GM hopes Chevy Volt will electrify American drivers

GM is betting that its new Chevrolet Volt, a $40,000 plug-in electric car, will lead the company, and maybe the city of Detroit, back to their glory days. The company plans to begin building the Volt in 2010 in its Detroit Hamtramck Assembly, a high-tech factory originally built in 1985 to make Cadillacs, Buicks and Oldsmobiles. At the time it was the first auto plant built in Detroit since the 1950s. Today it's one of only two plants still making cars in Detroit.

Initially the plant will produce only a few thousand units per year.  Assuming the technology performs as advertised and the market demand is there, production will ramp up.

The Volt is a conventional compact with a 400-pound lithium-ion battery under the back seat and a 1.4-liter gasoline engine that recharges the battery and gives the car a range of more than 300 miles. Will consumers pay the premium to get the extra mileage? Probably not, unless gas prices go much higher than they are today.

"The Volt technology is very exciting, but costs will have to come down before it can become generalized, and U.S. fuel prices will have to rise to world levels, meaning $5 or $6 per gallon," GM vice chairman Bob Lutz said.

Both state and federal money is going into the project, with over $2 billion in tax credits and government grants propping up GM's attempts to become a force in the battery-powered car market and regain some of its former lustre.

It's a tall order. GM is a ward of the U.S. Treasury, its CEO, Fritz Henderson, a government appointee. Yet the company emerged from bankruptcy in June smaller and more focused. The number of plants is down to 34 from 47 in 2008; there are 68,500 hourly and salaried employees, compared to 91,650 in 2008. And it will market just four brands, half of what it did last year. Costs are down, too.

The question is, can GM beat its rivals with a hastily developed, expensive technology? Its track record with "green" technology is not exactly inspiring, but now it needs nothing less than a grand slam if it's going to regain the confidence of investors, begin paying back the taxpayers, and jump-start the green-car economy that may well be Detroit's last hope.