Out of Control Policy Blog

Weak Demand Slows Chevy Volt Production

General Motors has decided to shut down production of its plug-in electric hybrid, the Chevy Volt, so that demand can catch up to inventories, idling 1,300 workers for five weeks. According to TPM (March 2, 2012):

“Even with sales up in February over January, we are still seeking to align our production with demand,” GM spokesman Chris Lee told the newspaper.

"GM sold 1,023 Volts in February and 1,626 for the year total, according to the Detroit Free Press, compared to 7,621 in 2011, the first year it was available for sale. The 2011 total came in at less than GM’s estimated 10,000 units. GM also revoked its projections that the car would sell 45,000 units in 2012, the Chicago Tribune reported hours before the news that production had been halted."

GM was still able to outsell its competitor, the Nissan Leaf, one more indicator of how slow this market will be to develop.

This is another indicator of the importance of keeping government out of the green technology business. GM had committed to the Volt well before the federal bailouts, and the private market is much better at dealing with the uncertainties and risks of emerging markets. Once federal subsidies become involved, partisanship and political ideology become drivers of technlogical change without the discipline of the profit motive or the reality check of consumer demand.

For more on this in the context of green technology, see Adam Pashek's writing on this issue at Reason Foundation. I've also discussed these pressures in the context of China's high-speed rail debacle.

Samuel Staley is Research Fellow


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