By now most people who follow green technology developments know that GM has temporarily suspended production of its Volt plug-in hybrid. Specifically, production will be shut down for five weeks so that GM can “align production with demand.” A post-crash-test battery fire with the Volt last year (which was overblown, but nonetheless probably turned off many consumers) and the vehicle’s high price have been cited as main reasons for slower-than-expected sales and the resulting production re-alignment.
As Lacey Plache, chief economist for the auto information site Edmunds.com said, “The fact that GM is now facing an oversupply of Volts suggests that consumer demand is just not that strong for these vehicle.” Electric-vehicle haters have eaten up the news, and are actively blogging away about how the Volt is a failure.
Gimme a break.
The biggest mistake here is that GM — and Nissan for that matter — was far too aggressive with its sales projections. The Volt’s success, given its initial price point, was always going to be limited to early adopters during its first few years of availability. It’s doing no worse than the Toyota Prius did during its first couple of years in the U.S. market, and the Prius had the advantage of already being available in Japan three years earlier.
So no, the Volt is not a market failure or a failure of technology. The temporary production stoppage is a problem with GM and its inability out of the gate to manage consumer (and market) expectations.
But what really boggles the mind about this story is the claim that there’s not enough demand to meet supply. Anton Wahlman of The Street seems to be confused about this as well. He writes that the average number of Volts at dealerships is quite low (often just two) compared to other vehicle models, and this appears to be the case across the United States — New York City, Washington, D.C., and San Francisco included.
Oh, and Canada as well. I received an e-mail today from Milfred Hammerbacher, CEO and president of solar panel maker and installer Canadian Solar Solutions. The Toyota Prius he has driven for many years is getting old and he explained that he was interested in replacing the Prius with a Volt. He inquired about availability at his local dealership in Waterloo, Ontario, and was told he’d have to wait 18 months to get the car! They told him demand in Canada is quite strong.
“If truly the market is hot in Canada, why can’t they figure out how to ship these cars into Canada?” Hammerbacher asked. “It doesn’t make any sense.” But the solar executive isn’t willing to wait 18 months. “I’ve gone ahead and ordered a new Prius.”
I relayed this story to a spokesperson at GM Canada and this was the response I got: “He should not have been told he would have to wait 18 months. If he placed an order today we would expect the Volt to be delivered in mid-summer.”
That works out to early August — so about six months.
Okay, fine, even if that dealership in Waterloo had the wrong information, why does a customer have to wait six months? That’s how long you’d wait to get an MRI scan in Ontario. Perhaps long wait times is part of GM’s problem, at least in the Canadian market. But given the limited inventory that appears in U.S. dealerships as well, it would seem GM’s problem isn’t necessarily poor demand as much as an inability to deliver a product when a customer wants it — i.e. as soon as possible.
Forced to wait, perhaps potential purchasers are opting for something else.