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

The Chevy Volt is due for a redesign, but what does it mean for the automaker itself?

Sep 2, 2014 at 12:37PM

Chevy Volt

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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Alexander MacLennan owns General Motors Class B and C warrants and has options on General Motors. He also owns shares of Tesla Motors. The Motley Fool recommends Ford, General Motors, and Tesla Motors and owns shares of Ford and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 disclosure policy.

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