GM Volt Viability Plan: First Incentives, Then Tech "Epiphanies"

The first generation of Chevy Volt extended-range electric cars, at the center of General Motors’ financial viability plan, has yet to hit showrooms. But that (along with its financial troubles) hasn’t kept GM from working on generations two and three, the company said in a call with reporters this morning. GM said that in fact the parallel projects were a sign of the automaker’s long-term commitment to electric vehicles for the mass market.

To be sure, gen-one Volts will be on the expensive side for an average car buyer — in the neighborhood of $40,000, according to former Volt frontman Bob Lutz, or about twice the cost anticipated for the new Honda Insight hybrid. This makes government incentives for fuel-efficient vehicles especially important in GM’s plan for the Volt. “First-generation technology is expensive,” said Bob Kruse, GM’s executive director of global vehicle engineering for hybrids, electric vehicles and batteries. “Incentives help make it viable.”

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While Kruse said the company is “very confident” in first-year sales projections, low gas prices could dampen that outlook (not to mention the recession and credit crunch that have put the brakes on auto sales).

“Dollar-fifty-a-gallon gasoline is not necessarily helping with the business case,” Kruse acknowledged. Asked if the company might sell gen-one Volts at a loss, as Lutz said it would (and as we’ve noted), Kruse said the price has not been finalized and will depend on the cost of petroleum at the time of the rollout, which is still slated for November 2010.

But GM doesn’t plan to lean on government aid forever. Kruse and chief Volt engineer Andrew Farah reiterated GM’s previously disclosed stance that there’s a learning curve for any new technology, and that the company hopes to slash the cost of the battery pack (the most expensive part of the vehicle) for future generations. Any big improvements in the technology will be leveraged to bring down the cost, they said, rather than increasing the all-electric range beyond 40 miles, which GM considers the “sweet spot” for meeting the travel demands of mass-market consumers.

Denise Gray, who heads up battery development for the Volt, offered a few details about how, beyond scaling up production volumes, GM plans to bring down the cost of manufacturing a battery pack. She said the company is looking to makers of smaller components — separators, for example — for savings, and also experimenting with different metals and integrating four-part pieces into one (in its current design, the pack has more than 150 parts). GM also expects to find savings in the electronics system and thermal designs, largely through in-house software development. How does GM plan to make these breakthroughs, or “epiphanies,” as Kruse called them? By investing in people and resources — perhaps an even bigger hurdle than the technological ones.

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