GM and federal safety officials believe last year's fires were caused by coolant leaking from damaged plastic casing around the batteries after side-impact collisions. That coolant caused an electrical short, which sparked battery fires seven days to three weeks after the crashes.
GM has a huge incentive to fix the problem and protect the Volt's image. Although the car isn't a big seller it's fallen short of sales goals it burnishes GM's image as a greener, more innovative carmaker.
The safety stumble could make it even harder for the Chevrolet Volt to compete with rival electric cars such as the Nissan Leaf. To contain the bad publicity after the fires, GM last year offered to buy back Volts from worried owners. Still, no owners have reported fires after crashes.
Starting in February, dealers will add steel to a plate that protects the Volt battery, spreading the force of a crash over a larger area, says Mary Barra, GM's product development chief. Tests by the GM and the government have shown that the repairs prevent battery damage and coolant leaks.
"We have made the Volt even safer," says Mark Reuss, GM's North American president.
GM has done crash tests on four reinforced Volts and found that the fix worked. The National Highway Traffic Safety Administration the federal safety agency has also crashed a Volt with the added steel. "The preliminary results of the crash test indicate the remedy proposed by General Motors today should address the issue," the agency says.
It will monitor the crashed car for another week as it continues its investigation.
NHTSA critics have accused the agency of going easy on GM because the government still owns a 26.5 percent stake in the company and because the Obama administration has urged more sales of electric cars to end U.S. dependence on foreign oil.
NHTSA spokesman Lynda Tran would not comment on the criticism.
GM nearly ran out of cash and needed a $49.5 billion government bailout to survive bankruptcy protection in 2009. The government took a stake in the company in exchange for the aid.
GM sold 7,671 Volts last year, falling short of its goal of 10,000. It was outsold by its main competitor, the Leaf, at 9,674. The Volt had its best month ever in December with 1,529 sales, but a GM executive conceded on Thursday that the battery fires may have affected sales.
"There has been some uncertainty in the market," says Alan Batey, vice president of GM's Chevrolet division. "We do believe that uncertainty will go away."
News of the fix helped GM stock. Shares rose $1.02, or nearly 5 percent, to close at $22.17.
The Volt has a T-shaped, 400 pound battery pack that can power the car for about 35 miles. After that, a small gasoline generator kicks in to run the electric motor. The car has a base price of about $40,000.
NHTSA began studying the Volt batteries after a test car caught fire last June at a facility in Wisconsin. The fire broke out three weeks after a side-impact crash test.