutz worked to kill the ev-1, the segment was obvious, but gm's sale of ovonics patents to texaco delayed it. We can see here Lutz attempting to destroy the segment in its birth, then seeing the light and embracing it.

GM now, completely after lutz is gone is segment leader. Mitsubishi and bmw are close, and lots of the talent at bmw came from gm on the project. I hope toyota steps up well with their next phev and sells it nationwide.

It looks likely that GM really cut $10,000 out of the cost of the volt, while improving it. The initial price reflected much higher costs, and I expect that gm initially had a variable loss per car. The $34,000 represents a car with a decent profit margin on it. Its not enough of a profit margin to pay for gen I R&D in the quantities they expect to sell, but the gen II project will probably be able to pay its variable costs as well. The key is to roll the voltec technology into a higher volume car than the volt. A small crossover has been talked about from the start.

I would say lutz is one of those guys that helped drive GM to bankrupcy. I have no doubt if he still was in charge of products the volt price would be lower, but I doubt they would make up the lower margin on volume. Let's not look backward.

The volt has a 18 kwh pack, which likely costs $375/kwh. If battery prices fall to $150, which is quilte likely by 2025, that will cut $4000 from the cost. The motors and psd will also probably drop in cost. We can expect about a 35% reduction in battery pack size by then too, so with decent packaging and a slight stretch good back seat leg room appears Then its up to gas prices to push volt versus say a corola or a cruze or civic.

 

Actually, there was quite a bit of resistance to that at the start. When diversification was brought up, the die-hard enthusiasts too that to mean a dilution of what Volt represented. It to years of persistence to get them to see it a different way. Of course, now there is some resentment toward those who stated the "too little, too slowly" concern from the start.

They thought gen-1 would be a huge success by the end of year-2. That hope fell apart. So, they looked toward gen-2 being a huge success right out the gate, to be more successful than the gen-2 rollout of Prius. Needless to say, that didn't work out either... hence asking what the new expectations should be.

 

I wasn't talking fan boys on affinity sites here. They are all pretty stupid. Bankruptcy slowed plans of gm to roll out voltec to other vehicles. Its a much different, leaner, and less stupid company today than when wagoner and lutz were in charge. GM appeared to be working on, but not greenlighting a voltec crossover as far back as 2011.
Chevrolet CrossVolt resparks hybrid crossover chatter - SlashGear

Again, I don't poll or keep track of that fan boy base that you like to talk about. In bankrupcy it came out that the volt would in no way make any money until gen II, and gen II looks like it has a good shot. Really if the bankrupcy court had made gm shed its european holdings, they probably would have had the cash to have 3 cars on the voltec platform by now, but that bleeding and the ignition swirch fiasco saps resources. I remember a lot of people thinking gm would fail to sell the volt and not make ti to a gen II. Perhaps big spectrum of ideas.

Finally I would not look to the fan sites that you appear to be still frequenting to see what to expect. I don't work and have never worked for gm, hell I've never even owned a gm vehicle. I do like the design of the gen II volt power train, and think it needs a more appealing platform to boost sales. The cute ute otlander phev is coming next year to at least start that segment, and the model X is now out to the midsized 7 seat BEV SUV. I see great growth in the plug-in segment, probably 30%/year. Whether GM gets much of that growth depends on them. I think the gen II volt will be a profitable halo but not a huge seller.

 

No reason to expect the gen3 volt to be much more expensive than the gen2 with the incentive considering the rate battery costs are going, and the other cost savings the gen2 achieved over the gen1.

There will be a period of time when Volt sales will take a hit while the other companies still have the incentive, but that will equalize once the incentive is gone for all.