* Volt to get 230 mpg based on draft EPA standard

* GM says working on second and third-generation Volt (Adds detail from webcast, financial forecasts, background on GM ownership, byline)

The Chevrolet Volt -- the electric vehicle General Motors Co [GM.UL] is counting on to recharge its image with consumers -- is on track to hit an unprecedented fuel economy rating of 230 miles per gallon in city driving, the automaker said on Tuesday.

GM 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.

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, which will be introduced late next year, is designed to run for 40 miles from a single charge of a lithium-ion battery pack. After the battery is partly depleted, a small combustion engine is designed to kick in to recharge the battery and power the vehicle.

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 will rely on the traditional gas engine.

Those standards, which will also provide a crucial benchmark under recently tightened federal fuel economy standards, are due to be published later this year.

Henderson said GM has engineers working on second and third-generation versions of the Volt in order to bring down the cost of battery-powered vehicles.

GM has been racing to make the Volt the first mass-market plug-in hybrid in the U.S. market in order to shake its association with gas-guzzling trucks and generate buzz for its car line-up that will take aim at competitors led by Toyota Motor Corp.(7203.T)

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 as little as 40 cents, the cost of recharging the car overnight in a garage.

For most vehicles, it would cost well over $3 to drive 40 miles, based on current gas prices.

Toyota has dominated the hybrid market with its Prius, now in its third generation.

The current Prius gets a fuel economy rating of 50 miles per gallon in combined city and highway driving. The Toyota hybrid accounted for over 60 percent of all U.S. hybrid sales in the first seven months of 2009.

The Japanese automaker is also developing a rechargeable version of the Prius that will compete with the Volt although the GM plug-in appears on track to be the first vehicle of its kind in U.S. showrooms. 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.

THE COST OF SUCCESS

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)

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