G.M.’s Volt is an innovative hybrid, but profits could prove elusive.

By MICHELINE MAYNARD

DETROIT - The Chevrolet Volt, a plug-in hybrid, will not arrive in showrooms until late 2010. But it is already straining under the weight of an entire company.
Executives at General Motors, the largest and apparently the most imperiled of the three American car companies, are using the Volt as the centerpiece of their case to a skeptical Congress that their business plan for a turnaround is strong, and that a federal bailout would be a good investment in G.M.’s future.
In recent ads, the company said of the Volt: “This is not just a car. It’s a vision of our future. Another claimed that the vehicle would “completely reinvent the automotive industry.”
There is a long tradition in Detroit of relying on a single new model or technology to quickly solve bigger problems.
But whether the Volt can live up to its billing is already a matter of debate. And some industry analysts note that General Motors has a poor record of introducing green technology to the market.
The Volt is a big long-term bet. New vehicles typically cost $1 billion to develop, and the Volt requires new technology that probably inflated that price tag even more.
G.M. says the car, which is scheduled to arrive in showrooms two years from now, will be able to travel 64 kilometers on a charge, but it will also have a small gas engine to extend the range to as much as 1000 kilometers using both the battery and gasoline . It is expected to cost about $40,000.
To some, the Volt will remain a niche vehicle until its cost drops sharply and its range rises dramatically.
“If you’re the affluent individual who wants to make a statement, it’s one thing,” said Ron Pinelli, president of MotorIntelligence.
com, an industry analysis firm. “If you’re Joe the Commuter, you’re not going to spend $40,000 on an electric car. It’s insane.”
In one exchange during the often-tense recent hearings in Congress for the three car companies, Representative John Campbell, a California Republican, asked on November 19 whether the Volt would provide the financial boost that G.M. needs.
“The Chevy Volt may be a great car, but they’re not going to make any money with it, at least not right away,” he said.
What sets the Volt apart, G.M. officials say, is that there is nothing like it on American roads, at least for now.
“We’re moving from a model where the primary power plant is no longer an internal combustion engine. It’s an electric motor,” said Jon Lauckner, G.M. vice president for global program management. “It’s a huge change in the whole paradigm of where cars have been.” Once it arrives, Mr. Lauckner said, customers will adjust more rapidly to the Volt than they did to the Prius, Toyota’s hybrid gas-electric car.
“We’ve turned into a plug-in society. We’ve got cellphones, PDAs, you name it, that are all plugged in. To a certain extent, it’s not much more complicated conceptually than coming in and plugging in your cellphone.”
David Cole, chairman of the Center for Automotive Research, in Ann Arbor, Michigan, agreed that the Volt would be a “game-changer.” When it is introduced, “we can say that the invention has arrived,” Mr. Cole said.
Many carmakers, including Mitsubishi, Nissan and BMW, have plug-ins under development.
Toyota said last year that it was working on a plug-in hybrid vehicle that would be available by 2010, meaning it could conceivably beat the Volt. Toyota has not said whether it will sell the vehicle to the public or only to fleet customers. G.M. has not said when or if it plans to make money off the Volt.
Mr. Cole attributed much of the Volt’s higher cost to its lithium-ion battery, which he estimated initially would cost $10,000 to $15,000 a car. But he predicted battery prices could someday be one-third that much, prompting the car’s price to drop closer to $30,000, and generating more demand. (G.M. eventually expects to sell about 60,000 annually.) “You’re never going to implement high volume until you get to future generations of the technology,” Mr. Cole said.
Sales of the Prius hybrid electric car, which had its debut in the United States in 2000, bumped along for their first few years until Toyota introduced a more powerful model in 2003. They accelerated when gas prices jumped in 2005 and hit a record in 2007, when Toyota sold more than 180,000.
The Volt is not General Motors’ first electric vehicle. In 1996, G.M. started leasing the EV1, an electric car, to customers in California. Although its few hundred owners loved it, the EV1 was discontinued just three years later.
David Friedman, a research director at the Union of Concerned Scientists, said he was concerned that G.M. was promising too much with the Volt. He said consumers who would benefit most from the Volt, city dwellers, might find it inconvenient since they would have no obvious place to plug it in on urban streets.
“The Volt is a risk worth taking: it’s just not a risk worth betting your whole future on,” Mr. Friedman said. “I do worry G.M. is doing it more out of image building than a focus on developing products.”