After GM filed for bankruptcy this morning, a spokesperson for the company told me that the filing will have no impact on its plans to start selling an electric car called the Volt at the end of next year. But if, as planned, the federal government owns a controlling stake in the company after the bankruptcy proceedings (60 percent, according to the New York Times), GM’s leaders might not have much to say about it.
It’s not clear that the government will tell GM what to do about the Volt. Indeed, in a speech today, President Obama said, “When a difficult decision has to be made on matters like where to open a new plant or what type of new car to make, the new GM, not the United States government, will make that decision.”
Yet the government has already shown willingness to force changes at the automaker, even without the controlling stake. For one thing, the government essentially fired GM’s CEO. If the government does get involved with the Volt, it may not be good news for the vehicle. Earlier this year, the White House released an assessment of the automaker that concluded that the Volt will cost too much to make to be a commercial success. From the report:
GM is at least one generation behind Toyota on advanced, “green” powertrain development. In an attempt to leapfrog Toyota, GM has devoted significant resources to the Chevy Volt. While the Volt holds promise, it is currently projected to be much more expensive than its gasoline-fueled peers and will likely need substantial reductions in manufacturing cost in order to become commercially viable.
If the Obama administration’s goal is to return the automaker to profitability as soon as possible, it might not want to continue pouring money into a project that it doesn’t think can succeed.
While the Volt might not be the perfect solution to reducing petroleum consumption–for one thing, at a rumored $40,000 apiece, it will be too expensive to sell in very large numbers–it seems at the least to be a step in the right direction. Indeed, it represents an overall direction that the administration supports, as seen by its emphasis on plug-in hybrids. (The Volt is a plug-in hybrid, since it will be powered by a gasoline generator after its batteries are depleted.)
GM will likely sell all of its first run of Volts, even at their high cost (more than 48,000 people have indicated that they want to buy the Volt). And economies of scale and advances in battery technology could bring costs down, allowing more people to buy the car. The wait would be worth it. Eventually, plug-in hybrids could allow most people to commute without using any gasoline.
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