GM's Plan to Save the Chevy Volt

When General Motors (NYSE: GM  ) CEO Dan Akerson went before a congressional committee to defend the Chevy Volt yesterday, he didn't mince words: "Although we loaded the Volt with state-of-the-art safety features, we did not engineer the Volt to be a political punching bag. And that, sadly, is what the Volt has become."

Republicans on the committee were seeking to make hay out of what they described as an "unnatural relationship" between the Obama administration and GM, one that, in their view, may have led safety regulators to delay reporting a risk of battery fires in the Volt.

GM has fixed the problem with the Volt, and those regulators have declared the car safe and ended their investigation. But the effort to repair the public relations damage to the car, and to GM, is just beginning.

The fuel of the ire against GM
How did the Volt, an innovative plug-in hybrid sedan that should be a symbol of American ingenuity, become a "political punching bag" in the first place?

In some ways, the Volt is simply in the wrong place at the wrong time. It's an election year, opponents of the administration are looking to score points wherever they can, and the Volt happens to come with baggage that rankles some voters:

  • It's an electric car. President Barack Obama has sung the green praises of electric cars, and his administration has made money and resources available to hasten their adoption. As with anything that comes across as the government imposing social change, this effort has generated something of a backlash. The Volt -- a very visible and very American green car -- has become a focal point for that backlash, not least because some have slammed the government loans and grants that helped make the Volt's technology possible.
  • The bailout still rankles. Ford (NYSE: F  ) makes hybrids and electric cars, too, but those don't generate the ire that surrounds the Volt. GM faces flak because of resentment around its 2009 bailout, which some see as a waste of taxpayer dollars -- and which Ford (heroically, in the eyes of some) avoided.
  • Special treatment is implied. The government still owns about 26% of GM, a legacy of those 2009 auto-industry bailouts. That gives Obama's opponents an opening to suggest that the administration is giving GM special treatment to protect "its" investment.

That baggage is probably partly why the Volt missed its 2011 sales goals and why the General has rolled back its ambitious targets for 2012. Overcoming that baggage won't be easy. But GM is determined to try -- and Akerson's testimony yesterday was the opening shot of its new campaign.

GM's campaign to save "the car America had to build"
Akerson's testimony was accompanied by a full-page ad in major newspapers in which he said he "couldn't be prouder" of the hybrid Chevy. And there's a new TV commercial -- which ran first on Fox News -- that calls the Volt "the car America had to build."

These are the opening salvos in what is likely to be a major, months-long campaign to reposition the Volt as a worthy vehicle that Americans should get behind. But that's likely to be a tough slog for the General, for a few reasons.

First, while the National Highway Traffic Safety Administration has declared the Volt to be safe, the political kerfuffle is likely to go on for a while -- it's an election year, after all. Second, and more to the point, the Volt, while still a really good car, isn't quite the "moon shot" it was a couple of years ago, technologically speaking.

Put another way, the competition is catching up.

Meanwhile, the competition marches on
Both Ford and Toyota (NYSE: TM  ) have recently debuted plug-in hybrids that, while they arguably use simpler technology than the Volt, effectively function in the same way. Ford's upcoming Fusion Energi offers more features, more style, and probably more interior space with what is likely to be comparable electric functionality, and a comparable (or maybe cheaper) price tag.

Meanwhile, you can still get a Prius, or a conventional Fusion hybrid, for less than the Volt's asking price. And if you're willing to spend a bit more, you can reserve a Tesla (Nasdaq: TSLA  ) Model S -- a bigger, more stylish, and more luxurious car that's completely electric, with good range.

While the marketing campaign is clearly necessary, it's unlikely to be enough to generate the kind of sales GM has hoped for with the Volt. Some innovation, some refinement -- and a price cut -- are going to be needed to meet the competition. All of that is probably on the way. But with GM's product-development teams already working on other critical programs, those refinements may not arrive for a while.

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Fool contributor John Rosevear owns shares of Ford and General Motors. The Motley Fool owns shares of Ford Motor. Motley Fool newsletter services have recommended buying shares of Ford Motor, General Motors, and Tesla Motors. Motley Fool newsletter services have also recommended creating a synthetic long position in Ford Motor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a plugged-in disclosure policy.

Read/Post Comments (6) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 26, 2012, at 2:42 PM, colleran wrote:

    It is unfortunate that the Volt has gotten stuck in the GM bailout debate. I congratulate GM for making the Volt. I think it is most valuable for the lessons GM has learned for future, including designing and building a brand new car in record time. Besides, I am convinced that the electric car is the only real alternative for the future. Oil is not going to get cheaper. The only question is when the tipping point will occur when people realize this.

  • Report this Comment On January 26, 2012, at 2:52 PM, spawn44 wrote:

    They want to save the Volt they better figure a way to lower the price. This car kicks the Prius rear end in everything except price.

  • Report this Comment On January 26, 2012, at 2:54 PM, ErnieJenson wrote:

    " And if you're willing to spend a bit more, you can reserve a Tesla (Nasdaq: TSLA ) Model S -- a bigger, more stylish, and more luxurious car that's completely electric, with good range." Remarks like this just shows how poorly informed those who write for the media really are. Only a person with little technical understanding would bet on the Tesla being successful.

  • Report this Comment On January 26, 2012, at 3:00 PM, TMFMarlowe wrote:

    @ErnieJenson: There's nothing in the above article to suggest that I think the Tesla is a guaranteed success. In fact, I think there are huge obstacles in the way of both the car and the company, as I explained here:

    http://www.fool.com/investing/general/2011/12/12/did-tesla-m...

    But if you'd like to share your thoughts from a technical point of view, please do.

    John Rosevear

  • Report this Comment On January 26, 2012, at 3:11 PM, RadWriter wrote:

    In commenting about the range of a Tesla as "good", I wonder if the author ever talked to an owner of a roadster? I have.

    Driving a roadster like your grandmother might, will probably get you about 150 miles down the road. Driving it the way most of us would will get you, maybe, 100 miles from home. Unless you pay extra for the quick charge equipment, a recharge will require about, as I recall, 6 hours. A quick charge takes about 4 hrs and a 220 connection.

    That sort of range may be just fine in an urban commuting situation, but it is pretty much useless if I am doing any serious Saturday running around in LA or any other spread out metro area not to mention most rural uses.

    The problem is batteries. The technology is rapidly improving but still has a very long way to go unless you plan on taking several days to travel over 300 miles. Another solution is to swap batteries at strategically located service stations. But that is also a long way off.

    Conventional hybrids are also really good around town, getting anywhere from 40 - 55 MPG on average there and 35 - 45 MPG at normal highway speeds on the open road. But is that an adequate return for poor braking, really poor emergency maneuvering capabilities and serious ugly (the Prius)?

    The Volt and the forthcoming Fisker Karma offer a far better real world alternative to an internal combustion engine. They will get you down the road at least 300 miles before filling the gas tank.

    The Volt only had problems weeks after a "total" so severe that it almost cut the car in half. So it posed no danger to the owner unless s/he planned to display the wreck in the house.

    The author is quite correct. It's all about politics and ignorance.

  • Report this Comment On January 29, 2012, at 9:02 PM, spectechinvest wrote:

    I tested the Volt for a couple days through a lease program, and when I was driving home one day having to fill up its gas tank and then had to plug it into the wall when I got home I realized an annoying truth.

    The volt is more of a hassle than a gas car, and more of a hassle than an electric car. I have to do twice the work just to maintain this car.

    That is why hybrids could be surpassed by pure electric cars. At least in my mind and with my peer group.

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