Less Expensive VoltGM plans to build a less expensive Volt
TheChevrolet Volt has been racking up awards but its price raised someeyebrows. Future versions should be cheaper, thanks to new engineering.By Peter Valdes-Dapena, senior writerFebruary 1, 2011: 3:27 PM ET
NEWYORK (CNNMoney) -- The Volt has won nearly every major award offeredand stirred up tons of interest, but one criticism persists: The priceis way too high.
Chevy cars -- including the Volt -- have always been intended for a mainstream market, but at $41,000, it seems GM is asking buyers to pay as they might for a Mercedes-Benz or BMW.
Thenext-generation Volt will almost certainly cost less, GM spokesman RobPeterson said. And the same changes that make it cheaper should make it better, too.
Sowhat's the sweet spot for the Volt, price wise? A $7,500 federal taxcredit takes the cost down to around $30,000. That seems like a moreviable price, but tax credits wont last forever.
"The ideal pricepoint for un-subsidized large-volume sales would probably be no morethan $30,000," said John O'Dell, editor of the Web siteGreenCarAdvisor.com.
Fortunately, even when subsidies disappear,today's high prices for electric cars will ease as the technologyimproves and gains wider appeal.
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Battery: The Volt's battery pack is estimated to cost about $10,000. Besides making it more cheaply, GM might simply want to shrink it.
Thebattery is probably more powerful than it really needs to be, saidOliver Hazimeh, head of the electric vehicle practice at consulting firmPRTM.
"Offering customers a little of different capacity may be an option, so you can provide customers with a choice," Hazimeh said.
For a significant cost savings, some customers may be willing to give-up some battery power.
Bulk up production: Another way to reduce battery costs is to sell more Volts, or more vehicles based on Volt technology, Hazimeh said.
"It's hard to look at this technology and make a business case out of it with one vehicle," Hazimeh said.
GM is reportedly considering a version of the Volt to be sold under the Cadillac brand and has shown a concept version of the Volt with a tall wagon body.
Selling more Volt batteries will spread out some of the production costs, making each one cost less
Better battery tech:The impact of volume on cost savings would be minimal, though, said JonLauckner president of GM Ventures, a GM subsidiary that finds andinvests in companies that have promising technology the automaker coulduse. Real savings will come through technology improvements, he said.
"Youdo extensive amounts of research and development and you get the samefunctionality or better with fewer cells," he said, "and you take awhole lot of cost out of the vehicle."
For example, GM Venturesrecently invested in California-based Envia Systems, a company thatmakes a new type of battery material that promises to hold more energyin less space and that's also less expensive than the stuff batteriesare currently made from.
Electric motors: Even though electric motors have been around about as long as gasoline engines, there's room for improvement.
Oneway to make a cheaper electric motor would be to do away with themagnets most of them use today, said Michael Crane, an executive incharge of hybrid and electric vehicle technology at auto parts supplierContinental.
Magnets can be expensive. Today's electric carmagnets, known as permanent magnets, rely on exotic materials likeneodymium and dysprosium.
"These materials are expensive because they aren't available everywhere in the world," he said.
Researchers are working on magnets that can be made from cheaper, easier to find stuff. he said.
Continentalrecently unveiled a new motor that foregoes "permanent magnets"altogether and instead uses only electromagnets. These are coils of wirewrapped around a core that become magnetic only when an electriccurrent is applied.
GM will use motors like these in its new hybrid Buick LaCrosse, Lauckner said.
Electronics and accessories:Besides the batteries and motors, electric cars contain a host of otherelectronic parts that control everything from the climate inside thecabin to how power flows to and from from the battery.
All thishardware and circuitry is costly and complex, said Crane. Today,circuitry is being built as single units that weigh less, use lessmaterial -- especially those expensive exotic metals -- and are easierand faster to put together on the assembly line.
Accessories likeair conditioning and power steering and braking systems are also bigopportunities for cost savings, said Lauckner. Originally designed to bepowered by gasoline engines, engineers are shifting to new systemsspecifically designed for hybrid and electric vehicles. These are arestill being perfected, he said.
Cutting the fat: Like manyelectric and hybrid cars, the Volt is loaded up with options. Takentogether, these features make customers feel like they're getting a lotfor their monthly payments.
While doing away with some addedfeatures like a full navigation screen, a fancy stereo or expensivepaint colors, could trim costs, Hazimeh advises caution if GM isconsidering that approach.
Electric vehicle buyers are after muchmore than just saving money on fuel, and these features "have a certaincoolness factor," that buyers have come to expect.
One thing GM shouldn't do, he warned, is make the Volt affordable by making it boring. 