Cadillac ELR vs. Chevrolet Volt 2.0

NEW YORK ( TheStreet) -- General Motors ( GM) recently introduced the Cadillac ELR, which is a 2-door coupe that builds on GM's current Chevrolet Volt. It enters production in the second half of 2013; the first deliveries are expected no later than January 2014.

It is now clear that the Cadillac ELR is not the Chevrolet Volt 2.0 under the skin. The changes, in terms of the drivetrain, from the current Volt are simply relatively minimal. Basically, there was some relatively modest tinkering in terms of how the battery interacts with the main electric motor, so as to squeeze out a little more power, that's all. But really all the essential parts of the current Volt drivetrain remain the same in the ELR.

The reason you want an ELR over the current Volt has to do with styling and an upgraded, plush interior of the highest caliber. The ELR loses back-seat space, and perhaps some luggage flexibility, but gains huge 20-inch wheels and spectacular "Bat-mobile" looks.

Cadillac has yet to announce how much it will charge for this new beauty, but it will surely be more than $50,000, especially considering that it looks as if it will only come one way: Fully loaded. The ELR will be in a class of its own in the market, and that gives it some pricing power. Cadillac hopes to sell 5,000 to 10,000 per year, and the car will be made on the same assembly line as the Chevy Volt.

So what does this mean for the Chevy Volt 2.0? It is now clear that the Volt 2.0 will be something completely different than the Cadillac ELR.

What is the No. 1 gating factor delaying the release of the Volt 2.0? The cost. Its battery, for one, costs several thousand dollars.

GM's chief objective with the Volt is to trim at least $4,000 off the cost of the Volt's battery. This will be possible -- the question is just when, and which supplier will help GM do it. Surely GM has been working on this for years already, the Volt 1.0 having entered production in November 2010, after engineering started in 2006-07.

Once GM has decided on this new lower-cost battery, the rest of the car is relatively easy to put together around it; it takes typically around 2-3 years. At this point, it's not yet known whether the Volt 2.0 will enter production in 2014 or if it will take all the way to 2015.

So what about this new battery in the Volt 2.0? There are several variables GM needs to consider:

1. Chemistry. This is as totally unknown as can be. It's a main driver of cost. There is a tremendous amount of research and development in this area. GM's current supplier is LG, the Korean company, but GM also uses A123 -- now a Chinese company -- for the battery in the Chevy Spark EV, which enters production this spring. There is no insight into what GM has picked -- or will pick -- for the Volt 2.0.

2. Cooling/heating. One big driver of cost is how much active (liquid) cooling and heating the battery needs. The cooling/heating of the Volt/ELR battery is very elaborate, most likely the best in the business. This means more cost and weight, but also a chance that the battery will perform strongly not just 8 or 10 years from now, but 20 or 30 years from now. A new battery chemistry could reduce the need for this expensive cooling/heating.

3. Enclosure and placement:

A) Will GM use the current T-shaped enclosure? It could use the same one as the current Volt (and ELR). This one is proven. But if there's a new reduced need for cooling/heating, the enclosure of the battery must also most likely change, because it's possible for lower cost.

In other words, GM could still use a fundamental T-shaped battery, but it could be a new one. I think this is, at a minimum, very likely.

B) Placement: What if GM decides not to keep the T-shaped battery at all? What if it decides to layer it in the floor, just like the Tesla Model S? Then all bets are out the window.

Much will also depend on what GM thinks about the Volt being a "one-product car" or if it is going to be a family of cars. The current Volt is much-beloved by its owners, but many current and potential owners want additional body styles. Most people tell me they want versions of the Volt that fit five, six, or seven people -- not just four. They want good old-fashioned minivans -- with the Volt powertrain.

Even in a minimalist scenario, where the Volt continues to be "one model," GM may want it to fit five people instead of four. If so, it will have to ditch the T-shaped (or straight) tunnel battery in favor of an alternative placement. This makes some sense, in any case, as it would increase the appeal of the "basic" Volt model.

Naturally, the Volt 2.0 will see all sorts of other improvements as well: Interior plastics, instrument panel and telematics immediately come to mind.

What GM had better not change is the basic drivetrain concept: A strong electric car, with a range-extending internal combustion engine. This is still unique in the industry -- and I'm not counting the $100,000+ Fisker Karma exception.

All other plug-in hybrids in the market -- primarily those from Ford ( F) and Toyota ( TM) -- are "hybrids" first, requiring somewhat frequent use of the petrol engine. This totally takes away the "fun" factor from driving an otherwise supposedly "electrified" car. The Volt can accelerate 100% and up to its 100 MPH speed limit, 100% on electric power. The competition does not do this.

Conclusion: GM can't afford to skimp on the Volt's "hard core" electric power. The electric motor in the Volt 2.0 can't be any less powerful than in the current Volt. If GM fails to understand this, the Volt will go from being a success in customer satisfaction, to a failure.

GM has a winner on its hands, with the current Volt having the highest customer satisfaction of any car in the market. The main reason for this is the powerful all-electric feeling of the electric motor, in combination with the class-leading average electric range of 35-40 miles.

GM's To-Do List for Volt 2.0:

1. Keep the powerful all-electric part of the drivetrain.

2. Lower the cost of the battery.

3. Keep the average electric range of 35-40 miles the same or increase it, even if slightly.

4. Improve interior materials/plastics and the dash/infotainment controls.

5. Look into making a 5-seat model?

6. Perhaps make 6- and 7-seat models? Minivan, SUV.

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

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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