The Chevy Volt: Driving Local Garages Into the Ground

NEW YORK (TheStreet) --For the next 50 years, one business I don't want to be in is the carservice business. Why? Because with the conversion to electric cars,there will be very little to service.

This is what we call a secular shift, in this case of Olympianproportions. How many hard disk drives do you repair in the iPad andiPhone world? None, of course. They don't exist.

Likewise, with electric cars, how often do you need to change oil,change spark plugs, timing belts, various other hoses, crankshafts,transmissions and much more. The answer is never.

Most people bring their cars into their dealer once every 5,000 or10,000 miles to spend approximately $200 or sometimes much more tochange oil, filters and a lot more. If you have an electric car, youtoo will bring in your car from time to time, but primarily to doone thing only: rotate the tires, and by the way you can do thatyourself.

There are at least 45,000 Chevy Volts on the road worldwide as of thelast month -- perhaps closer to 50,000 if you count some internationallocations that lag in their sales reports. Cumulatively, they havebeen driven 300 million miles thus far.

With a regular gasoline/diesel-only car, those 300 million miles wouldhave been a gold mine for the auto service business. With the ChevyVolt, not so much.

This is one reason the Chevy Volt, for the second year in a row, hasobtained the highest customer rating of any car in Consumer Reports.Ninety-one percent of owners recommend it to their friends, neighbors, colleagues and relatives.

In other words, the Chevy Volt basically sells itself. No need forexpensive advertising, so GM ( GM) is clearly wasting some money here. Themost effective sales method is the enthusiastic owners. Why pay $100million a year to magazines and TV channels, when existing owners willpromote the car for free?

During the first four months of 2013, sales of Chevy Volt inside theU.S. are only barely up from the equivalent four months of 2012. Still,this is a reduction in sales momentum. It is no catastrophe to be uponly 3% year over year, but in previous months the increase was oftenover 100%.

So why are sales of Chevy Volt up only 3% year over year? There are five reasons:

1. A new Chevy Volt 2.0 model might be announced at some point in thecoming months:

The current Volt was engineered starting in 2006, mostly finished in2008, and production started in 2010. We are now well into our thirdyear of the Volt's mass production.

As technology advances rapidly in battery-powered cars, a car such asthe Volt should see a complete redesign after only four years. Thismeans that an all-new Volt 2.0 could enter production as early as2014, as a 2015 model.

Some people are speculating about a Volt 2.0 not happening until 2015,as a 2016 model. I believe they are wrong. GM has most likely beenworking hard on the Volt 2.0 since at least early 2012, probably 2011.

Seeing as it took only three years to develop the Volt 1.0, we shouldexpect production of Volt 2.0 to start in calendar year 2014, not2015.

As a result, some prospective Volt buyers are waiting for an improved2.0 version to show up in approximately 15 to 18 months from now. Thisone might be slightly less expensive, but more importantly, it will have aricher interior, space for five people (instead of four), and perhapsbetter infotainment technology.

2. Tesla ( TSLA). The California carmaker achieved volume production in December 2012, and seeing that it is an outstanding car, it has taken sales from Volt owners who don't mindspending approximately three times as much on the car. A loaded Teslais over $100,000, whereas a loaded Volt, after tax credits and otherdiscounts, could be as low as $30,000.

Tesla also fits five adults, as well as much more luggage than theVolt. The novelty of a car locally made in Silicon Valley has alsosteered sales away from the Volt to Tesla in the country's largestelectric car market by far -- Silicon Valley.

3. The Cadillac ELR. For those who would like a great-looking Volt but don't need a car as big as the Tesla and don't want to go all-electric as with theTesla -- some are waiting for the 2014 Cadillac ELR. GM announced inJanuary 2013 that deliveries of the Cadillac ELR would start inJanuary 2014.

That was the exact moment -- January 2013 -- when Volt sales started tomoderate, to the point of being approximately flat sequentially. It'sclear that some people are waiting for the Cadillac version of theVolt, and everyone agrees that it is stunning.

4. Chevrolet Spark EV: As I wrote more than a year ago, after Volt comes Chevy Spark EV. This is a smaller, all-electric car made in Korea. It will cost approximately $10,000 less than the Volt, at $32,500 or less, before tax adjustments.

Production of the Chevy Spark starts this summer, and at least in thebeginning, it will be sold only in California, Oregon and South Korea. It has an electric motor that is unusually strong,with 400 pound-foot worth of torque, similar to a Ferrari 458 -- but atbarely 10% of the Ferrari's price.

Chevrolet Spark EV is clearly the car you want if you want Ferraripower. But you'll pay only $22,500 after California tax adjustments. That surebeats paying a quarter-million dollars! Surely some prospective Voltbuyers are holding out for this one.

5. BMW i3: I wrote in 2012 that the BMW i3 will be the 2014 car of the year. Itmay be the most dramatic new kind of car we have seen in well over ageneration, arguably besting both the Tesla and the Volt.

The BMW i3 is basically a Tesla, but made in carbon fiber and with amotorcycle engine as on-board generator, so you will never riskgetting stranded. On top of that, the interior and exterior design ofBMW i3 is both stunning and supremely practical. I have beenpredicting for the last year that it will be the most-talked-about carwhen it hits U.S. streets this December.

Clearly, some prospective Volt owners have been holding out for theBMW i3 and will keep Volt sales lower than otherwise in 2013 andwell into 2014.

Conclusion: Don't be in the car service business.

Going forward, being in the car service business is like trying toservice the hard disk drives inside iPads and iPhones. It'spointless; there's nothing to do. Electric cars need their tiresrotated, but little or nothing else. Even the brakes -- thanks to theregenerative brakes on all electric cars -- will likely last 20 to 50years for most drivers.

Close to 125,000 electric cars will be sold in the U.S. this year, upa little over 100% from last year's 52,500. In 2011, the number wasunder 18,000. As for 2014, we don't have a good idea yet, but itshould be dramatically more than this year's 125,000.

I guarantee there is an electric car in your future. What I can also guarantee is that your auto service bills will declinedramatically as a result.

At the time of publication, the author was long AAPL.

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

More from Opinion

Trump Blinks on China Trade War That's Looking Harder to Win

Trump Blinks on China Trade War That's Looking Harder to Win

Monday Madness: GE, China, and Micron

Monday Madness: GE, China, and Micron

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

How Technology Will Unleash the Legal Marijuana Industry's Growth Potential

How Technology Will Unleash the Legal Marijuana Industry's Growth Potential

Apple Buys Tesla? Amazon Buys Sears? 3 Dream Mergers That Just Make Sense

Apple Buys Tesla? Amazon Buys Sears? 3 Dream Mergers That Just Make Sense