Will GM Sell 120k Volts Next Year?

Production of Chevrolet’s Volt was supposed to be limited to 10k units this year, a target GM has already set its sights on surpassing. With 2012 volume projections now reaching 25k units, the next step in The General’s quest to prove that the Volt is a viable vehicle is a staggering goal: doubling its 2013 production target from 60k to 120k units of production. According to Bloomberg, GM has not officially announced the 120k volume goal and may not build that many Volts in 2013 at all, if energy prices and supplier challenges don’t allow it. And though supplier issues could well leave the goal out of reach, even if GM is able to ramp up production to fulfill its 120k unit goal by next year, there are no signs yet that the market will support those production levels. After all, GM is essentially banking on the kind of volume-to-price niche that BMW has taken years to cultivate with its 3 Series… which starts at prices slightly below the Volt’s $41k, and still moved fewer than 110k units last year.

But GM CEO Dan Akerson doesn’t see the pushing Volt volume as a pure business play, but as a strategic hedge. He explains

We want to stay sharply focused on technology. We don’t want to be caught flat-footed as we were in 2008.

And thanks to heavy government support, GM can afford to make those kinds of strategic gambles… although government support has its own hazards as well. For example, GM may be able to build its Volt sales volume to near five-digit numbers… but only as long as it gets a $7k government consumer tax credit which brings the Volt’s effective purchase price into the mid-$30k range. After GM sells 200k Volts, however, that credit will expire and GM will have to sell Volts at MSRP, putting it into the tough situation of having to replicate the BMW Dreier’s high-MSRP, high-volume formula. If GM’s efforts to build production volume brings costs down within those first 200k units, it could then reduce the price of the Volt and potentially have a better chance of keeping sales volume up… on the other hand, if demand remains weak, no supplier is going to jump to reduce costs on a vehicle with little hope for ever achieving mass sales volume. More likely, however, the government will simply re-up the tax credits allowing GM’s plug-in to continue avoiding the market pressures that make EV gambling so tricky.