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(Corrects name in paragraph 7 to Krebs instead of Kreb)
* Volt to get 230 mpg based on draft EPA standard
* GM says working on second and third-generation Volt (Adds analyst's comments)
By Kevin Krolicki and Soyoung Kim
DETROIT, Aug 11 (Reuters) - The Chevrolet Volt, the electric car General Motors Co [GM.UL] is counting on to revitalize its lineup, is on track to achieve an unprecedented fuel economy rating of 230 miles per gallon in city driving, GM said on Tuesday.
GM's Chief Executive Fritz Henderson said the Volt would get a "triple-digit" fuel economy rating for combined highway and city driving based on a draft standard developed by the U.S. Environmental Protection Agency. He did not provide the combined highway and city figure.
Toyota Motor Corp's (7203.T) Prius hybrid, which accounted for over 60 percent of U.S. hybrid sales from January through July 2009, has a combined fuel economy rating of 50 miles per gallon.
"The Volt is becoming very real, very fast," Henderson said in an announcement at GM's technical center that was Webcast to the public.
The Volt, expected late next year, is designed to run for 40 miles from a single charge of a lithium-ion battery pack. When the battery is partly depleted, a small combustion engine kicks in to recharge the battery and power the vehicle.
Industry tracking firm Edmunds.com said that while the Volt might fall short of mileage expectations, it would still be the most fuel-efficient mass-market vehicle and would help GM to break its association with gas-guzzling trucks and SUVs.
"For most people, it is not realistic to expect that kind of mileage in real world driving," said Michelle Krebs, an analyst at Edmunds.com. But, he added, "The Volt should easily get more than 50 miles to the gallon, and that will make it an industry leader."
In drafting standards to calculate the published mileage rating for the Volt and other upcoming electric vehicles, U.S. regulators have made assumptions about how much a typical driver would rely on the traditional gas engine.
Those standards are due to be published later this year.
Henderson said GM has engineers working on second- and third-generation versions of the Volt to cut production costs.
GM has been racing to make Volt the first mass-market plug-in hybrid in the United States and generate buzz for its lineup that will take aim at competitors led by Toyota Motor Corp.
The Volt is designed to be recharged at a standard electric outlet. Henderson said that would reduce the cost of the first 40 miles of driving for some Americans to about 40 cents, the cost of recharging the car overnight in a garage.
The national average price of a gallon of gasoline on Tuesday was $2.643 for regular, according to the Automobile Association of America's daily fuel gauge report. On that basis, it would cost about $8.81 for a vehicle getting 12 miles per gallon to travel 40 miles.
Toyota is developing a rechargeable Prius, but it appears the Volt could be the first vehicle of its kind in U.S. showrooms.
GM executives have said the Volt could cost as much as $40,000 before a $7,500 consumer tax credit.
The company has said the car would not be profitable in its first version because of development costs.
"I don't want to say we're going to subsidize things," Henderson said, "but that said, we need volumes to get to (the second generation)."
The announcement about Volt's projected fuel economy comes a month after GM exited a fast-track bankruptcy, and is part of an effort by Henderson to shift attention back to GM's vehicles and away from the financial problems it has had.
GM emerged from bankruptcy under the majority ownership of the U.S. Treasury, and is planning an initial public offering by July 2010 to pay back part of what it owes the government.
Henderson said GM was on track to post a net profit as early as 2011 after cutting costs and improved sales.
U.S. auto sales rose in July as Americans took advantage of a government "Cash for Clunkers" incentive program to trade in old gas guzzlers for more fuel efficient vehicles.
With GM's inventory levels low, the company is looking at raising production in the current and coming quarters, Henderson said. "We certainly feel very good about our inventory position, feel better about the market at least hitting the bottom and maybe starting to bounce, and we will adjust accordingly." (Reporting by Kevin Krolicki and Soyoung Kim, additional reporting by Bernie Woodall in Los Angeles)