Wall Street Journal Wants GM to Abandon the Volt


Photo: Michael Graham Richard
False Dilemma
Keith Johnson wrote a short piece about the potential impact of GM's impending bankruptcy on the future of the GM Volt (which GM has been feeling a bit defensive about lately) in the WSJ. He concludes with what I think is a false dilemma: "GM can focus on making mass-market cars that sell well and abandon the Volt. Or it can carry on with the Volt and hope either costs come down or consumers suddenly change their habits and run out to buy a $40,000 compact sedan." Read on for why I think this is shortsighted.
Photo: Michael Graham Richard
Keep Your Eyes on the Road Ahead
In 1997, oil prices were around $20/barrel. Toyota was just coming out with its first generation Prius in Japan, and probably planning to start selling it in the US in a few years. We can probably assume that at the time (oil prices stayed close to $20-30/barrel until 2000) Toyota didn't expect to make too much quick cash from the Prius. But it was an investment; new technologies, new expertise, a new platform that could then be incrementally improved, bringing costs down with technical changes and economies of scale.

Who today would say that Toyota would have been better off if they had dropped the Prius when it looked like it wouldn't be making money for a while?

The world is moving in the direction of electric vehicles, with hybrids as the stepping stone. If GM wants to be successful in the future, it has to aim for the future, not for the present or the past. So the advice of dropping the Volt because it is too expensive now is simply shortsighted.

How much is it costing GM to have stopped working on the EV1? At the time it probably looked like a good financial decision, but what if GM had made an EV2, EV3, maybe EV4. Tesla Motors - a company now worth more than half of GM's market value - probably wouldn't even exist (Elon Musk said it during an interview). And what if it had tried to bring to market some of its hybrid projects? Maybe not in 1969, but how about 2000?

Maybe the Volt version 1.0 won't rake in the cash, but as an investment, it's worth a lot of money for GM. That doesn't mean that other carmakers won't come out with even better plug-in hybrid systems, but if GM doesn't even try, there's won't be an even-better-and-more-affordable Volt version 2.0, and the company is sure to miss the boat.

See also: What Does GM's Bankruptcy Mean for the Chevy Volt?

Via Wall Street Journal
More Green(er) Transportation
345 Tesla Electric Roadsters Recalled by NHTSA
GM Gas-Electric Hybrid Car Ad From... 1969!
GM Defends the Volt, Attacks Smaller Electric Car Start-Ups (Tesla, Fisker, etc)
i MiEV Electric Car to Have Second Battery Factory Because of High Demand

Tags: Electric Cars | Electric Vehicles | Transportation