NEW YORK ( TheStreet) -- How do you improve a car that has the highest customer satisfaction rating in the market -- 91% per Consumer Reports? You cut the price, and reengineer the car for the better, that's how.First, there's a well-publicized story going around that General Motors' ( GM) Chevrolet has cut the price of any remaining 2012 Volt models by $5,000, and the 2013 model by $4,000. This looks to me like completely irrelevant non-news. Why? For starters, the 2012 model was already sold out a long time ago, at least in the country's largest market, California. As of October 2012, I couldn't find a single 2012 model Volt left in stock at any of the California dealers I called. What about the $4,000 price cut for the 2013 model? Well, that's not news either. Most Chevrolet dealers appear to have been offering between $4,000 and $5,000 off 2013 Volts from time to time, since at least last August. Considering that demand for the Volt was very strong in California in the second half of 2012, when inventories dwindled in the fourth quarter of 2012, the discounts were smaller, approaching zero. But now they're back again. Why? Clearly, U.S. sales have fallen from over 2,500 per month in late 2012 to close to 1,500 per month so far in 2013. So why have Volt sales fallen? There are five reasons: 1. Tesla (TSLA). The Model S started eating into its large backlog of reservations in 2012, but as of early 2013 you can now get a Tesla within 60 days -- perhaps as little as 30 days -- if you order one now. Some people are clearly willing to pay at least twice as much money for a Tesla, compared to a Volt.
One reason contributing to people buying a more expensive Tesla is that some employers are paying their employees more money if they buy an electric car. For example, privately held Evernote pays its employees $250 per month -- $3,000 per year -- if they buy a plug-in car. Employees also get free charging at the office. This disproportionately skews the electric car market to the more expensive models with larger batteries, and of course Tesla is the most expensive EV with the largest battery.
Battery: This is the centerpiece of the Volt 2.0. Significant improvements in battery technology, cooling, heating and packaging is enabling GM to offer the Volt 2.0 in two different versions:
- A five-seat version (unlike the Volt 1.0, which was only available with four seats) with a 16 kWh battery. This uses the same T-shaped battery as the Volt 1.0, but there is a "cut-out" for a fifth passenger, effectively dividing the battery into two clusters -- one between the front seats, and the other under the rear seat. Viewed from under the car, it would look identical to the Volt 1.0, however. A four-seat version, just like the Volt 1.0. By filling in this space in the "tunnel," battery capacity increases from 16 kWh to 20 kWh. This version would also be a "spare part" that would also fit inside the Volt 1.0, proving the long-term upgradeability of the Volt. The battery enclosure would be identical to the Volt 1.0, preserving long-term upgradeability and spare part economics.
- Fewer exterior parts. You may have seen that the Volt 1.0 has more external body parts than is necessary. These will go away, reducing cost and weight. Fewer interior parts. You may have seen that the Volt 1.0's dashboard has a lot more parts than is necessary. This will be simplified, reducing cost and weight. Interior technology and ergonomics: People have complained that the Volt 1.0 is both too complex, and yet is behind the Tesla in terms of telematics. The Volt 2.0 will both get some more conventional controls (knobs, dials), as well as a more advanced set of displays, showing more information. In other words, better both for more conservative older people, as well as for younger technology enthusiasts alike. Creature comforts: The seats will be better, electrically adjusted, and a sunroof option may happen. Heat, cooling, windshield wipers and lights: I have noted that the Ford ( F) plug-in electric models have better heat, cooling, windshield wipers and lights compared to the Volt 1.0. The Volt 2.0 will seek to narrow or eliminate these shortcomings. The heat and cooling systems are also important for the efficiency of the electric range. All of these things improvements will help eek out a couple of miles of extra range. However, also keep in mind that a Volt 2.0 will also need to be engineered to satisfy ever-increasing safety standards, so that is a continued drag on energy efficiency, as is the case with all new car models.