Plug In America Challenges Obama Auto Task Force Conclusion on GM Volt, Proposes Reduction in Warranty Terms to Reduce Manufacturer Cost
31 March 2009
In response to the Presidential Auto Task Force Report that concluded that the plug-in Chevrolet Volt was unlikely to be commercially successful in the short-term due to its cost (earlier post), Plug In America is proposing a plan to make GM’s Chevy Volt and other plug-in cars more affordable. Plug In America also noted that most advanced new technologies are initially more costly.
California law requires that the Volt and other plug-in hybrids come with a 10-year warranty. To ensure this longer life, automakers are as much as doubling the size of the battery pack, increasing cost to manufacturer and consumer. But not a single production plug-in electric vehicle sold to date, from GM’s early EV1 to today’s Tesla, has had a warranty of more than five years, noted Plug In America advisory board member Chelsea Sexton.
To support early deployment, California should relax the warranty requirement for cars like the Volt to five years, phasing to 10 years over time. This alone could cut the number of batteries required by as much as half and reduce the cost of each vehicle by thousands of dollars. The minimum Volt warranty we’re asking for has historically been the maximum ever given for any plug-in car.
—Chelsea Sexton
The warranty reduction would not impose added liability on GM or consumers, Sexton noted, because President Obama has said the federal government will guarantee the warranties of GM and Chrysler vehicles should they go bankrupt. And dealers can sell extended warranties, providing additional security for consumers who want it as well as revenue when auto companies need it most.
Plug In America's legislative director Jay Friedland further noted that the existing $7,500 Federal tax credit for plug-in vehicles would further reduce the Volt’s cost. Moreover, several states are implementing additional tax credits of up to $5,000 per vehicle.
We applaud the Obama Administration for its robust support for plug-in vehicle technology. But, this discouraging statement about the Volt’s early viability is counter-productive to the President’s own goal of 1 million plug-in vehicles by 2015.
It is unreasonable to expect the Volt and any similar new technology to be immediately profitable when other technologies that started with a price premium, such as the Toyota Prius, became wild successes. Even the first DVD player costs many times more than it does today.
—Chelsea Sexton
Plug In America is a non-profit organization works to accelerate the shift to plug-in vehicles powered by clean, affordable, domestic electricity to reduce US dependence on petroleum and improve the global environment.
Sexton, a former GM employee on the EV1 project, featured prominently in Chris Paine’s 2006 film, “Who Killed the Electric Car?” and was a co-founder of Plug In America.
This seems reasonable. If the state gave you a $2500 credit and the Feds give you $7500, a $40,000 Volt becomes a $30,000 Volt. Now when you get reasonable on the warranty, you might get the end user price well below $30,000.
Early adopters may be willing to take risks. Maybe they could lease the cars as well. There IS a way that they could get the number of units sold higher. It is making the car more profitable that is the tough part. I do not think they could do that right away.
What the incentives do is use tax payer dollars to support the car on the basis that it cleans the air and reduces oil imports. That can only last so long. Then the price has to come down on the batteries and when price/incentives cross over, you might have a viable and profitable product.
Posted by: SJC | 31 March 2009 at 03:50 PM
I don't understand what's so expensive except the battery? Remove all the things on a car that typically wear out including brakes. Replace them with electric motors and electronics -- technologies that have been around for a long time and that keep getting cheaper and cheaper and never seem to wear out -- and you should end up with a less expensive car that runs forever. And that's exactly what their "planned obsolescence" business model can't account for. How can they price it high enough to make up for the fact you won't have to buy a new one every three years? Honda solved the problem of product longevity by diversifying into hundreds of other businesses. I don't care if its a car or a toaster, I'll buy it if it says Honda because I know they build their products to last.
Posted by: creativforce | 01 April 2009 at 08:56 AM
The things that wear-out and break on modern cars are suspensions (bushings, ball joints, links, dampers, bearings) and electronics (mostly sensors). I don't see how a plug-in would be different.
It's still going to have to steer and go over bumps and, if anything, it will have more electronics than the average car.
Coming from Honda, I suspect that you live in fear of "oxygen sensor failure, bank 1" codes and clogged PCV valves, but those issues are brand-specific. Most cars can go years between check-engine lights.
I suspect a plug-in will rust like any other car as well.
