After the Volt? The Chevy Spark

NEW YORK (TheStreet) -- Over 17,000 plug-in electric cars were sold in the U.S. in 2011, thefirst year of any plug-in electric car sales worth talking about. Myoptimistic estimate for 2012 that I published here in early January was 130,000, but a nice round 100,000 is probably more realistic.

At somewhere close to 100,000 units for the U.S. market alone, theplug-in electric car market would be two-thirds of 1% of the entire U.S.car market, which is estimated to approach 15 million units this year. Some will look at that and say "at or just below 1% is peanuts."
Chevrolet Volt

Other people will look at that and say "In 2007, the iPhone was alsoat or below 1% of the global cell phone market." And now, a few short years later, are people laughing at the Apple iPhone? Um, maybe not.

While 2012 will be a very strong growth year for plug-in electriccars, 2013 to 2015 should be dramatically stronger. One car that willcontribute nicely to unit growth volumes will likely be the ChevroletSpark Electric, to be launched some time around April 2013, plus orminus a couple of months.

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In order to understand the Chevrolet Spark, you have to understand howit differs from the Volt. The Volt, which has now sold approximately10,000 units in the U.S. and where European sales just started thisweek, is a "zero-compromise" performance car that competes mostly withcars that are much more expensive.

The Chevy Volt drives 25 to 50 miles on pure electric power, after whicha gasoline generator kicks in to take you are far as any regulargasoline car -- until you have the time and opportunity to plug in theVolt again. In the Volt, you can take that 600-mile road trip toVegas in the comfort equivalent to a $90,000 Porsche Panamera, butachieve the fuel economy not too far behind a Toyota Prius, which inits highest-end trim costs almost exactly the same as a Volt.

According to the sales configurator on Toyota.com, a loaded Priusplug-in costs $39,525, compared to a loaded Chevrolet Volt at $44,575. Then adjust for a $5,000 difference in the federal tax credit in the Volt's favor, and you're left with almost the same price.

For those longer road trips, after the first 35 gas-free miles,driving the Volt at a speed of 70 miles per hour, mileage will becloser to 35 MPG than 40 MPG. That's a little bit behind the 47 MPG aPrius will likely yield at that kind of speed. Still, getting 35 MPGor more will handily beat the Porsche Panamera.

GM ( GM) made the mistake in launching the Volt by branding it a Chevrolet.It should have been a Cadillac, given that it's a premium constructioncar competing mostly with cars costing a lot more. Anyway, theCadillac version of the Volt arrives in early 2014, in conjunctionwith what is expected to be the updated Chevrolet Volt 2.0.

Some people, however, aren't considering a car at those price levels.Some people would only consider an electric car if it cost under$30,000 before any tax incentives. As a reminder, a plug-in electriccar with a battery 16 kWh or larger is eligible for up to $7,500 in afederal tax credit, as well as $1,500 from the state of California, ifthat's where you live.

And the largest number of electric car drivers live in California.Surprise, surprise.

Therefore, once that sticker price falls below $30,000, the net costto the consumer starts to look a lot like it's hitting $20,000. That's below the average new car price in the U.S. today.

Chevy's Next Star

The net price of a base Volt is $30,995 today ($39,995 minus $9,000 intax credits), but what car could shave that by third or even more?

The Chevrolet Spark, due approximately one year from now, that's what!

With the Chevy Spark, GM will try to undercut the Nissan LEAF, the Ford Focus Electric, and the various BMWs that are and will be in the market in the next two years, such as the current BMW ActivE and theupcoming BMW i3. I predict that the Chevy Spark Electric, when ithits the U.S. market by the second quarter of 2013, will cost no morethan approximately $29,000 before any applicable tax incentives.

Unlike the Volt, the Chevy Spark will of course not be azero-compromise performance car, but rather compete with the smallall-electric cars with limited range. The EPA-certified ranges of theLEAF, Focus and ActivE, respectively, are 73 miles, 76 and 93. Thereis no good indication yet as to the range of the Chevy Spark, but itwill most likely be a lighter car that has the potential for breakingthe 100-mile barrier, perhaps even 110 or 120 -- or 140.

