GM Eases Summer Production of Chevrolet Bolt

By Adrienne Roberts Features Dow Jones Newswires

Workers assembling General Motors Co.'s Tesla fighter are taking a month off this summer amid lukewarm demand, a sign American car buyers are showing little interest in vehicles that rely solely on battery power to get from Point A to B.

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The Detroit auto giant's plant in Orion Township, Mich., began producing the Chevrolet Bolt late last year, with output hitting more than 15,000 vehicles before the company's typical summer shutdown in the beginning of July. That break usually spans two weeks, but workers at the Bolt plant -- also building the slow-selling compact Chevrolet Sonic -- remain on vacation through the third week of the month as inventories of both cars climb.

A GM spokesman, saying the shutdown stems from the inventory of unsold Sonics, said workers return to the Orion assembly line July 24. However, they will take another one-week break in August.

The long layoff is unusual for a vehicle that is still considered to be in launch mode and delivers a blow to GM as Tesla Inc. is ramping up production of the Model 3, which is priced lower than the Bolt and delivers similar driving range on a charge. The $35,000 Model 3 is Tesla's fourth model, and already has amassed hundreds of thousands of reservations from potential buyers.

The $37,000 Bolt is struggling to drum up similar demand amid low gasoline prices. About 7,500 Bolts have been sold through June, but it is yet to go on sale in all 50 states.

Sales of the Bolt are roughly equivalent to the Nissan Leaf, a lower-range electric car that has been on sale in the U.S. for several years. Electric vehicles make up just 0.6% of U.S. market share in 2017, according to Autotrader.com, as inadequate charging infrastructure, high costs and low gasoline prices have muted demand.

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Haig Stoddard, an analyst with Wards.com, said the Bolt is a strong performer among the field of electric vehicles, but it is "not selling as strong as GM had hoped." Tesla represents nearly half of EV sales in the U.S., Autotrader estimates.

"Obviously, GM has enough inventory of Bolts to accommodate sales if they're closing the plant," Autotrader.com analyst Michelle Krebs said. She said the car has gotten off to a "slow start...it's been an uphill battle."

GM's overall market share is stuck in neutral, falling below 17% as its fuel-efficient car offerings slump and it takes aggressive action to reduce low-margin sales to rental car companies. The Bolt, under development for several years, helps the company meet tightening emissions standards, and buyers qualify for a $7,500 tax credit after the sale.

"Putting the Bolt into the market should be looked at as part of GM's R&D in electrification," Mr. Stoddard said. "GM and the rest of the industry are preparing for the long term."

Jim Cain, a GM spokesman, said the company has more than 100 days' supply of Bolt inventory on Chevrolet dealer lots (compared with an industry average of 74 days'), but that number is distorted by the fact only some Chevy dealers currently offer the car.

GM's business plan is different than that of Tesla, which relies solely on selling electric vehicles for its automotive revenue.

GM, highly dependent on light-truck sales for profit, has scrambled to manage rising inventories of slow-selling passenger cars, including conventional sedans. The auto maker is cutting jobs and slowing production at several of its passenger-car plants this year, including factories that make Chevrolet Malibu and Cadillac sedans.

The Bolt has been acclaimed as an affordable alternative to Tesla's popular Model S, which often sells for more than $100,000. Unlike Tesla, however, GM doesn't offer buyers a dedicated charging network, and the company is reliant on an independent dealer network to sell the car.

Adam Kraushaar, president of Lester Glenn Auto Group located about 50 miles south of New York City in New Jersey, said his Chevy dealership is too far from the city for people living in the community to buy a Bolt, even with a 238-mile range on a charge. Initial demand for the Bolt at his dealership was strong, but then dropped off "fairly dramatically."

Although the car isn't "setting the world on fire," it isn't languishing, Mr. Kraushaar said.

Paul Masse, owner of Paul Masse Chevrolet in East Providence, Rhode Island, thinks the Bolt will be a steady seller. Mr. Masse ordered 100 Bolts for his dealership, significantly more than GM was planning on sending him.

Customers often come in looking for a crossover wagon, but once he tells them about the Bolt's range, roominess and the little maintenance that is required, he said he can change opinions. Since receiving his first order of 100 Bolts at the end of May, he said he has sold 22.

"Once gas prices go up, you'll want a Bolt," Mr. Masse said. For now, he is offering a lease deal for zero dollars down and a payment of $249 a month.

Write to Adrienne Roberts at Adrienne.Roberts@wsj.com

(END) Dow Jones Newswires

July 20, 2017 14:03 ET (18:03 GMT)