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TheStreet Open House

GM Isn't Alone in the Race to the 200-Mile Electric Car

A few days ago, the Internet was again abuzz with rumors about a future electric car from General Motors (GM - Get Report).  The claim was that it would have 200 miles of range, be available by the end of 2016 and be part of the Chevrolet Sonic nameplate.

In essence, this is only a variant of rumors based around seemingly inconsistent statements from then-outgoing GM CEO Dan Akerson last December.  I analyzed these inconsistencies on Dec. 16.

This time, it's really not a lot better, except for one thing:  LG has recently said that it will have a battery capable of providing 200 miles of range by 2016.  LG is GM's current battery supplier, but LG also supplies a long list of other automakers.

To understand what GM's situation is in the area of plug-in electric cars, let's first review what the company offers today.  One pure electric GM car is offered mainly in California and Oregon: the Chevrolet Spark.

Two plug-in electric cars with range-extenders are offered nationally and, in some cases, in other countries:  Chevrolet Volt and Cadillac ELR.

Read More: How Will GM Stock React to Another Recall?

Many people got -- negatively -- excited by the suggestion that GM would offer its next-generation pure electric car under the Chevrolet Sonic umbrella.  The Chevrolet Sonic is GM's second-smallest car sold in the U.S., to the tune of approximately 100,000 per year.  It is viewed as a "cheap car" -- especially by those who haven't driven it.

The other small Chevrolets sold in the U.S. -- Spark and Cruze -- sell to the tune of 50,000 and 300,000 per year, respectively, in the country.  Collectively, they have all seen huge sales increases as they were introduced in various stages over the last three years.

They are also well through the midlife of their product life cycles.  All-new replacements are expected in the next one to two years.  From this standpoint, if GM wants to make its electric drivetrain cars as part of any of these platforms, they will all be a lot more attractive than they are today.

I obviously don't know this for a fact, but it shouldn't take a rocket scientist to figure out what GM's approximate electric car plans are for the next one to three years.  This should be exactly the same as I pointed out in my December article.

At its core, GM likely has two separate plug-in cars planned for release in the next one to three years:

First, a plug-in hybrid to replace the current Chevrolet Volt and Cadillac ELR.  The main feature of this car is to have an electric range of approximately 40 miles, and then a gasoline engine adding normal car range after that.

Let's call this car the Volt 2.0.  It will basically do the same thing as the current Volt, except it will be refined (interior, suspension and NVH [noise, harshness and vibration]) and cost-reduced.  In an ideal world, GM would like to sell some version(s) of this car for $30,000 to $35,000 while making its standard margin profit.  It is widely assumed that GM is losing money on the current Volt, which starts at $35,000.

Most industry observers think GM is taking close to $8,000 in cost out of the Volt, for this all-new 2.0 model.  In addition, GM could of course offer this platform in additional body styles, where prices and margins would be better.  Most industry observers assume that the first version of this Volt 2.0 will be introduced at the Detroit Auto Show in January 2015 and enter production a few months thereafter.  That seems reasonable, but I can't verify the timing.

That leaves us with the second, and far more difficult, electric GM car.  This would be a 200 mile range pure electric car that could be sold at a profit for as little money as possible.

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