GM’s next Volt challenge: cut the price

Posted Feb. 1 at 1:26 p.m.

The Volt has won nearly every major award offered and stirred up tons of interest, but one criticism persists: It’s too expensive.

The next-generation Volt will almost certainly cost less than the $41,000 list, GM spokesman Rob Peterson said. And the  changes that make it cheaper should make it better, too.

A $7,500 federal tax credit takes the cost to around $30,000, but the credits won’t last forever.

“The ideal price point for un-subsidized large-volume sales would probably be no more than $30,000,” said John O’Dell, editor of the Web site

But as technology improves and gains wider appeal, neither will today’s high prices.

Battery: The Volt’s battery pack is estimated to cost about $10,000. Besides making it more cheaply, GM might want to shrink it.

The battery is probably more powerful than it needs to be, said Oliver Hazimeh, head of the electric vehicle practice at consulting firm PRTM.

“Offering customers a little of different capacity may be an option, so you can provide customers with a choice,” Hazimeh said.

Bulk up production: Another way to reduce battery costs is to sell more Volts or more vehicles using its technology, Hazimeh said.

“It’s hard to look at this technology and make a business case out of it with one vehicle,” Hazimeh said.

GM is reportedly considering a version of the Volt to be soldas a Cadillac and has shown a concept of s tall wagon Volt.

Better battery tech: The effect of volume on cost would be minimal, though, said Jon Lauckner president of GM Ventures, a GM subsidiary that invests in companies with promising technology the automaker could use. Real savings will come through technology improvements, he said.

“You do extensive amounts of research and development, and you get the same functionality or better with fewer cells,” he said, “and you take a whole lot of cost out of the vehicle.”

Electric motors:  One way to make a cheaper electric motor would be to do away with the magnets most use, said Michael Crane, an executive in charge of hybrid and electric vehicle technology at auto parts supplier Continental.

Today’s electric car magnets, known as permanent magnets, rely on exotic materials including neodymium and dysprosium.

“These materials are expensive because they aren’t available everywhere in the world,” he said.

Continental recently unveiled a new motor that uses only electromagnets. These are coils of wire wrapped around a core that become magnetic when an electric current is applied.

GM will use such magnets in its new hybrid Buick LaCrosse, Lauckner said.

Electronics and accessories: Besides the batteries and motors, electric cars contain a host of other electronics that control everything from cabin climate to power flow.

All this is costly and complex, said Crane. Today, circuitry is being built as single units that weigh less, use less material — especially exotic metals — and are easier and faster to put together on the assembly line.

Accessories including air conditioning and power steering and brakes are also big opportunities for cost savings, said Lauckner. Engineers are shifting to new systems designed for hybrid and electric vehicles.

Cutting the fat:  Volt is loaded up with options. Taken together, these features make customers feel like they’re getting a lot for their monthly payments.

While doing away with some features including a full navigation screen, a fancy stereo or expensive paint colors, could trim costs, Hazimeh advises caution with this approach.

These features “have a certain coolness factor,” that buyers have come to expect.

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