Posted by: Bernard | 01 April 2009 at 01:16 PM
I don't know what the big deal is anyways. GM never expected to sell that many, something like 20,000 the first year, that's all they were going to make. So why give them even more breaks when they still haven't really committed to really making a change in the way they do business? I'm tired of everyone cutting GM slack when they still don't want to make the real changes they need both for their own future, and the planet's. If GM really wanted to be selling EVs, they would be in the showrooms today. Seriously, parts are available off the shelf. They just don't want to sell them, and they will fight and complain all the way down the drain. If it weren't for all the associated jobs involved, I would just say good riddance.
Posted by: Eletruk | 01 April 2009 at 01:42 PM
The Volt is going to sell like hot-cakes amongst the eco-friendly upper class. But the best way for GM to significantly lower the cost of the Volt for other consumers is to cut the battery range in half from a 64 kilometer range down to a 32 kilometer range. The daily commute for 75% of Americans is 53 kilometers. Since cities are currently starting to provide outlets on city streets to plug in EVs and PHEVs, a commuter could recharge at home and then recharge his vehicle again after reaching his destination.
So, IMO, GM should sell two versions of the Volt: one with a 64 kilometer battery range for the wealthy and cheaper one with a 32 kilometer battery range for the average Jane and Joe.
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Posted by: Marcel Williams | 02 April 2009 at 02:09 AM
The reason we have only had "The big three" auto co's for decades is because building cars is hugely capital intensive. Nobody can come up with the kind of money necessary to start a car company
So, this isn't like letting a restaurant go out of business, where another will spring up quickly. To let the car companies die is really letting the auto industry die in america. Perhaps, tesla and the few electric makers will grow, but it's unlikely they'll ever get as big as Ford, GM & chrysler.
If there were no foreign competition it would be different.
Posted by: danm | 02 April 2009 at 09:33 AM
It sounds like they want GM to continue, but under new ownership and with only a few brands. The goal was stated that they want a structure that can make it on its own with no further assistance.
Posted by: SJC | 02 April 2009 at 05:43 PM
I disagree with reducing the battery warranty. If the Volt does not prove to last as long as or be as reliable as the current automobiles, the case for an electric vehicle (with the average consumer) will be dimished.
I'd rather the initial cost be higher than ideal than have a vehicle that is less reliable (over the long term). If the 40 mile range degrades to 20 miles over the first 7 years, this vehicle will not be a success. And the perception of the electric vehicle will remain that of a transportation oddity not as a mainstream family hauler.
Posted by: sbarr | 03 April 2009 at 07:36 AM
As much as some would like to see EVs, it might be a good idea to take it gradually. People could expect the batteries to last as long as an engine. They might go 10 years before a rebuild at 20k miles per year. Hybrid batteries may do this, but range extenders are tougher on batteries for the first all electric miles.
Posted by: SJC | 03 April 2009 at 08:58 AM
I think this demand for ultra-long-life batteries is ridiculous, an attempt to kill the concept before it can go anywhere. Nobody demands a ten-year tire, for pete's sake. Nobody demands a ten-year starting battery.
PHEV traction batteries should be considered service items, just like tires. We should set a target for cost over the first X years/miles and let the marketplace sort it out. If you can make do with cheap batteries that you replace every 3 years, maybe Firefly Energy could jump in with something that could get the cars out the door much cheaper than waiting for the American lithium-ion industry to be built more or less from scratch.
Posted by: Engineer-Poet | 03 April 2009 at 08:09 PM
PHEV batteries and ESSU's (duration) will evolve quickly if market is there.
Purchasers could always buy extended batteries warranty (over the basic 48, 60, 72 or 84 months) built-in the PHEV purchase price.
Those who want 10 or 10+ years should be prepared to pay for it.
Various standard and extended warranties are already the case for tires, starter batteries, engines, transmissions, radios, and cars/trucks non-moving parts etc.
Posted by: HarveyD | 05 April 2009 at 01:14 PM
This is what happens when you nationalize businesses. Obama knows less about running an auto company than he doees about free markets.
Posted by: Bryan | 08 April 2009 at 08:02 AM
Looking for grants for 53 y/old female to help fund Pure Electric Vehicles that will soon be offering 2 versions of a totally electric vehicle-one version to be used as a more economical vehicle selling for around $10,000 and 2nd version is a sportier version selling for around $16,000. First car is due to roll (sport version) in two weeks and we are going to need money and funding to manufacture large quantities quickly here in Michigan.
The "juice" 1 cents/minute!!
Posted by: Nancy P-Pure Electric Vehicles | 15 May 2009 at 03:48 AM