GM Punching Up Volt Production, Adding Jobs

By John O'Dell May 19, 2011

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General Motors on Wednesday increased the number of Chevrolet Volt plug-in hybrid vehicles it is officially planning to build, as the company gears up for the formal announcement next week of the new jobs expected for the Detroit-Hamtramck, MI, assembly plant where the Volt is manufactured. GM plans this year to build 16,000 of the Volt and its European version, the Opel Ampera. That includes about 3,500 for overseas delivery and 2,500 as demos at dealerships, spokesman Rob Peterson said. Next year, GM plans to build 60,000 Volts, with 45,000 designated for the U.S.

The new targets add 1,000 Volts to the number to be sent overseas this year and 15,000 to official 2012 estimates. The update comes as GM plans to add as many as 2,500 jobs to the Detroit-Hamtramck factory as soon as this summer. The automaker is planning an announcement of additional jobs for the Detroit-Hamtramck plant, people familiar with the situation said, but GM spokeswoman Kim Carpenter declined to comment.

The increased production forecast nonetheless falls short of expectations set by CEO Dan Akerson as recently as last week. He said building about 25,000 Volts this year was still possible, adding that he hopes GM will eventually build more than 100,000 a year. Executives had discussed making next year's Volt production target as high as 120,000 – double the 60,000 GM now projects. Discussions likely will continue, as GM monitors demand for the extended-range electric car. "I want more, faster," Akerson told reporters last week.

General Motors' current plan to build 16,000 Chevrolet Volts in total this year means the Detroit-Hamtramck plant will have to at least triple the number of extended-range electric cars it puts out each month. Detroit-Hamtramck will have built about 3,300 Volts so far this year when it shuts down in June for four weeks of equipment updates, assuming its production this month mimics that of the first four months of the year. When it restarts production in July, the plant will have discontinued the aged Cadillac DTS and Buick Lucerne front-wheel-drive large cars, which had made up about 87% of the factory's production through April.

That, along with plans to add as many as 2,500 jobs to the plant, will make room for a lot more Volts. The plant currently employs about 1,100 people on one shift. Many of GM's U.S. plants run on three shifts. Discussions continue about how many Volts GM can and should build, based on demand and the availability of supplies, a person familiar with the talks said. The effects on suppliers of the March 11 earthquake in Japan won't hinder Volt production, but they are affecting how bullish GM can be in its plans to increase production this year, this person said. With the addition of the new jobs, on a second or even a third shift, the Detroit-Hamtramck plant would conceivably be able to meet the higher production targets Akerson has mentioned, which dealers would welcome. The plant also needs to prepare to help build the 2013 Chevrolet Malibu starting next year.

Right now, stores that currently sell the Volt are essentially sold out, and the month-long Volt assembly-plant shutdown will not help improve Volt inventories, which are some of the thinnest in the industry: according to Edmunds.com’s proprietary Days To Turn (DTT) metric, Volt’s delivered to dealer lots required only 18 days to be sold. Moreover, dealerships in 41 more states, along with China, Europe and Canada, still are waiting to sell their first models later this year.

If GM does eventually build more than 100,000 Volts, the automaker may come under pressure to turn some of its upcoming Volt cost-cutting into a lower price for consumers. GM currently loses money on every $41,000 Volt it sells, but it is hoping efficiencies from increased production and gradual improvements in the cost of the powertrain will help it start making money on the car. The Volt runs on an expensive lithium-ion battery for its first 25 to 50 miles. The electric drive motor then is supplied with electricity from a gasoline-powered generator.

But GM is generally intending to use cost-cutting to help it make money during the Volt's first few years of sales, not to substantially reduce the car's price, two people familiar with the planning said. For now, price is not keeping the Volt's first customers away, dealers admit. "When you have early adopters, those people are willing to pay. They're not as concerned about the price as maybe the middle-of-the-pack," said Greg Heinrich, a Nevada dealer who is Chevrolet's representative on GM's National Dealer Council. "I think it's a little early to say the pricing issue would come into play. But hey, if it's $25,000 like the Prius, I'm sure that would help."

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