A hundred or 120 miles, you say? Isn't that peanuts compared with the Tesla Model S, which will offer perhaps 160 miles with its base version, and300 miles for the premium model? Yes, of course -- but the Tesla is amuch more expensive car. The 160-mile base Tesla is $57,400, and the300-mile version is $77,400. Add all the options and we're talkingaround $100,000.

In other words, the Chevy Spark, while obviously being a much smallerand simpler car for sure, will arrive at approximately half the priceof the most basic Tesla Model S. Then subtract the same $9,000 in taxincentives, and we may be comparing a $20,000 car with a $50,000 car.That's 60% less. These two cars have something in common, but theyaren't the most direct competitors.

Spark Vs. LEAF

A more fair comparison for the Chevy Spark Electric would be theNissan LEAF and Ford Focus Electric. Those cost mostly between$35,000 and $40,000 -- at least $5,000-$10,000 more than what I expectfor the Chevy Spark Electric. That price premium would be justifiedbecause they are slightly larger cars, but perhaps mitigated if theChevy Spark can achieve a meaningfully longer range.

I find that most Nissan LEAF owners with whom I speak are concernedwith the limited 73-mile average range -- even though the theoreticalmaximum exceeds 130 miles. With no safety margin, a 73-mile averagemeans "range anxiety" for a lot of people. Many of these Nissan LEAFowners are regretting they didn't buy a Volt instead, which of courseis not subject to any electric range limitation. I hear stories of ahandful of LEAF owners trading them in for a Volt.

Many of these Nissan LEAF (and Ford Focus Electric) owners wouldgladly have traded some vehicle size for meaningfully better range.Therefore, if Chevrolet can achieve over 100 miles, perhaps even 110or 120, worth of range, GM will put a fat dent into Nissan's LEAFsales. Of course, one can always surmise that Nissan is deep downinto the LEAF 2.0 development, and the chief objectives of that carwill of course be cost reduction and an improvement in the meager 73mile average range.

Meanwhile, however, GM now has the opportunity, at least for a while,for a "smack-down" if it can deliver a $29,000 (or less) Chevy Sparkthat is awarded a 100+ mile EPA range certification. An all-electric100-to-120-mile car is obviously still not for everyone -- duh! -- but itwould fit the needs of millions of car buyers, and be a class leaderif launched with those specs as early as possible in 2013.

The Chevy Spark's main electric traction motor will be 85 kW (114horsepower) and be built close to Baltimore. That's less than theVolt's 111 kW (149 horsepower) motor, and of course it lacks theVolt's generator that can be combined for even greater power andefficiency at higher speeds. As such, the Spark is unlikely to matchthe Volt's top speed of 100 MPH. Perhaps 90 MPH is more realistic.Hey, at least acceleration is certain to be very strong, as with allof its peers.

Battery Size

The main unanswered question about the Chevy Spark's specs is the size(capacity) of the battery. The two main class benchmarks here are theNissan LEAF and Ford Focus, at 24 kWh and 23 kWh, respectively. Giventhat the Spark will most likely be a lighter car, it could do with a smaller battery and still achieve the same range.

However, if GM is smart, they would ensure that the Spark achieves anEPA-certified range of at least 100 miles, as discussed above. Thatlikely means that it must have a battery of at least the same size as the LEAF and Focus. Perhaps something closer to 30 kWh.

A light car such as the Spark should be able to get almost four miles perkWh, so a 30 kWh battery would yield 120 miles, which would be a sweetspot for this car, beating its main competitors in the market today.Let's hope Chevrolet achieves it.

Here is the mystery question for GM: Given the solid experience withthe Volt, why isn't this Spark Electric hitting the market one yearearlier than it will? It ought to be in the market right now -- not10 to 16 months from now. The only legitimate excuse must be that itachieves a superior efficiency of meaningfully more miles per kWh thanany other similarly sized competitor. If Chevrolet doesn't achievethat target, it is likely to be viewed a failure.

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