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The Chevy Volt 2.0 Nears Production -- Long Live the Electric Car King!

Stocks in this article: GMF

2. More advanced digital displays. Above the buttons and knobs, two displays are found. In the big scheme of things, the Volt 1.0 has some of the better displays in the business. However, one would like to see more customization so these displays can show the data set the driver wants. Basically, many drivers want to configure the displays just like a spreadsheet, suitable for engineers.

3. A better seating experience. The Volt needs a steering wheel that telescopes more, accommodating taller drivers with longer legs. The driver needs to be able to lean back more, not sitting so upright because the steering wheel is too close to the pedals.

Speaking of the steering wheel, it needs to be made of richer leather that lasts better over time. After three years it has become extremely slippery and cheap-feeling.

The old-fashioned gear selector is also overdue for retirement. It takes up a lot of space and feels like an old relic. What should be the model for the future? Look no further than the all-new, 2015 Chrysler 200, which has the best gear selector in the business: A round knob!

I talked a bit above about one of the two biggest objectives with the Volt 2.0 that inhibited sales of the Volt 1.0: the lack of a third seat in the back. I suspect GM lost 50% of potential Volt sales on that point alone.

The second issue plaguing not so much the consumer but GM itself is the cost to build the car. I think we can safely assume that considering all development expenses for the Volt 1.0, it is sold at a discount, currently starting at $35,000. GM may not be losing a lot of money on a variable cost basis but when counting all the development overhead, it likely isn't collecting a standard profit margin.

For this reason, cost reduction is the other major goal of the Volt 2.0. I'm not talking about $4,000. It has to be more. Chances are GM will be taking out over $6,000 in variable cost for each Volt.

The sources of cost reduction will be:

1. By far, the battery. LG Chem supplies the Volt 1.0, but not all plug-in GM cars. There is no information on which company will supply the Volt 2.0. LG Chem sounds like the low-risk choice. Either way, the cost will be a lot lower for this battery, by thousands.

2. Less expensive engine/motor. Everything you see under the hood will be smaller, lighter, consist of fewer parts and be less expensive to make. This is a reduction in variable cost of probably over $1,000 per car.

3. Fewer body parts. Inside and outside the Volt 1.0 you will see way too many body creases and overlaid materials and parts. This could be reduced and simplified. It may not take out much more than $500 per car but it will be something.

The Volt 2.0 should be in U.S. dealerships probably around the middle of 2015 as a 2016 model. Some 12 to 18 months after that, I expect GM to launch its 250- to 300-mile pure EV cars, priced a bit higher than the Volt 2.0. More about them in a future article.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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