Chevy Volt Lost in the Green “Field of Dreams”

From The Foundry, by Mike Brownfield, January 23, 2012 –

“If you build it, they will come,” an ominous voice called out to Kevin Costner’s character, Ray Kinsella, in the movie Field of Dreams. For Kinsella, the “it” was a baseball field in the middle of a farm in Iowa—and despite all the naysayers, the starry-eyed young father put his family’s fortunes on the line in pursuit of his crazy dream.

Eventually, “they” came—the ghosts of the disgraced 1919 Chicago White Sox team and carloads of fans from miles away—and Kinsella’s “knight of faith” reliance on the mysterious voice paid off. Unfortunately for President Obama and General Motors, the dream of creating an electric car revolution is not being realized, and the positive results are about as tangible as the apparitions of eight dead baseball players.

About one year ago, General Motors began producing sleek, highly marketed, battery-powered Chevy Volts—whose $41,000 price tag is being offset with a taxpayer-funded $7,500 tax subsidy. But last year, only 7,671 Volts were sold, falling well short of the 10,000 that GM expected to sell. To make matters worse, GM was forced to recall all of those vehicles to make modifications to keep them safe during crashes. Now, after the dim year of poor sales, car dealers are starting to rebel and don’t want to put the cars on their lots. Jalopnik reports:

Now we’re hearing reports of dealers who don’t want to buy the cars from GM because customers just aren’t materializing for the Volt.

Automotive News gives an example this morning in the New York City market where last month, GM allocated 104 Volts to 14 dealerships in the area and dealers took just 31 of them, the lowest take rate for any Chevy model in that market last month. That group of dealers ordered more than 90% of the other vehicles they were eligible to take.…

In Clovis, Calif., Brett Hedrick, dealer principal at Hedrick’s Chevrolet, sold ten Volts last year. But in December and January he turned down all six Volts allocated to him under GM’s “turn-and-earn” system, which distributes vehicles based on past sales volumes and inventory levels. GM’s “thinking we need six more Volts is just crazy,” Hedrick said to Automotive News. “We’ve never sold more than two in a month.” Hedrick says he usually takes just about every vehicle that GM allocates to him.

With dealers opting to not stock the cars, Jalopnik writes that GM no longer plans on meeting their Volt production targets for 2012—apparently supply and demand matters to the company. Bear in mind that electric cars like the Volt are a “critical element in President Obama’s long-term plan to break our dependence on foreign oil,” as Energy Secretary Steven Chu explained. What’s more, the President predicted that electric cars would help create thousands of new jobs with surging demand for the vehicles, all while pumping some $5 billion in taxpayer funds into the electric-car industry. But even those subsidies aren’t enough to stoke the demand for the product.

Politicians can deliver speeches, set goals, and subsidize; likewise, companies can build products and market them to consumers. But at the end of the day, they can’t force people to buy. “Build it and they will come” might have worked for Ray Kinsella, but it doesn’t always work in the free market. Supply matters, but only if there’s a demand to go with it.

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