Volt Double Down

The Volt electric car has been a fizzle for GM – and that’s putting it kindly. Only a small handful have sold – and that’s putting it euphemistically, given the massive subsidies that went into building it and the equally massive incentives ($7,500 a pop at the federal level, not counting state-level payola) that have proved necessary to get anyone to “buy” one.

So what does GM do?

It builds an even more expensive Volt – the $75,000 (to start) Cadillac ELR.

Not surprisingly, even fewer of these electric Edsels have found “buyers” – notwithstanding the almost $10k in other-people’s-money that’s held under the nose of prospects as an inducement.

How few?

As of early July, only 300 suckers have lined up so far. About six per state.

This makes the Volt seem like a best-seller. GM has managed to unload a few thousand of them.

The unfolding debacle redux shouldn’t surprise anyone. The Volt hasn’t sold much because its high price (almost $40k last year – deeply discounted to about $35k this year) defeats its purpose. Well, its alleged purpose. Or rather, the only sane purpose for building – let alone buying – one of these things: Significantly lowering your cost to get around by significantly reducing the quantity of gas you have to buy. Isn’t that the object of this exercise?

But if the car itself costs a small fortune, who cares how little gas it uses? Even if gas prices double, the math isn’t favorable. Financially speaking, you’d be much better off buying a $16k economy car that gets 40 MPG rather than a $35k Volt that hardly uses any gas at all (even if that were true – and it’s not true).

No sale.

Well, few sales.

There will always be a handful of people for whom money’s a secondary consideration, who will buy a car like the Volt – or the ELR – because they like it for other reasons than economic reasons. Maybe they like its looks. Or they think the technology is “cool” – regardless of its cost.

But an electric car or hybrid that costs 50 percent (or 200 percent) more than an otherwise comparable gas-burner does not compute for people who base their buying on economic considerations – which is most people. In particular, people who shop hybrids and electrics.

GM isn’t the only car company that’s done the Gerry Ford falling down the steps routine, either.

The plug-in version of the otherwise big-selling Toyota Prius has sold not-so-much. Because a Prius that makes economic sense at just over $24k makes a lot less sense at nearly $30k (the base price of the plug-in version).

A Volt at $35k makes even less sense.

So how much sense does the $75k ELR make?

And the Volt, at least, has four doors – and seats four realistically. It’s a hatchback, too – so there’s room for people’s stuff  as well as people. Notwithstanding its priciness, the Volt could plausibly serve as a family’s main car.    

The ELR, on the other hand, is a two-door coupe that seats four unrealistically. It has a purse-sized 10 cubic foot trunk. It is hopeless as a family car.

And ridiculous as an economy car.

Even if it cost nothing to operate (and it costs more than you’d expect to operate) the fact that it costs more than a  Porsche Cayman S, a Lexus LS or and nearly as much as a Mercedes S-Class makes any discussion of the ELR’s economic bona fides as absurd as a singing mime or a stud eunuch. I could punch a hole in the gas tank of my ’76 Trans-Am and the thing would still be a less expensive means of getting from A to B than an ELR.

But does it work as a luxury car?

I guess – if you don’t mind paying $75k (call it $68k, after Uncle “rebates” you $7,500 of other people’s money) to go slower than a $16k Corolla – and not nearly as far.

The ELR lugs itself to 60 in about 9 seconds; a Corolla gets there a few tenths sooner than that.

This ought not to be surprising given the Corolla has a more favorable power-to-weight ratio. Its 1.8 liter gas-burning engine only makes 132 hp – but there’s only 2,800 pounds of Corolla to pull. The ELR has 157 hp on tap – slightly more than the Corolla. But there’s 4,050 pounds of Cadillac around its neck.

The ELR is the slowest Cadillac GM has built in years. It also happens to be the most expensive Cadillac you can buy right now.

If you don’t mind being outrun by $16k Corollas.

And not just 0-60.

A new Corolla can go about 500 miles (on the highway) before you’ll need to pull off for five minutes or so to refill its 13.2 gallon tank. The ELR can go about 37 miles before its batteries are drained to the point that the on-board generator (a small gas engine not connected to the drive wheels) kicks in to keep the car moving. If you want to run on electricity-only again (you know, to “save gas”) you’ll need to stop for 4-5 hours to recharge the batteries from an external power source. If you have access to a 240 Volt  external power source, that is. Otherwise, it’s overnight (or all day) for a standard household 115 Volt outlet.

Nothing more luxurious than waiting on line for hours to “refuel” while everyone else is getting to where they’re going.

Right?        

I despise the Tesla for being rent-seeking on wheels, but at least it moves. Maybe not for long. But – for one or two quick bursts, before its batteries wilt – it’ll run with elite high-performance luxury-sport gas burners like the BMW M5. I’ll give it that.

But the ELR doesn’t go far, takes forever (relative to even the humblest gas burner) to re-juice itself- and it’s slow, on top of that.

Tell me again: Why would anyone in possession of his senses buy this car?

Exactly.

But GM couldn’t see it – and went ahead and did it. I’m not sure why, but two possible explanations come to mind – neither of them pretty:

One, GM is run by idiots. People who read the market like Captain “EJ” Smith piloted Titanic. There is plenty of evidence that this could be the case. The same people who commissioned the ELR signed off on the Aztek, after all. Or at least, some of them – and the same corporate types. The egregious ignition switch mess provides another case in point. Yeah, let’s keep on putting those known defective switches into cars . . . fingers crossed, no one will ever know.

Two, GM is run by crony capitalists of the first magnitude; people who make Boris Yeltsin look like a free market kind of guy. This explanation makes much more sense to me. The guys – and gals – on the top floor of the Renaissance Center understand politics as much as top car managers once knew engineering and marketing. The ELR – and Volt – derive from political considerations. They are “green” and help GM show a sunny, “earth friendly” corporate visage to the public. It doesn’t hurt that the federal government pays handsomely (in other people’s money) to subsidize the manufacturer of cars like the Volt and ELR.

GM is not the only company cashing in, either. It’s a proverbial feeding frenzy and – in a crony capitalist/rent-seeking economy – such perverse incentives drive product development as much or more as authentic market signals.

Buyers may not be interested in cars like the Volt or the ELR. But that doesn’t mean there isn’t money to be made in making them.

GM is not run by stupid people.

Throw it in the Woods? 

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