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The Chevy Volt: Driving Local Garages Into the Ground

Stocks in this article: GM TSLA

So why are sales of Chevy Volt up only 3% year over year? There are five reasons:

1. A new Chevy Volt 2.0 model might be announced at some point in the coming months:

The current Volt was engineered starting in 2006, mostly finished in 2008, and production started in 2010. We are now well into our third year of the Volt's mass production.

As technology advances rapidly in battery-powered cars, a car such as the Volt should see a complete redesign after only four years. This means that an all-new Volt 2.0 could enter production as early as 2014, as a 2015 model.

Some people are speculating about a Volt 2.0 not happening until 2015, as a 2016 model. I believe they are wrong. GM has most likely been working hard on the Volt 2.0 since at least early 2012, probably 2011.

Seeing as it took only three years to develop the Volt 1.0, we should expect production of Volt 2.0 to start in calendar year 2014, not 2015.

As a result, some prospective Volt buyers are waiting for an improved 2.0 version to show up in approximately 15 to 18 months from now. This one might be slightly less expensive, but more importantly, it will have a richer interior, space for five people (instead of four), and perhaps better infotainment technology.

2. Tesla (TSLA). The California carmaker achieved volume production in December 2012, and seeing that it is an outstanding car, it has taken sales from Volt owners who don't mind spending approximately three times as much on the car. A loaded Tesla is over $100,000, whereas a loaded Volt, after tax credits and other discounts, could be as low as $30,000.

Tesla also fits five adults, as well as much more luggage than the Volt. The novelty of a car locally made in Silicon Valley has also steered sales away from the Volt to Tesla in the country's largest electric car market by far -- Silicon Valley.

3. The Cadillac ELR. For those who would like a great-looking Volt but don't need a car as big as the Tesla and don't want to go all-electric as with the Tesla -- some are waiting for the 2014 Cadillac ELR. GM announced in January 2013 that deliveries of the Cadillac ELR would start in January 2014.

That was the exact moment -- January 2013 -- when Volt sales started to moderate, to the point of being approximately flat sequentially. It's clear that some people are waiting for the Cadillac version of the Volt, and everyone agrees that it is stunning.

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