Wednesday, March 9, 2011

GM Volt not Flash in the Pan, 2nd Shift Ordered

General Motors announced today a 2nd shift for the Detroit-Hamtramck plant which produces the Chevy Volt. Nearly 1,000 jobs will be created. A pool of 2,500 laid off auto workers will have first dibs on the positions.

March 9 The Detroit Free Press

GM is seeking to build more than 25,000 Volts this year, up from the original target of about 10,000, CEO Dan Akerson has said, as the automaker prepares to battle higher gas prices and make money on the Volt. Executives are debating a decision to produce 120,000 Volts annually starting next year, well above the current estimate of 45,000.
The timing for adding the shift could change as GM continues to weigh its Volt production schedule amid rising oil prices.

Ramping up production for the Volt, might be viewed as a risk. The car list price is $41,000. If you add the cost of marketing the Volt actually costs more than that. Granted, buyers of the Volt are eligible for up to $7,500 in tax incentives, but are there enough folks who can afford a $30,000-odd car? That's  a gamble.

However, oil prices will continue to rise. The recent spike at the pump because of the civil war in Libya is just a pinch compared to the roundhouse the economy will receive if unrest continues to spread across oil producing nations. Even if things calm down and a thousand years of peace reign oil prices will still go up.

There are 7 billion people on the planet. There will be 9 billion by 2050. Most of the population growth will occur in regions where cars have been monetarily out of reach. That will change. Like the Ford Model T of 20th century, owning a car is a sign of financial success and economic progress. The emerging middles class, particularly in China and India,  wants cars. There is a rising demand (cars). And so, the cost of the supply (oil) will increase. It's economics 101.

It appears that the leadership at GM understands this. If they make this investment in the Volt the car maker will be at the fore front of the electrical vehicle industry. And when the oil prices explode GM, American workers, and Detroit will benefit, instead of suffering declines.

The Volt is a risk GM has to take.

1 comment:

  1. Just saw one at the Chevy dealership the other day, a nice looking car. It was the first one sold in Ann Arbor.The annarbor.com did a write up on it.

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