The Dramatically Improved Chevrolet Volt 2.0

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.

2. Nissan (NSANY) Leaf. Production started in the U.S. of the improved and cost-reduced car in January, and U.S. sales are now running approximately 2,500 per month. With an advertised lease price of $199 per month, this is taking some sales from the Volt.

3. Fiat 500 electric. For sale only in California, hundreds of customers are signed up to take delivery from Fiat dealerships in California starting this June, and this number is growing every day. As with the Nissan Leaf, the price is $199 per month, taking customers away from the Volt.

4. Chevrolet Spark EV. For sale in California and Oregon starting in the coming weeks, this more powerful all-electric competitor to Nissan Leaf and Fiat 500 electric also costs $199 per month. Clearly some people will prefer this rocket (402 lb.ft worth of torque) ahead of the Volt.

The cash price is also a record-low $27,500 -- $17,500 in California after tax incentives, minus the $3,000 per year an employer such as Evernote will pay. Basically, some people are getting this car for essentially free on a six-year basis.

5. The all-new model year 2015 Volt. There is an all-new 2015 Volt 2.0 coming some time in 2014, and savvy potential buyers are holding off for this significantly improved version.

Let me tell you a little bit about the all-new 2015 Chevrolet Volt 2.0, which I expect to enter production some time in 2014. This speculation is based on the best information that I have been able to find, and its accuracy cannot be guaranteed. It is speculation, and it is possible that all of this information is somehow wrong.

That said, here are the key aspects of the all-new 2015 Chevrolet Volt 2.0, according to my best sources:

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.

What does this mean for all-electric range? Basically, while the current Volt 1.0 is rated by the EPA at 38 miles, the five-seat Volt should be around 40 miles, and the four-seat Volt (with the larger battery) would be closer to 50 miles.

Under the hood, the gasoline and electric combination will have been reworked primarily for efficiency. It is believed that the 1.4 liter four-cylinder will make way for a 1.2 liter three-cylinder. Weight will likely be down, in that area of the car, under the hood.

The gasoline efficiency will have been improved from the current 35-40 MPG (after the first 38 miles on all-electric, of course), to something very close to 50 MPG, or essentially matching the current Toyota Prius. Considering that most Volt owners drive a large majority of their miles on wall-plug battery power, this will not make a huge impact for most people.

However, if you are using the Volt to drive to Las Vegas or otherwise on long trips, going from 35 or 40 MPG to 50 MPG will make a difference. It is simply the result of being a refined 2.0 product.

In any case, the exterior and interior will have been reworked for greater refinement, comfort and reduction in cost. Some examples:
  1. 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.
  2. 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.
  3. 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.
  4. Creature comforts: The seats will be better, electrically adjusted, and a sunroof option may happen.
  5. 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.

All in all, the Chevrolet Volt 2.0 will be the first truly all-new electric car in the market, replacing an equivalent previous model. I have little doubt that just as the Volt 1.0 is a market leader in customer satisfaction today, the Volt 2.0 will be nothing less: The best $40,000 car in the world is about to get even better.

At the time of publication the author was long F.

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

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