Are Chevy Volt Fleet Sales Latest Evidence of GM Deception?

Sales for the Chevy Volt have been stagnant and it has become apparent that lack of supply is not the reason. GM CEO Dan Akerson is responsible for tying the success of GM into the success of the Volt by having made lofty claims that the vehicle was, in fact, the future of the company while investing a major portion of marketing dollars to help support the perception. Deception was evident as statements were made that the vehicle was “virtually” sold out and supply couldn’t keep up with demand, while evidence surfaced that this was not the case. GM cancelled plans to run a second shift for the vehicle even as it continued the ruse and floated rumors that there were huge waiting lists of purchasers for the vehicle.

The latest nail in the coffin for the Volt is the discovery that the lithium-ion batteries that power the vehicles may be a safety risk as NHTSA vehicles spontaneously combusted into flames days or weeks after crash-tests. More disturbingly, NHTSA and GM did not immediately notify the public, instead waiting six months to reveal the problem. The delay is being investigated by congress and the NLPC has requested documentation from NHTSA under the Freedom of Information Act regarding communications between the agency and GM.

There are costly lessons to be learned from the Volt debacle. The first step is to accept the fact that, even though a small minority of Volt owners may be very happy with their vehicles, the car does not offer the value to appeal to the vast majority of car buyers. We then should question why so much taxpayer money has been spent to produce and promote the Volt. There is no need to condemn all EVs or hybrids for the sins of the Volt, but even the most ideologically green enthusiast should realize that studies should be done to evaluate the costs and benefits of any new technology before spending billions of taxpayer dollars to promote that technology.

More studies are needed on the environmental and safety issues with lithium-ion batteries, as well as the ability of our power grid to produce the additional electricity needed to power EVs. A debate is also needed as to what the costs and benefit to oil dependence are if EV goals are met. If we can reach an obtainable goal of having about six million EVs on US roads in 10 years, what are the actual benefits? Using projections that there will be close to 300 million total passenger vehicles on the road that will account for between 40% and 45% of total US oil consumption, the math would give us a reduction of oil usage of less than 1%. Assuming the tax subsidies currently offered on the EVs remain, we are talking about spending approximately $50 billion of taxpayer money over 10 years, with a portion of that having gone towards grants and charger subsidies, to achieve about a 1% reduction in oil usage. Is that a wise investment? And shouldn’t we be pursuing alternatives, like natural gas vehicles, as a possible viable option?

The Volt fiasco has been supported by cronies in industry along with directives from the Obama Administration. General Electric still supports the vehicle and, according to a WSJ report, “…said it has no plans to change its commitment to purchase Volts for its fleet and fleet-services business. A year ago GE agreed to buy 12,000 Volts by 2015 as part of a larger commitment to electric vehicles. GE so far has purchased hundreds of the electric-gas vehicles and continues to receive more daily.” GE stands to profit from selling charging stations for the vehicles and is probably the number one crony corporation to benefit from green initiatives.

When the Volt was rolled out over a year ago, a financial news network that was majority owned by GE acted as cheerleader for the Volt dedicating the better part of a day (and then some) hyping the vehicle. The network also suggested that all taxpayers be allowed to “benefit” by participating in the GM IPO and GM was portrayed as a company that would be “printing money.” Neither the Volt nor GM shares have lived up to the hype. The network is now minority owned by GE, but GM stories are still handled with kid gloves by the commentators.

With powerful supporters like the Obama Administration and GE, how far will GM go to overcome the evidence that the Volt is not all it was cracked up to be? The level of deception to this point may indicate that further attempts to fudge demand will be made. I am already suspicious of GM’s reporting of fleet sales for the Volt. All conversations I have had with people at Chevy dealerships indicate that individual demand for the Volt is very low. Meanwhile, I continue to read articles about how townships are purchasing Volts with federal grant money along with reports that GE continues to buy a good percentage of the Volts sold. It would not be hard for GM to fudge the numbers and claim that demand is coming from individual consumers, even as taxpayers and GE foot the bill.

When Volt sales occur, they are reported on the GM portal. If vehicles purchased by townships or GE are not entered as fleet sales, GM would be able to give the impression that sales are coming from individuals. This is not a far-fetched scenario, as Akerson and GM have not been all that honest up to this point.  Consider GE’s statement that they have been buying hundreds of Volts and then add townships, utility companies and federal government purchases (not to mention dealer to dealer sales) and I would have to assume that actual total fleet sales are at least over a thousand and perhaps much more. Given the fact that only a few thousand Volts have been sold year to date, the fleet percentage is likely to be higher than reported by GM.

I will say this much, given the recent NHTSA safety investigation into the Volt and the feedback I am getting from dealerships, if December sales of the Volt exceed 1,000 it will not be because individual consumers are buying the vehicles in large numbers. Much of the sales will have come from crony GE and taxpayer-funded township purchases. 

Perhaps the technology for EVs can improve in the near future and it will be feasible for manufacturers to produce the vehicles without huge subsidies. The problems surfacing for the Volt, while bringing a realization that we should be skeptical of costly green initiatives rushed through by our government, should be viewed as a failure of Akerson led GM and the Obama Administration’s energy policies and not of all EV technology. Akerson should be held accountable and it is time to replace the Obama appointed leadership at GM. Treasury should first get the taxpayers out of its stake in GM, and then the company should be run without government influence. And that means that the shareholders should decide who sits on the GM board and who serves as CEO of the company. The Chevy Volt debacle and the deceit that came with it are evidence that Akerson is not the guy for the job.  

Mark Modica is an NLPC Associate Fellow.