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What Does the Next-Generation Chevy Volt Mean for General Motors?

Source: General Motors.

For the model year 2011, General Motors (NYSE: GM  ) launched its long-planned Chevrolet Volt. Combining an electric motor and a 16 kWh battery pack with a four-cylinder gas engine, the Volt became one of the first plug-in hybrid electric vehicles, or PHEVs, on the road.

But even as its technology remains futuristic-looking to many consumers, the Volt is set to undergo a redesign for the 2016 model year.

Potential changes
Since 2011, little has changed about the Volt. A few programming changes here and a couple of small increases in battery capacity there are about it when it comes to changes to the current model.

As is the policy of many car companies, GM is keeping details of the 2016 Chevy Volt under wraps, at least until it can show the car itself. But that hasn't stopped automotive journalists from bringing out their expectations and wish lists.

Among the things being discussed as possibilities:

  • A smaller, more efficient 1.0-liter three-cylinder engine to replace the current 1.4-liter four-cylinder engine.
  • Changes to the battery pack shape to allow for a fifth seat.
  • A lower price to better compete with gas-powered midsize cars.
  • Reductions in weight to increase efficiency and range.
  • Improved aerodynamics to increase efficiency and range.
  • Longer range through a higher capacity battery pack.

It's still up in the air as to which, if any, of these changes will be adopted, but the speculation is sure to entertain car followers and electric-car fans alike.

New marketing strategy
For the past few years, GM has marketed the Volt as a mass-market vehicle to compete against conventionally powered vehicles in all markets. But earlier this month, Forbes noted a shift in the marketing of the Volt away from the mass-market approach.

Chevrolet Chief Marketing Officer Tim Mahoney told Forbes that the Volt sees its strongest popularity in the Northeast and West Coast markets and that Chevrolet is deploying its resources in a different manner than in its earlier years. This will involve focusing more on social media and testimonials as GM hopes to channel the overwhelming positive reviews of the Volt into greater sales numbers. GM is also looking to play to its market strengths by targeting the Northeast and West Coast rather than continuing its mass-market "Volt for everyone" approach.. The geographical concentration of Volt demand goes to the core of why Mahoney no longer sees the Volt as mass market.

If the speculations regarding a price reduction are correct, the lower price could open up a whole new aspect of Volt marketing. A price drop would have the potential to bring the Volt's price down well into the range of a midsize car, especially after the inclusion of the $7,500 federal tax credit. If a price reduction does happen, look to see how Chevrolet adjusts its marketing approach.

Technology showcase
The idea that GM would redesign the Volt for 2016 is not particularly surprising. Cars tend to get a redesign every several years, and the Volt's time was up. In addition, GM has had five years to further develop new technologies such as a higher-capacity battery pack and a new three-cylinder engine, not to mention any technologies it's still keeping under wraps. Since the Volt is partially designed to show off GM's tech development, getting it on the roads is a major priority.

Various car-news sites claim to have spy shots of the 2016 Volt, but as with most redesigns, the details will remain hidden until GM reveals the car, currently slated for the 2015 Detroit Auto Show.

If GM releases the 2016 Volt the way it releases other new model years, car buyers can expect to see it in dealerships by fall to winter 2015.

Good for GM
Despite the positive reviews from Volt customers, Volt sales have not lived up to initial expectations. However, the new Volt and marketing strategy have the potential to push sales higher. If GM's marketing strategy works how it hopes, the automaker will be more effective in targeting the people most likely to purchase a Volt. Additionally, if the rumors of a fifth seat are true, then the Volt could target larger families and others looking for more seats.

In the near-term, an increase in Volt sales is unlikely to have a major impact on GM's bottom line. Former GM vice chairman Bob Lutz explained in a Forbes article that the Volt is at best barely profitable now and is more of a long-term investment. Instead, GM is using the Volt as a way to hedge its bets when it comes to electric vehicles while trying to improve its corporate image.

Getting charged up
With the potential to showcase its latest technology through a redesigned Volt, GM has piqued my interest. If you're like me and are excited to see what GM can do to improve the Volt, be sure to keep an eye on the Detroit Auto Show.

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Read/Post Comments (9) | Recommend This Article (4)

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 September 02, 2014, at 9:50 PM, RHO1953 wrote:

    Still a tu*d, and those can't be polished. Who in their right mind would pay thirty grand for that car? It is simply paying up front for fuel. Would you do that with a gasoline powered car? Want to use your heater? Gotta run the engine. Want to use the AC? Cut your range in half. These are toys for people with more money than common sense.

