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GM Volt Sales: Yellow Light for Electric Car Growth Stories

NEW YORK ( TheStreet) -- The latest sales figures from the electric car market suggest that the outlook remains mixed for companies whose success hinges on broader adoption of models like the Chevy Volt and Nissan Leaf.

The Volt isn't a make-or-break issue for GM (GM - Get Report) -- in fact, GM's overall auto sales surprised to the upside in February.

For lithium ion battery companies, such as A123 Systems (AONE) -- hoping to cash in on future GM electric car models -- and related battery technology, such as lithium ion separator company Polypore (PPO), broader adoption of electric cars is the core growth narrative.
Volt sales rebound, but consumer demand for electric cars still seems tepid.

In February, GM sold 1,023 Chevy Volts and Nissan sold 478 Leafs in North America, compared with sales of 603 Volts and 676 Leafs in January. Year over year, the numbers for both electric cars look good, up from 281 Volts and 67 Leafs in February 2011. The pickup month over month in Volt sales from 603 in January to 1,203 also suggests that the Volt is rebounding from the battery fire issue with which 2012 began.

Volt sales are still well below the December 2011 record level, though, and Nissan Leaf sales continue to trend down in the North America, on a decline for over six months, and February being the worst sales month for the Leaf since last April.

Polypore has become a battleground stock linked to the bullish and bearish divide on electric car adoption versus hype. A123 has recently been focusing on sales of lithium ion batteries to the energy storage market as part of making the case that it's not beholden to consumer demand for electric cars.

Stifel Nicolaus said on Thursday that if production and demand do not come into better balance, companies reliant on increased adoption of electric cars like Polypore may be pressured by investors.

Cumulative sales of the Volt have been 1,626 vehicles this year, implying total sales of 9,756 Volts in 2012, a 27% year-over-year increase. If this sales data is to representative of 2012 demand, it would be a disappointment from GM, LG Chem [which makes the Volt battery] and Polypore, Stifel wrote.

"Momentum needs to continue to build moving forward to drive meaningful production increases y/y for the Chevy Volt," Stifel wrote.
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