I always like to watch the moves being made by the auto industry in the painfully slow transition toward hybrid and electric vehicles. I wrote several months about GM and what they will market as their flagship electric vehicle the ‘Chevy Volt’. On the plus side Chevrolet will have the vehicle on dealer’s book by the end of the year which makes them the first US manufacturer to mass product a car of this type. On the other hand news this week has been published that perhaps best sums up the problems with Detroit in terms of leading the market – the base MSRP has just been announced.

I’ve written before that consumers know a premium will be attached to vehicles of this type and that the premium will often be offset by tax credits so some extent, but the news from Chevrolet makes me wonder if they closed their market research department along with so many dealerships in recent years? The base price for the small sedan has been announced at $41,000 a figure that is some $10-20,000 above the ‘traditionally powered’ competition. It’s a price that I’m concerned will make far too many potential buyers recoil from the vehicle when a similar sedan or even a hybrid can be purchased quite easily for a price in the vicinity of $25,000.

The Chevrolet Volt, will sticker shock reduce impact?

So just what are Chevrolet thinking? Part of the answer might come from the company themselves who say that the car is not just the best in its class, but the only car in its class. To a certain extent that is true but the scenario will be very short lived. Are we looking at the the motoring equivalent of flat screen TV which cost more than triple what they now do when they were first brought onto the market? I don’t know enough about the production costs of the vehicle but would safely assume that much of the cost of the vehicle is padded to cover research and development. If that is the case Chevrolet are not only showing a short-sighted approach but also one that won’t captivate the market and lead toward a much more rapid acceptance of electric vehicles. Time will tell whether the price will deter as many would be buyers as I think it will, but I can’t help feeling that a tag of around $33,000 while still expensive could have seen Chevrolet dominate this market for years to come. I think the cost might deter up to 50% of the consumers they had lined up for the Volt. If that’s correct it demonstrates again where Detroit just don’t seem to get it.

Chevy further justify the cost by explaining the car is ‘loaded’ with extras so that the car buyer sees the vehicle with more prestige. Included in the base price will be “Standard screen base navigation, Bose premium audio, five years of Onstar directions and connections, plus the fundamental element of the vehicle which is an extended range capability which takes you from the 40 miles of battery power up to an additional 300 miles.”

It makes me wonder what the base price would be if the car was equipped simply to compete directly with the Toyota Corolla or the Honda Civic? Don’t Chevrolet understand that the environmental features of the car will lure buyers – not the offer of an Onstar computer? It’s like purchasing solar power for you home but taking on an extra 20% to the costs because the panels also as outdoor speakers for your patio. This isn’t what will draw the consumers to the product in my opinion.  My excitement about the Volt has dropped rapidly with this news, although I love the concept and the technology. I just think that extending your profiteering to cover R&D instead of  focusing on market share and market conversion would have been a far better approach for GM to take. What do you think?