Volt Sales Come at This Cost

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When General Motors (NYSE:GM) launched the Chevrolet Volt in 2010, the car came accompanied by lofty sales predictions and the promise of oil independence; now two years later, the Volt has set a monthly sales record of 2,800 cars for the month of August.

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But the Volt’s sales come at a cost. Sales of the $40,000 car increased mainly because of discounts that took $10,000 off the Volt’s sticker price. That discount, according to TrueCar estimates, is more than four times the industry’s per-vehicle average. However, while sales may have been dependent on the discount, the Volt’s August sales show Americans are willing to buy electric cars if the price is low enough.

Even so, electric cars have a long way to go before they become profitable for car manufacturers: electrics and gas-electric hybrids accounted for only 3.5 percent of new car sales this year. Before becoming popular, according to the nonpartisan Congressional Budget Office, the cost of electric cars must be dropped in order to become competitive with gasoline-powered vehicles.

Released amid a reeling economy, the Volt’s sales performance was dragged down by more than its high price and recession-weary consumers. After crash tests, the government announced that the battery could catch fire upon impact, and in the state of California, the car did not qualify for the carpool lane exemption for low-polluting vehicles. Furthermore, the Volt debuted at the same time as the Nissan (NSANF.PK) Leaf, a pure electric compact car that sold for $7,000 less.

By 2011, U.S. Volt sales numbered just 7,700 cars, falling short of GM’s goal of 10,000. In comparison, the Toyota (NYSE:TM) Prius hybrid sold 136,000 cars the same year.

But in the intervening months, Volt sales have grown by 13,000, and while sales will still miss the company’s 2012 target of 60,000 worldwide, analysts predict that car sales could reach 20,000 this year.

The increase in gas prices, along with a retrofit of the car’s battery, has helped sales. The Volt now leads electric car sales in the United States, outselling both the Prius and the Leaf.

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