General Motors will have to subsidise the first few years' production of its first plug-in hybrid, the Volt, according to a US report.

A senior General Motors executive told TheCarConnection.com (TCC) there likely would be a big gap between customer expectations and the actual cost to build the Volt meaning, at least for the first few years of production, the automaker would have to heavily subsidise production of the high-profile, fuel-sipping vehicle.

"It's going to be expensive" to build, acknowledged Troy Clarke, president of GM North America, to TCC on the sidelines of the 2008 Chicago motor show.

According to TCC, Clarke noted that even though GM has promised to bring the Volt plug-in - more accurately described as an "extended-range electric vehicle" - to market sometime in 2009, it is still in the midst of inventing the necessary technology, with most of that effort focusing on the vehicle's lithium-ion batteries.

"The first generation (of new technology) will cost you like the dickens," Clarke told the enthisiasts' website. "It's usually the third generation of a technology that gets you to a normalised cost base."

TCC noted that the Volt is markedly different from a conventional hybrid, such as the Saturn Vue or Toyota Prius, which use less powerful and markedly less expensive nickel-metal hydride batteries. Its wheels are driven only by the vehicle's electric motors which can derive power either from a pack of lithium batteries, or from a small, internal combustion engine which acts like an electric generator. The plan is to provide somewhere around 30 to 40 miles (50-70km) of battery range, enough for a typical day's commuting. For longer drives, the petrol engine would kick in.

TCC said the cost for batteries needed to deliver that range is unclear, but well-placed industry sources believe it could run to the tens of thousands of dollars and that's one reason why a plug-in version of the Toyota hybrid may deliver significantly less range, according to Toyota president Katsuaki Watanabe.

The Car Connection noted that industry insiders believe that Toyota swallowed about half the cost of the Prius during its first few years on the market. Company officials don't deny they subsidised the hybrid early-on, but today, they insist, Prius actually turns a profit, TCC said.

Well-placed Toyota officials have said much the same thing to just-auto during presentations of current and future hybrid technology, including a recent demonstration of the Prius plug-in in Japan.

"It's the burden of leadership," to accept the initial cost penalties of groundbreaking technology, Clarke told TCC, acknowledging that if Volt is successful, the payoff would be substantial, even initially. Not only could it draw new buyers, but it would also enhance General Motors' 'green' credentials, something the automaker has sought to enhance in its global battle with Toyota.