Will the Volt’s problems zap electric car sales?

December 8, 2011, 1:22 AM UTC

As automotive imbroglios go, General Motors’ problems with its Chevrolet Volt barely rate. Unlike scandals at Ford and Toyota that affected millions and sent both companies reeling, GM only has about 6,500 Volt owners to worry about. But some fret that the incident could put a dent in sales of advanced green vehicles just as they are beginning to catch on.

The troubled started in May, when the National Highway Traffic Safety Administration (NHTSA) performed crash safety tests on the Volt. Three weeks later the test vehicle caught fire while it was in storage at a NHTSA testing facility. Since then, two out of the NHTSA’s three follow-up tests have reproduced the fires. GM (GM) announced it would provide loaner vehicles to owners and even consider buying the cars back. About two dozen people have contacted the company about making the latter move, a company spokesman said.

It is a delicate moment for sales of highly advanced vehicles like the Volt. For the first time major manufacturers, including Toyota (TM), Ford (F) and Nissan (NSANY), are rushing to put out mass-market electric or partially electric vehicles.(The Volt, which costs about $39,000 before hefty tax credits, is a so-called extended range hybrid, which has both an electric motor and a conventional gas engine.) Consumers, meanwhile, are slowly beginning to put aside concerns over the range and high costs of such cars.

Still, the market is tiny. Analysts at Pike Research expect that global sales of plug-in hybrids and electrics will only reach 1 million units in 2015, compared to a global auto market of about 70 million vehicles today. In the U.S., hybrid and electric vehicles only make up about 2% of automotive sales, according to car-buying site Edmunds.com.

Some green car advocates worry that bad press could trim the budding category’s prospects. According to David Friedman, deputy director and senior engineer of the Union of Concerned Scientists, consumers have a three- to five-year attention span for emerging technologies. A bump in the road could hurt sales. “I’m sure there are people who will decide not to get an electric car after this, but, at worst, this will cost Chevy some Volt sales,” adds John O’Dell, senior editor of Edmunds.com AutoObserver blog.

GM has a lot going for it, though. The company has been quick to react to press accounts of the incident, and it was further buoyed when the car shopping Bible, Consumer Reports, rated the Volt number one in owner satisfaction. GM hasn’t licensed its technology to other car makers, so it has no manufacturing partners to fret over either. GM spokesman Greg Martin says that customers buying such vehicles are also the most informed. Sebastian Blanco, editor-in-chief of AutoblogGreen.com, agrees. “There’s enough interest in electric vehicles that they can weather the ups and downs for now,” he added.

The question now is how GM handles the NHTSA investigation, says Tesla spokesman Ricardo Reyes. Tesla voluntarily recalled 439 of its electric Roadsters following a customer report that a cable chafed against a carbon fiber panel and began to emit smoke. Reyes says sometimes these sorts of growing pains can actually have a silver lining for auto makers. “Where it sparks research and conversation, I think we come out ahead,” he says.