Popularity of New Volt Shows Potential of Second-Generation Plug-ins

By · April 16, 2016

With the second-generation Chevy Volt in full production, the plug-in hybrid from General Motors has overtaken the Nissan LEAF to claim the mantle of best-selling affordable plug-in in the United States. In March, Volt sales grew by nearly 200 percent over last year, propelling the Volt past the LEAF in cumulative sales since the two cars launched in late 2010.

Sales of both vehicles slumped relative to the overall market in recent years—due largely to falling gas prices and the aging of first-generation editions of the plug-ins.

In October, Chevy began selling the second-generation Volt. While the first-generation Volt captured the hearts of early adopters of plug-in technology, the new Volt—which sports more traditional exterior styling and a simplified dashboard—is geared toward a broader market of customers. Most importantly, the 2016 Volt now boasts a range of 53 miles, an improvement of 15 miles over the 2015 model.

The recovery in Volt sales, which began late last year, is partly attributed to pent-up demand—buyers who delayed purchases until the launch of a new and improved model are now making the move. The Nissan LEAF now faces a similar reality, as buyers wait for Nissan to release its second-generation EV sometime next year. Nissan attempted to mitigate flat sales by offering an optional larger battery pack for the 2016 model year, but so far the incremental jump from 80 to 107 miles has not made a big difference in terms of sales numbers.

Are Flat Sales a Problem for Plug-ins?

The overall plug-in market has not yet surpassed 1 percent of total car sales in the U.S. and sales of the two leading affordable EVs have been tepid in recent years. Yet, this is not necessarily a long-term sign of a moribund market for electric vehicles. Even with low gas prices significantly impacting the financial impetus for going electric, a sizable number of consumers are warming to the idea of plug-in vehicles.

Interest has been galvanized by the success of Tesla, whose costly luxury models have been a hit with well-heeled buyers. Last month, Tesla began taking deposits for the forthcoming Model 3, which will start at about $35,000. The Model 3 sports a driving range of more than 200 miles. In just two weeks, about 300,000 people added their names to the Model 3 waiting list, even though the small sedan isn’t scheduled to begin deliveries until late 2017.

The recent recovery of Volt sales to near-record highs still falls short of the “game-changing” growth Chevy was hoping for when it launched the plug-in back in 2010. Yet, the potential for the plug-in market will not be fully understood until we see a jump or series of jumps in prices at the pumps.

The timing of a future increase in gas prices, just when battery technology improves and production costs drop, could move sales of plug-ins well beyond their current niche market. At the same time, carmakers continue to release new models, as a means to comply with stricter mandates on emissions.

If the unprecedented interest in the Tesla Model 3 is any indication, the number consumers who want to drive plug-ins could surpass all previous expectations. Those buyers are just waiting for the cost and attractiveness of the vehicles to improve—in a manner similar to the upgrade of the Chevy Volt from the first to the second generation.

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