The 2016 Chevrolet Volt will be all-new when it arrives at dealers this fall. GM chose to invest in an all-new Volt despite disappointing sales of the first-generation model. Source: General Motors.
General Motors (GM 3.96%) is planning to release an all-new version of the Chevrolet Volt this fall.
It's improved in many ways. The interior is nicer, the backseat is roomier, and it's lighter and more fuel-efficient than the first-generation Volt sedan.
It should use even less gas. In fact, some owners may use almost no gas. GM said this week that the new Volt will be able to get 53 miles of range on electric power only before its gasoline engine kicks in. That's an improvement of almost 40% over the old model.
In many ways, the outgoing Volt has been a big success for GM. It delivered on all of the promises GM made for it, and it scored some of the highest customer-satisfaction ratings in the auto business. Volt owners love their cars.
But in one big important way, the Volt wasn't a success: Sales never lived up to GM's expectations. And they've been positively terrible lately.
Sales of the Volt were never good, and they have been getting worse
Through July, U.S. sales of the Chevy Volt are down over 34% over year-ago totals. And it's not like last year's sales were great: GM sold just 18,805 Volts in the U.S. in 2014, down more than 18% from the year before. In fact, the current Volt has been falling short of sales expectations ever since it was launched.
To be fair, the Volt isn't the only battery-powered car suffering through a huge sales slump. U.S. sales of Nissan's all-electric Leaf are down 30% this year. And hybrids like Toyota's Prius family (down 15.4%) aren't faring much better.
The sales challenge facing mass-market electrified cars is an obvious one: At an average of about $2.69 a gallon, gas prices in the U.S. are down over $0.80 from where they were a year ago. Many experts think that prices could stay low for years to come.
In other words, gas seems cheap -- and lots of new-car buyers are choosing trucks and SUVs instead of more fuel-efficient options. That has hurt sales of sedans, and it's had an even bigger impact on hybrids and electric cars.
Simply put, fewer buyers are willing to make the compromises needed to get better fuel economy right now. That makes the outlook for cars like the all-new 2016 Chevy Volt seem bleak -- but GM is pressing ahead with its new Volt and other electrified vehicles anyway.
Why?
Despite slow sales, GM needs the Chevy Volt
There are lots of reasons. GM's engineers are already carrying lessons learned from the Volt to other products in GM's portfolio. The hybrid version of the all-new Chevy Malibu sedan, due this fall, is expected to have class-leading fuel economy -- using technology developed for the Volt.
But in part, GM is pushing ahead with the new 2016 Volt because it has no choice.
Under current U.S. regulations, fuel-economy rules are set to get a lot tighter over the next few years. That poses a big challenge for General Motors.
Right now, GM gets a lot of its profits from big sales of its pickup trucks and SUVs. It wants to be able to continue to build and sell those popular products for years to come, but they hurt GM's overall fuel-economy average.
GM is working hard to improve the fuel economy of those trucks. It's expected to make big progress by 2019 or so.
But even then, it will need to build and sell fuel-sipping cars to help offset the trucks. And few cars are more fuel-efficient than Chevy's Volt.
