Reuters: GM Is Losing Nearly $50K on Each Electric Volt
by: Becket Adams at the Blaze
General Motors posts a $49,000 loss for each new Volt plug-in hybrid it produces, Reuters reports.
You know what this means, right? It means that for each new Chevy Volt, the taxpayer bailed out company loses what the average American makes in a year.
And on top of that, rock bottom lease offers made during the summer may have inflated the above number. According to the report, some motorists paid only $5K to drive around in a new $80K Volt for two years. Oh, yeah, and Volt production has been put on hold at GM’s Detroit-Hamtramck plant.
What we’re trying to say is that it will be a very, very long time (if ever) before GM makes a profit on the Volt.
The problem with the car is that “the Volt is over-engineered and over-priced,” according to Dennis Virag, president of the Michigan-based Automotive Consulting Group.
But hey! If it’s any consolation to GM, Nissan, Honda and Mitsubishi are all having a hard time marketing their electric and hybrid models as well. But even that minor bit of consolation disappears when you consider the fact that Toyota has had great success with its Prius model (meaning it’s possible to have a successful electric-hybrid).
“GM’s quandary is how to increase sales volume so that it can spread its estimated $1.2-billion investment in the Volt over more vehicles while reducing manufacturing and component costs — which will be difficult to bring down until sales increase,” the Reuters report reads.
“But the Volt’s steep $39,995 base price and its complex technology — the car uses expensive lithium-polymer batteries, sophisticated electronics and an electric motor combined with a gasoline engine — have kept many prospective buyers away from Chevy showrooms,” the report adds.
But more than just steep prices, many Americans simply prefer a car that gets better mileage and has the infrastructure in place to help charge and maintain it.
“It’s true, we’re not making money yet” on the Volt, Doug Parks, GM’s vice president of global product programs and the former Volt development chief, told Reuters in an interview. The Volt “eventually will make money. As the volume comes up and we get into the Gen 2 car, we’re going to turn (the losses) around,” he added.
But some analysts disagree with Parks.
“I don’t see how General Motors will ever get its money back on that vehicle,” said Sandy Munro, president of Michigan-based Munro & Associates, which specializes in vehicular analysis.
It currently costs GM “at least” $74K to produce the Volt, including development costs, Munro added.
“That’s nearly twice the base price of the Volt before a $7,500 federal tax credit provided as part of President Barack Obama’s green energy policy,” Reuters notes.
Again, as stated earlier in this article, with these type of costs tied into the vehicle’s production, it may be a very, very long time (if ever) before GM sees a profit on the Volt.