The Chevy Volt Comes Down in Cost

General Motors CEO Dan Akerson made a splash at a meeting of Safeguard America’s Future Energy (SAFE) in Washington, which I attended, by announcing that GM will introduce a Malibu that can be powered by compressed natural gas. But that’s off sometime in the future.

What he said that was perhaps even more exciting was that GM has driven down the price of the Chevrolet Volt from $40,000 to $25,000. I’ve been a big fan of the Volt since writing about it in Why GM Matters. I felt then, and still do, that it is one of the most important vehicles for GM because it represents technology leadership. I’ve driven it twice and think that it is actually a lot of fun. It’s a great vehicle that does everything right in terms of how it combines a lithium ion battery with a small gasoline engine. You never have “range anxiety.”

The problem has been, sales have been disappointing because of the price point. Even with a $7,500 federal tax rebate, you’re still talking a purchase price of $32,500. That’s out of reach for most consumers.

But GM didn’t give up. As we’ve seen in many industries ranging from semiconductors to flat screen televisions, if you can start achieving volume, you can drive costs down. That’s what the company has done.

Now that the Volt will cost $25,000 (with no tax credit, I assume), the whole calculation in the mind of a consumer will change. And GM is not wasting time on using the Volt technology in other products. A new Cadillac is essentially a Volt with the bells and whistles that one expects from Cadillac.

The Volt story is just beginning.

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