  • Report this Comment On September 02, 2014, at 11:52 PM, fpl1954 wrote:

    It's an impressive car. For people who don't drive a lot of long distance, it's nearly ideal, but it retains the ability to drive long distance. At present, it makes more sense than a Tesla.

  • Report this Comment On September 03, 2014, at 12:17 AM, LazyCapitalist wrote:

    I like the idea of a Chevy Volt. My daily commute to work, gym, errands, and home could be done entirely with the Volt's 38-mile range battery (with miles of range to spare). Except for the occasional road trip, I could go almost every single day without using the gas in tank.

    If my apartment complex had electric car charging, I'd consider buying one. But my apartment complex doesn't, so I'll be purchasing a traditional gas vehicle (or a non-plug-in hybrid) when that time comes to go car shopping.

  • Report this Comment On September 03, 2014, at 7:43 AM, markwb wrote:

    A well written review of what the updated volt could be and what it means for GM.

    But No review of the volt is complete without mentioning the on going ( and well funded) attacks against electric vehicles and how GM is going to handle the reality that for every dollar it spends on advertising the volt, for hire lobbiest ( such as the NLCP) will spend $2.

    The reality is that it is up to consumers to wake and understand that they don't have to spend $50 a week on gas, but only $10 a week on electricity .

    It's up to consumers to see the world as it really is, time to wake up and be free of oil!

  • Report this Comment On September 03, 2014, at 12:40 PM, Seanickson wrote:

    what do you mean attacks on electric vehicles? I've yet to see one.

  • Report this Comment On September 03, 2014, at 2:56 PM, yojamey wrote:

    My wife is leasing a Volt with 15,000 miles per year and zero down and $300/month including taxes.

    15000 miles/ 17 mpg @ $4 gallon in minivan $3,500/year for fuel

    15,000 miles/ 3.5 miles per kWh x $0.19 per kWh

    $800/year for electricity

    We take our $2700/year savings on energy and put that towards the $3600/year lease payment and my wife gets to drive a drive a brand new car that is amazingly smooth and quiet and fast for a total of $900 per year more than fueling our minivan.

    My wife loves her Volt...She loves the quietness of all electric operation and single speed transmission and likes running on ALL electric power for up to 50 miles per charge (35-40 miles is the average).

    90% of drivers in the USA travel less than 40 miles on a daily basis

    2.5 months and 3,000 miles later the lion's share of our use has been on electricity and we typically charge at home.

    I have heard that Toyota and Honda are both banking on Hydrogen Fuel Cells rather than Battery electric vehicles

    We like our electric car and wish they were more affordable as the experience driving a car with so few moving parts is unequalled in terms of quiet acceleration.

    Add Solar to Buy Low and Sell High-

    I have a neighbor who has an electric car and added solar to his home and he spins his power meter backward at 35 cents per kWh during the day and charges his car at night for 10 cents per kWh using time of use rates. He drives on sunshine and gets to drive around for less than anybody besides bicycle riders.

    If you can plug in your cell phone to charge overnight you could plug your Volt (or other electric car) in overnight and be ready to go 40 miles on clean and quiet battery power again by morning.

  • Report this Comment On September 03, 2014, at 6:10 PM, danwat1234 wrote:

    RHO1953, the Volt has an electric heater for the cabin so you don't need to run the engine to stay warm. It also has heated seats. When the engine is on to maintain the battery charge, the engine coolant can heat the cabin.

    The AC doesn't cut the range in half. Uses not more than a few kilowatts of power, less than the electric heater.

    It's not $30K used, more like $15-25K and so far the battery pack is showing excellent longevity with Erick Belmer having about 177K on his Volt.

  • Report this Comment On September 03, 2014, at 8:23 PM, skinny wrote:

    I love my volt getting 115 MPG but if they can get 80 miles on a charge it would be the perfect car.

  • Report this Comment On September 04, 2014, at 12:22 PM, LAPoloPlayer wrote:

    I agree with a lot of these positive comments about the Volt. But I would LOVE my Volt even more if it had a sunroof/moonroof. Since a great many Volt owners are prior BMW owners, wouldn't it make since for GM to appeal to this kind if owner even more by offering one? Also: California and other states need to require landlords to permit tenants to install home chargers for residential use... I bet this is more a problem than most people realize to EV acceptance. My two cents. Great article by the way!

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Alexander MacLennan

Alexander MacLennan is a Fool contributor covering Industrials, Airlines, and Financial companies. He is always ready for a good growth or turnaround story and tries to find them before the market does.

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