Chevy Volt

Is the Chevy Volt Ready for Prime Time?

Written by Green Chip Stocks
Posted August 12, 2008 at 5:27PM

The buzz surrounding the Chevy Volt is increasingly overwhelming. An overview and update is certainly in order.

It was only five years ago when General Motors product chief Bob Lutz said that hybrid cars don't make "economic or environmental sense."

Since then, the market and the science has proven him absolutely wrong. Prius sales are off the charts and every major automaker is now playing the hybrid game, albeit with different results.

Before announcing the Chevy Volt at the 2007 Detroit Auto Show, General Motors definitely took its lumps, failing with both Saturn hybrid knock-offs and with trying to implement hybrid systems on large gas-guzzlers like SUVs and trucks.

Failing and desperate, executives rolled out the Chevy Volt—an impressive piece of machinery until you look at the numbers.

Originally well-received by all parties, the Volt now looks as though it'll come with a price tag twice as high as its competitors. Some are even saying it could lose money for GM, which has been posting billions in annual losses for years.

And there are battery issues. Oh, are there battery issues.

So the question remains: Is the Chevy Volt just a very expensive public relations campaign.

Chevy Volt: Is There Something Better?

According to John McCain, there isn't. He recently told a group of GM workers that "The eyes of the world are now on the Volt. It's the future of America and the world."

I guess he hasn't heard of UQM, Tesla, Phoenix Motorcars, Aptera, or Toyota, for that matter.

Yet, the promises have been made. When first announced, the Chevy Volt was rumored to cost $25,000. Then GM was hinting at $30,000.

Now, Lutz says that $40,000 might be possible, but that $48,000 is more realistic. It's beginning to look like a moronic auction.

Do I hear $50,000? $55,000?

The battery alone is projected to cost $10,000 per vehicle, which will be outsourced to either LG of Korea or Continental AG (XETRA: CON). GM's decision will be announced shortly.

Whichever battery pack is chosen, it will ultimately become a part of GM's proprietary E-Flex hybrid powertrain. The Volt will use batteries to power the car up to 40 miles a day without recharching. When the electric battery needs to be recharged, the E-Flex Drive System—complete with a small internal combustion engine—kicks in and recharges the lithium ion battery pack while powering the vehicle.

Don't get me wrong, this is a very novel concept. Kudos to GM if they can pull it off.

But the fact remains, the Toyota Prius commands a 51% share of the domestic hybrid market. And its already an established consumer vehicle, in many cases delivering in excess of 50 miles per gallon. The Civic hybrid is also very impressive. And so are the larger hybrid models, like Camry and Accord.

Cracking that market share will be a tough row to hoe for General Motors what with them being so late to the game.

Some manufacturers, like Phoenix Motorcars, Tesla, and Aptera have foregone hybrids altogether in pursuit of all electric vehicles. All three of those companies have successfully manufactured vehicles that run entirely on electricity.

Hybrid Investment Opportunities

If the Chevy Volt is a less-than-stellar consumer option, then GM (NYSE: GM) certainly isn't a pure play hybrid investment outlet.

Tesla, which is currently manufacturing the 220 mile per charge Roadster and has plans for sedan, was rumored to be going public this year.

And while the company has formally acknowledged its intent to do so, unfavorable market conditions have prevented it thus far. When it does come to market though, be ready to buy.

But you can still invest in electric vehicle technology. Both Altair Nanotechnologies (NASDAQ: ALTI) and UQM Technologies (AMEX: UQM) are supplying battery parts to Phoenix Motorcars for their SUT, an all electric truck that gets over 100 miles per charge.

And A123 Systems Inc., which has battery deals with GM, Think, and BAE Systems just recently filed for a much anticipated $175 million IPO. I'd be all over that one as soon as it lists.

There are plenty of other up-and-coming hybrid, electric vehicle, and battery plays out there. Only time will tell which will be successful.

In addition to companies manufacturing vehicles, there will be a massive investment opportunity in companies that will be modify our grid to support increasing amounts of electric vehicles.

My service, Alternative Energy Speculator, will guide you on how to profit from this transportation renaissance.

Until next time,

nick hodge

Nick