NEW YORK (TheStreet) -- The California government's discrimination against the Volt led toweak demand in early 2012.In 2011, the Chevrolet Volt sold 7,621 units, moderately short of the10,000 goal. For 2012, Chevrolet's goal is to sell 45,000 Volts inthe U.S., and 15,000 internationally. Various media reports are now suggesting that U.S. sales have stalledat a relatively low level near 1,000 units per month, manifestingitself in dealers being asked to take more Volts than they believethey will be able to sell in early 2012. These reports sound at leastsomewhat credible and must be explained.
A few years ago, it used to be the case that you could buy one ofthose carpool sticker-equipped used Toyota Priuses for a heftypremium, perhaps at some point approaching even $5,000. People usedto say that you bought a sticker with a Prius attached to it. That'show important this sticker was -- and is -- to California car buyers. The Volt runs on pure electric for the first 25 to 50 miles, after whicha gasoline generator kicks in to take you as far as you want to go bypouring gasoline up to nine gallons at a time, every 325 or so milesalong the way for longer trips. Most people commute in their cars farless than 50 miles every day, so they will drive on pure electricityjust like the Nissan LEAF. That was not good enough for government bureaucrats in California,however. They made the Chevrolet Volt 2011 model ineligible to applyfor California carpool lane status. Whoops! What happened to thoseprospective buyers of the Chevrolet Volt in California? Of course,they all ran out and bought a Nissan LEAF. In other words, it is the California government's fault that as weenter 2012, the demand for Chevrolet Volts is weaker than it otherwisewould have been, following the initial sales to some 8,000 early Voltadopters. Critics of the Volt often base their arguments on how thegovernment helped the sale of the Volt, but in this case it's veryeasy to show that the single biggest obstacle to Volt sales is . . . theCalifornia government.
In the meantime, however, the largest market for plug-in cars --California -- appears not to be delivering many Volts in early 2012.Customers are of course waiting for the new version, starting in Marchif everything goes as planned. That's why, despite strong salesnumbers in December, there is likely going to be an "air pocket" worthof California Volt sales in January and February. But for the carpool lane issue, there is no reason Nissan LEAF salesshould be so dramatically larger than Chevrolet Volt sales inCalifornia. The Volt has a dramatic advantage in range and thereforepracticality, as a result of its on-board generator. Nobody willdispute that the Volt looks better and that it has a much more upscaleinterior. It's built more like a sports car than an economy car --and it drives that way too! Yes, the Volt is almost $5,000 more expensive than the LEAF, but priceis not a selling point of any of these cars, especially consideringthat the households buying them are mostly higher-income. To wit,Tesla has had no problem taking $5,000 (and up) deposits for manythousand Model S cars that are set to enter production in less thansix months from now, and they cost, on average, approximately twice asmuch as a Volt or LEAF. The other reason California car buyers are waiting for this newversion of the Volt in the next few months is that Chevrolet isbumping up the warranty from eight years and 100,000 miles, to 10 yearsand 150,000 miles, for this new Volt version. On top of that, theCalifornia government is going from penalizing the 2011 and early 2012model Volts by not giving them carpool stickers, to giving a $1,500tax credit. Why buy a Volt now when you can wait just a few short months and getyour Volt with a carpool sticker, a longer warranty and a $1,500 pricecut? Hello??? You have zero incentive to buy now, when you know thatall of these huge improvements and conditions are just around thecorner.
On a final note, it is interesting to observe that 99% of the criticsof the Volt appear not to have driven the car. Isn't that amazing!People with such strong opinions about a car typically have at leastdriven the object of their review, and hopefully more than just aroundthe block. But not in the Volt's case. Everyone is an expert here! But have you driven it? No, I would never drive one of those! Well, the defense rests... In contrast, almost everyone who actually does drive the Volt gives ithigh praise. It has the single highest customer satisfaction rating-- 93% according to Consumer Reports just two months ago -- of any carin the market, even higher than the Porsche 911 with 91%. Of course, not every plug-in electric car will be successful. As withany car, some will flop for any of the usual reasons some cars alwaysflop -- looks, price, market positioning, a quality issue, you nameit. With the Volt, however, there doesn't appear to be any objectiveissue other than perhaps price, which is even dubious once you reallycompare the Volt appropriately. The Volt isn't for everyone, of course -- no car is. Not every personis in the market for a car that can fit only four people and costs$45,000 before tax credits. Some people need much bigger cars to fitmore people and cargo. Others need 4x4 capability. Yet others want aconvertible or an extreme sports car that may fit only two people anddo 0 to 60 in less than four seconds and can go much, much above 100 MPH. No one car can fit anywhere near all needs and preferences in themarket. The Volt technology will find itself into all sorts of body stylesover the next several years. Ten years from now, it will probably bein almost all GM cars. Over the next 25 years, it could be in 60million cars shipped. That may sound crazy right now with only 10,000or so Volts sold, but not to those who actually get to spend some timebehind this Volt version 1.0, because the reaction from those peopleis almost always "But of course!"