GM to upgrade Detroit plant to build next generation Volt, paper says

The Volt's U.S. sales fell 15 percent in the first quarter. Pictured is the assembly line at the Detroit-Hamtramck plant. Photo credit: BLOOMBERG

UPDATED: 4/7/14 4:09 pm ET - adds more background

DETROIT -- General Motors plans to invest $450 million at its Detroit-Hamtramck Assembly Plant and a battery assembly facility in suburban Detroit to build the next generation Chevrolet Volt, The Detroit News reported.

The investment, which GM plans to announce during an Automotive Press Association luncheon Tuesday in Detroit, is expected to add a second shift at the factory and create 1,400 jobs, unnamed sources told the newspaper.

GM would not confirm the investment, but spokeswoman Katie McBride said the company is planning to hold a news event at the press association event.

Second time around

The plug-in hybrid Volt was a pioneer back in 2010 along with electric Nissan Leaf, but GM won’t be able to lean on the novelty factor the second time around to draw attention, analysts said.

With many more electrified options available since the Volt’s debut, analysts say GM will need to boost the Volt’s EPA-estimated 38-mile electric range, while reducing its pricing and improving its styling to draw attention.

The news comes at a time when Volt sales are declining. During the first quarter, GM sold 3,606 units in the United States -- down 15 percent from the year-earlier period. Sales in 2013 fell 2 percent to 23,094 vehicles.

Cars.Com analyst Jesse Toprak says the next Volt will likely attract the average buyer. Toprak says the Volt will have to go through the same process as the Toyota Prius to become a high-volume vehicle.

“At first, the Prius was bought by celebrities and people who wanted to stand out as environmentally friendly, so money wasn’t the issue,” Toprak said.

“Then it became a point where average car buyers started looking at the Prius when prices came down to a certain level and they were like, ‘Hey this actually can be a good buy. It saves money on gas, is practical, small and so on.’ Now we’re at the beginning stages of Volt coming to this inflection point for becoming more of a mass-market vehicle. That has a lot to do with pricing, and consumers accepting the technology.”

Second shift

Detroit Mayor Mike Duggan and Michigan Gov. Rick Snyder have been invited to attend Tuesday's announcement, the newspaper reported.

The Detroit-Hamtramck plant employs about 1,600 workers on a single shift. It is currently the only facility assembling the plug-in hybrid. The plant also produces the Cadillac ELR, the Chevy Impala and Malibu, and the Volt's European sister, the Opel Ampera.

The battery assembly plant is about 30 miles south of the Detroit-Hamtramck factory, in Brownstown Township, Mich. About 100 people work there now, but it was unclear if new jobs will be coming, the newspaper said. The plant makes the batteries for the Volt, Ampera and ELR.

“The levers to push are style, affordability and future content,” IHS Analyst Stephanie Brinley added. “It already has technology.”

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