GM temporarily unplugs Chevy Volt factories amid slow sales

Chevy-VoltGeneral Motors will shut down production of the Chevrolet Volt for five weeks, beginning March 19, as it tries to get rid of a stockpile of unsold cars. At the Detroit Hamtramck plant that builds the Volt and the Europe-market Opel Ampera, 1,300 employees will be laid off for those five weeks.

“Even with sales up in February over January, we are still seeking to align our production with demand,” said GM spokesman Chris Lee. Last year, GM said it planned to sell 60,000 Volts in 2012, with 45,000 of those going to the U.S. market, according to the Detroit Free Press. Last year, GM expected to sell 10,000 Volts but only sold 7,671. Only 603 Volts were sold in January, and 1,023 in February, for a total of 1,626. With such low demand, cars are being produced much faster than dealers can sell them. GM has an inventory of 6,300 Volts, a five-month supply at the current sales rates. A two-month supply is considered normal.

Chevy Volt-AlaskaAs an extended-range electric vehicle with a gasoline engine acting as a generator and full-time electric drive, the Volt was hailed as “GM’s moonshot” and won numerous awards for its high-tech powertrain. So why isn’t anyone buying them?

The Volt’s steep purchase price could be one factor. Some buyers may have been turned off by the $39,995 base price of what is essentially an electric Chevy Cruze.

The newness of the Volt’s technology might be another factor. It was initially unclear whether the Volt was a hybrid like the Toyota Prius, or a fully-electric car with an onboard generator. Nissan’s “100 percent electric” Leaf may have stolen some of the Volt’s green thunder. The “extended-range electric vehicle” designation, and GM’s ads showing a Volt driver explaining the car’s design to confused gas station customers probably didn’t help matters.

Neither did an investigation by the National Highway Traffic Safety Administration (NHTSA) after a post-crash test battery fire. According to Inside Line, a December 2011 survey of 3,800 U.S. car buyers showed a decline in interest in the Volt. The survey found that 47 percent of electric vehicle enthusiasts would have considered buying a Volt in December, versus 71 percent in March 2011. Only 1.7 percent of general consumers said they would buy one, versus 5.6 in March 2011.

Although the NHTSA closed its investigation in January, and concluded that the Volt is as safe as a normal car, public opinion can be difficult to change. The Audi 5000’s U.S. sales collapsed because driver’s feared unintended acceleration, even after an investigation found nothing wrong with the car.

However, it is a bit early to claim the Volt as a failure; suspending production is very different from ceasing production. It is also understandable that GM would have trouble selling a relatively expensive car with bleeding-edge technology during one of the slowest times of the year for new car sales. We will need to check back in five weeks.