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Chevy Halts Production of Plug-In Hybrid – Will More Follow?

Chevrolet will halt production for 5 weeks during Spring. During this time, 1,300+ workers will be temporarily laid off. Currently, it appears that these workers will all be brought back once production ramps back up.

If you haven’t heard of the Chevy Volt, then you must not have watched much of the Super Bowl as Chevy used the event to springboard a multimillion dollar ad campaign. Apparently, this simply wasn’t enough since production is going to be halted. Chevy has stated that there are several reasons for this.

The primary reason that production will take a hiatus is because there are simply too many of them piling up in inventory. The same is true of the European version of the Volt, known as the Opel Ampera. At the end of February, the in-house Volt inventory topped 3,600 vehicles, which does not include all of the Volts which were in transit to dealerships during the count.

During this time, GM will be refocusing on the hybrid to make it more appealing to consumers. One of the key tenants will be making it more affordable to lease. Currently, the monthly lease price of the Chevy Volt is $399 and will likely be cut to around $350. Additionally, California drivers will be eligible for an additional rebate of $1,500 when they buy the new low-emissions version of the Volt. As an added incentive, the Chevy Volt has qualified for unlimited use in the states carpool lane.

Along with making it easier to lease and own, GM will also be launching another ad campaign which will address many of the popular misconceptions about the vehicle. The biggest hurdle will be overcoming the criticisms of the National Highway Traffic Safety Administration. They noted that there safety concerns related to the lithium-ion battery in the fall of 2011. Since then, the NHTSA has completely cleared the Volt of any safety risk after making changes to modify and strengthen the vehicle.

The Bigger Question

At last year’s Detroit Auto Show, the Chevy Volt was named Car of Year, beating out the Nissan Leaf. Even with all of the accolades, neither car has become popular which raises the question as to whether these types are cars will ever really catch on.

In 2011, US auto sales increased 10%+, however the hybrid segment rose just a little more than 2%. Many people point to the high price tag that these cars carry as the real reason that they haven’t become more popular. The Chevy Volt was being sold for $41,000 (not including a government rebate of $7,500). This is incredibly high considering the number of new, fuel-efficient gas powered cars being made available for a fraction of the price. For example, the Chevrolet Cruze starts out at under $17,000.

The biggest reason that pundits believe that hybrid cars like the Chevy Volt and Nissan Leaf was because rising gas prices would make them more cost-effective over the lifetime of the vehicle. The problem is that very few people foretold the spike in gas powered cars which easily post 30mpg to 40+ mpg. Just as important, these fuel-efficient gas powered cars are nowhere near as expensive.

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