Market analysis and Mostly benign rambling on the launch of the Chevrolet Volt

Tuesday marked the announcement for pricing on the long awaited Chevy Volt. See, a long time ago in 2007 a corporation called GM showed a concept car in the remote corner of it's green section through the auto show season. It was a much applauded concept but few took it seriously.

Then, the bottom fell out. 18 months later GM and Chrysler were bankrupt wards of the state and the Obama administration was their boss. Suddenly the slow track Volt was GMs top R&D priority. Batteries were abused. Frames were abused. One billion dollars disappeared into a project which was widely seen as GMs most defining moment since it's meteoric rise after WWII.

For many GM embodies the pinnacle of corporate mismanagement. In the last thirty years GM has managed to lose market share in most years. It's business model has been almost entirely on large and high powered SUVs and boat sized sedans. It was once quipped that if you want to end the war on drugs, you could simply put GM in charge of selling them.

But now the Volt is here. If it lives up to its promise, it could remake GM and blow open a whole new market segment. It goes 40 on electricity which costs two to seven cents a mile. After that a gas powered generator kicks on, allowing it to travel another 300 miles. After that the car can be filled, gas, or both to continue on. The interior is well appointed with leather and all types of electronics optional.

Sound good? There is a catch in the from of a $41000-44000 price tag. With the $7500 tax break, the Volt comes in at $33500. This price puts it in competition with the BMW 3, Acura TL and TSX, the Lexus IS, Cadillac CTS, the Audi A4 and the Corvette.

So can they do it? The luxury car market has been soft and the Volt lacks in performance... I think that's ok. At a time when Camrys come with 260 ponies and Mustangs get 30mpg there is room in every niche.

There will be just 10,000 volts in the first year, most of which will be accounted for long before the first one makes it to show rooms. Depending on initial quality and consumer reaction it seems likely that at very least GM will have a small market success on it's hand. A feather in its cap to show that GM can do innovative and environmentally sound things.

The true make or break will come down to what gas prices do. Peak oil has arrived, and if the economy picks up rapidly we will see $4 gas return, in which case the Volt would justify its premium price to a much larger audience.