It is hard to understand why General Motors (NYSE: GM) would continue to punish itself by moving further into the electric car market. Sales of its Chevy Volt have been a few hundred per month. It lauded the Volt as the car of the future. Unfortunately, consumers do not see it that way. The industry sales leader is the Nissan Leaf, but even it has done poorly.
GM announced it will build a new electric minicar — the Chevy Spark EV. It also will sell a gasoline-powered version of the car — a sign that GM has doubts about the appeal of the electric version.
GM misjudged the green car market with the Volt. Those drivers who wanted to drive “green” bought the Toyota (NYSE: TM) Prius hybrid in great numbers. Its electric engine is supplemented with gas power. That gives it a driving range the Volt does not have.
GM also did not anticipate the success of clean diesel cars, which have taken another large part of the green market. The cars, many made by Volkswagen, get nearly 50 miles to a gallon. That puts such diesel cars in a solid position to compete with electric vehicles. The other competition in the market comes from a new line of superefficient gas-powered engines. The Ford (NYSE: F) EcoBoost engine runs cars that can get as much as 40 MPG.
GM took the wrong road when it moved into electric cars — the road less traveled.
Douglas A. McIntyre
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