NEW YORK (TheStreet) -- How do you improve a car that has the highest customer satisfactionrating 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 - Get Report) Chevrolet hascut the price of any remaining 2012 Volt models by $5,000, and the2013 model by $4,000. This looks to me like completely irrelevantnon-news. Why? For starters, the 2012 model was already sold out a long time ago, atleast in the country's largest market, California. As of October2012, I couldn't find a single 2012 model Volt left in stock at any ofthe California dealers I called. What about the $4,000 price cut for the 2013 model? Well, that's notnews either. Most Chevrolet dealers appear to have been offeringbetween $4,000 and $5,000 off 2013 Volts from time to time, since atleast last August. Considering that demand for the Volt wasvery strong in California in the second half of 2012, when inventoriesdwindled 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 fromover 2,500 per month in late 2012 to close to 1,500 per month so farin 2013. So why have Volt sales fallen? There are five reasons: 1. Tesla (TSLA - Get Report). The Model S started eating into its large backlog ofreservations in 2012, but as of early 2013 you can now get a Teslawithin 60 days -- perhaps as little as 30 days -- if you order onenow. Some people are clearly willing to pay at least twice as muchmoney for a Tesla, compared to a Volt.
One reason contributing to people buying a more expensive Tesla isthat some employers are paying their employees more money if they buyan electric car. For example, privately held Evernote pays itsemployees $250 per month -- $3,000 per year -- if they buy a plug-incar. Employees also get free charging at the office. Thisdisproportionately skews the electric car market to the more expensivemodels with larger batteries, and of course Tesla is the mostexpensive EV with the largest battery.
Battery: This is the centerpiece of the Volt 2.0.Significant improvements in battery technology, cooling, heating andpackaging is enabling GM to offer the Volt 2.0 in two differentversions:
- A five-seat version (unlike the Volt 1.0, which was only availablewith four seats) with a 16 kWh battery. This uses the same T-shapedbattery as the Volt 1.0, but there is a "cut-out" for a fifthpassenger, effectively dividing the battery into two clusters -- onebetween the front seats, and the other under the rear seat. Viewedfrom 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 thisspace in the "tunnel," battery capacity increases from 16 kWh to 20kWh. This version would also be a "spare part" that would also fitinside the Volt 1.0, proving the long-term upgradeability of the Volt. The battery enclosure would be identical to the Volt 1.0, preservinglong-term upgradeability and spare part economics.
- Fewer exterior parts. You may have seen that the Volt 1.0 hasmore 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'sdashboard has a lot more parts than is necessary. This will besimplified, reducing cost and weight. Interior technology and ergonomics: People have complained thatthe Volt 1.0 is both too complex, and yet is behind the Tesla in termsof telematics. The Volt 2.0 will both get some more conventionalcontrols (knobs, dials), as well as a more advanced set of displays,showing more information. In other words, better both for moreconservative older people, as well as for younger technologyenthusiasts alike. Creature comforts: The seats will be better, electricallyadjusted, and a sunroof option may happen. Heat, cooling, windshield wipers and lights: I have noted thatthe Ford ( F - Get Report) plug-in electric models have better heat, cooling, windshieldwipers and lights compared to the Volt 1.0. The Volt 2.0 will seek tonarrow or eliminate these shortcomings. The heat and cooling systems are also important for the efficiency ofthe electric range. All of these things improvements will help eekout a couple of miles of extra range. However, also keep in mind thata Volt 2.0 will also need to be engineered to satisfy ever-increasingsafety standards, so that is a continued drag on energy efficiency, asis the case with all new car models.