GM is using the Volt to prep China for a cheaper electric car

Among the seemingly hundreds (only a slight exaggeration) of press releases GM has sent out around the Shanghai auto show was one which said GM and SAIC would together develop a next generation electric vehicle architecture relevant to China. Which means cheaper than the current Volt platform. http://media.gmchina.com/content/media/cn/zh/news/news_detail.brand_GM.html/content/Pages/news/cn/zh/2011/Apr/041804

Well, in the blog below, which posted on the Chinese-language website Netease’s auto163.com site several weeks ago, http://alyshawebb.blog.163.com/ I said GM was launching the Volt in China to seed the market for a future model developed with SAIC. A model more appropriate for China’s market.  I should have posted this blog on china-ev.org as well. Then I would seem prescient. Now I just seem late,  sigh. Nonetheless, I’m posting it now.

From my March 28 auto163 blog:

The press here in the U.S. has jumped on General Motors www.gmchina.com  for every small inaccuracy in its information on the Chevrolet Volt, the plug-in hybrid that won “2011 Green Car of the Year” award.  Hopefully the press in China won’t jump all over those complaints when the Volt is introduced to China, which GM China chairman Kevin Wale last week said again would be in late 2011.

 Rather than nitpicking those small issues, I would rather consider whether the Volt is appropriate for the China market, and what GM’s purpose in introducing the car in China is.  I don’t think the Volt is that appropriate for the China market. But I think the technology could be. That’s why GM is introducing the model to China. 

First,  the complaints. GM touted the Volt as an electric car until someone pointed out that it does in fact have a gas engine. The engine generates electricity to turn the wheels when the battery runs low. So the car is really a plug-in hybrid—that is it uses both gasoline and a battery for power.  After a few weeks of acrimonious press, GM got past that issue. 

More recently, there was the range question. Consumer Reports, a respected company which evaluates products and publishes reviews, test drove the Volt in extremely cold weather and was able to drive only 26 miles on pure battery power before the electric engine kicked in.  The headlines here in the U.S. screamed that the Volt had “fallen short on range.” To be fair, GM now says the Volt’s range is between 25 and 50 miles, though it initially advertised a 40-mile pure electric range for the Volt.  And 26 miles is within the advertised range, plus that mileage was obtained in extreme conditions.

So I think those are really non-issues.

Now, how appropriate is the Volt for China?

I drove a Volt a few weeks ago at a friend’s dealership. It’s a roomy car, with good acceleration. I wouldn’t call it fun to drive (which I thought the Nissan Leaf was), but it was nice to drive.  My friend, the dealer, has driven a Volt since December 31, 2010.  He has driven it more than 3,000 miles and has averaged 230 miles per gallon. 

He mainly drives it shorter distances, using only the battery, from his home to his several dealerships. They are all in the same area. That seems about the kind of driving many in China would be doing. So the Volt would be a good way to save money on gasoline.

But, recharging would be a hassle. It takes four to six hours to recharge the Volt using a 240V outlet. Where would a Chinese owner plug it in? Most people in China live in multi-unit housing, often many floors from the ground.  Volt owners can buy a home recharging units for their car and install it in the garage. How many Chinese have a garage?

Then there’s the price. GM hasn’t said how much the Volt will sell for in China. In the U.S. it is priced at $41,000 before federal rebates.  Volt deliveries to dealers started to trickle out in late 2010, and there’s quite a few people waiting for a Volt. There have even been reports of dealers trying to add as much as $20,000 to the price because of a shortage of the cars.

GM hasn’t announced how much the Volt will sell for in China. Probably not much more than it does here in the U.S..  But, the Volt qualifies for a $7,500 tax rebate here in the U.S. In China, it will not qualify for a government subsidy, according to GM spokesperson Hua Foley.

There will be an import tax on the Volt, which is produced a GM plant in Michigan.  I’d bet that GM will absorb some of that import tax in order to keep the price down. Nonetheless, even with no markup from the U.S. price, it will be expensive for a car that size.  

GM hasn’t announced where the Volt will be sold in China first. But at the EVS25 symposium in Shenzhen last November, Wale said that the dealerships would be chosen by Shanghai GM, and that the locations would be in cities where there were lot’s of the kinds of consumers GM figures will buy the Volt.

What kind of consumers are those? Just as in the rest of the world, they are tech-savvy, interested in urban renewal and the environment, said Wale. In China, the average Volt buyer would likely be a successful businessperson, and somewhat younger than the U.S., he said.

That is not news. But something else Wale said was very telling. The technology in the Volt can be used in other vehicles, he said. GM had made a sizable investment in the battery and electric vehicle technology, said Wale. “We obviously will want to use them in other vehicles.”

He also said GM plans to participate “very aggressively” in the China market with its partner SAIC to develop technology relevant to the China market that will increase the availability of electric vehicles to the Chinese people. He added, “that won’t change our strategy of introducing vehicles suitable for the China market.”

So I think GM doesn’t care if it sells many Volts in China. Those it does sell will be demos for the technology. But I bet there will be some SGM models—and maybe even SAIC models—on the China market in a few years with the same technology and a lower price tag.