Chevy Volt's $10,000 Discount

When GM’s (NYSE: GM) Chevy Volt, its first plug-in hybrid vehicle, was released in December 2010, it was expected to do great things for the company. The vehicle had a price tag of $41,000 – $33,500 after a $7,500 federal tax credit – and it ran 35 miles entirely on electric power before switching over to a full gasoline engine.

But it came out while the economy was still struggling to see recovery and after GM’s $50 billion government bailout. Its cost was $13,000 more than a gasoline-powered compact car and $7,000 more than the Nissan Leaf. It had a lot of competition, and it wasn’t holding up well.

Even company officials will admit that – in retrospect.

From the Washington Post:

“Let’s face it, over $40,000 is asking a lot for a compact car,” said Bob Lutz, a retired GM vice chairman who led the development of the Volt.

So the company decided to do something about it: GM is now offering a whopping $10,000 in discounts – that’s 25% – for the vehicle.

It looks like it’s working. The car set its sales record this past August, when GM sold 2,800 in that month alone. It’s surpassed both the Prius Plug-in and the Nissan Leaf in sales. And analysts believe as many as 20,000 cars could be sold this year.

The 2013 model will be an improvement. It changes the 35 all-electric miles to 38.

And the discount will be particularly helpful for those looking to lease the car – the most popular choice, officials said. With $2,400 down, the monthly lease price comes out to around $249 per month.

Still, the company will likely miss its 2012 sales target of 60,000. Sales reached 13,000 in August this year, up from a yearly total of 7,700 last year, but it’s unlikely to exceed 20,000.

The car has come a long way since the end of 2010. In California, it competed with the Toyota Prius hybrid, which had an exemption allowing single drivers to take advantage of the state’s 1,500 miles of carpool lanes because of the vehicle’s low emission rate. Single Volt drivers didn’t have this – the gasoline-powered generator missed standards.

Since then, this problem has been fixed. And it boosted California sales almost immediately.

From the Washington Post:

“It definitely helps to discount,” [sales manager Chad] Kelman says. “The market in L.A. Is fiercely competitive.”

The state has been the starting point for a number of new electric vehicle infrastructure designs. In July, ECOtality (NASDAQ: ECTY) installed its first Blink(R) DC Fast Charging stations at California’s Bishop Ranch – stations that can fully charge an electric vehicle in 30 minutes.

And just today, Tesla Motors (NASDAQ: TSLA) announced that it has installed six of its newly-unveiled Superchargers across the state. Only Tesla’s Model S will be able to connect to this thirty-minute charger, but its just another example of how California is often the starting place for these technologies.

GM hopes sales will pick up even more in years to come. The company hasn’t quite made it to the break-even point with the Volt, but it’s using profits from other cars to continue the subsidies. And the company has still managed to get a lot out of this vehicle.

From the Washington Post:

GM says that the Volt has helped the company, even if it never makes a dime. The car has pulled in customers from rival brands, and helped Chevy wrestle at least part of the environmental halo form Toyota’s Prius, executives say. It will also help GM meet tough government fuel economy standards.

Even if the car didn’t have outstanding sales numbers from its debut, it still has some loyal followers. The new and improved 2013 model could help its prestige even more.

That’s all for now,

Brianna Panzica

@brianna_panzica on Twitter

Energy & Capital’s modern energy guru, Brianna digs deep into the industry with accurate and insightful updates into the biggest energy companies and events. She stays up to date with the latest market moves and industry finds, bringing readers a unique view of current energy trends.