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About That Chevy Volt Price Cut

NEW YORK ( TheStreet) -- In a perfect example of lazy journalism, every single news outlet has reported overnight that General Motors (GM - Get Report) cut the base price of the Chevrolet Volt from $40,000 to $35,000.

Practically speaking, nobody who bought a Volt over the last year should feel cheated.


If Mr. and Ms. Journalist had done their homework, they would have known that ever since August 2012 -- one year ago -- GM had already offered close to $5,000 off every Volt sold, or implied in attractive $199/month lease offers. In other words, by cutting the base MSRP from $40,000 to $35,000, GM is merely codifying what had been the real-world price for the past year.

Of course, we can discuss until the end of time why Volt sales aren't higher -- at any price. That's not the point here. Volt sales have gone from very small in 2011 (under 8,000) to approximately 30,000 world-wide in 2012. At the current rate, 2013 doesn't look like it will be a big increase over 2012, and perhaps it will be almost flat.

That's obviously a disappointment. At some point a couple of years ago, GM said it hoped it would 60,000 world-wide in 2013, 45,000 of whom in the US. Tesla learned from this mistake of setting high expectations, saying nothing and letting the world be amazed at an estimated 21,000 sales in 2013. Worked wonders for Tesla (TSLA) stock.

It is easy to see why the Chevy Volt is barely selling more than the Tesla Model S: Gasoline prices remain not too far around $4 per gallon, and other gasoline/diesel cars are becoming ever-more efficient. For example, a 2014 BMW 328 diesel yields 37 miles per gallon and the 2014 Mercedes GLK 250 diesel yields 28 MPG -- and that's a four-wheel drive SUV.

Further down the stack, you can buy a Chevrolet Cruze diesel and get a combined 33 MPG, or go with the easiest and most proven of fuel-efficient of choices: Toyota (TM) Prius for about $25,000 base price, yielding 50 MPG on regular gasoline.

I have been arguing for years that electric cars are unlikely to be sold rationally on cost advantages, except perhaps if you take into consideration long-term maintenance advantages. Electric cars need to be sold on a superior driving experience -- quiet, smooth ride with gobbles of torque. Once you have driven one, you won't go back.

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