GM (NYSE: GM) has had enough problems with its Chevy Volt’s lithium-ion batteries that the National Highway Traffic Safety Administration has opened a formal investigation into fires in several vehicles it has tested. GM has tried to ameliorate the public relations problems these fires have caused. It has offered loaner cars to customers who bought Volt. GM also has offered to buy back the cars from concerned customers. The Volt fires have triggered a distraction to GM management and probably have hurt the entire Chevrolet brand, which is the U.S.’s number one car company’s largest seller. So, GM should abandon the Volt and limit the damage done to its reputation.
GM has made it much of the way back from the tattered state of its reputation after financial losses; market share erosion, particularly at the hands of Toyota (NYSE: TM); and its crippling 2008 government-supported bankruptcy.
GM would go a long way to prove that its management is mature enough to realize when a product has been a failure and when it is more likely to do the company great harm that become a viable new technology. GM should end its Volt project and buy back the few thousand cars it has sold.
Douglas A. McIntyre
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