GM is still losing as much as $49,000 on each Volt it builds,

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frankxbe

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(Reuters) - General Motors Co sold a record number of Chevrolet Volt sedans in August — but that probably isn't a good thing for the automaker's bottom line.
Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds, according to estimates provided to Reuters by industry analysts and manufacturing experts. GM on Monday issued a statement disputing the estimates.

Cheap Volt lease offers meant to drive more customers to Chevy showrooms this summer may have pushed that loss even higher. There are some Americans paying just $5,050 to drive around for two years in a vehicle that cost as much as $89,000 to produce.

And while the loss per vehicle will shrink as more are built and sold, GM is still years away from making money on the Volt, which will soon face new competitors from Ford, Honda and others.

GM's basic problem is that "the Volt is over-engineered and over-priced," said Dennis Virag, president of the Michigan-based Automotive Consulting Group.

And in a sign that there may be a wider market problem, Nissan, Honda and Mitsubishi have been struggling to sell their electric and hybrid vehicles, though Toyota's Prius models have been in increasing demand.
Knew they were selling the volt at a loss I was just surprised that it was that much ouch! A likable car and legitimate concept . too bad for the economics of it though .
 
Knew they were selling the volt at a loss I was just surprised that it was that much ouch! A likable car and legitimate concept . too bad for the economics of it though .

That is nuts, but that's what happens when you try and force a product down consumers throats, either by poor decision making from the company it self, or in this case coercion. Too bad the failed experiment was not with their own money at least.
 
This often happens with a companies flagship car. They're relying on their other models to make up the cost right now. This is a technology that should have been pioneered with the EV1's YEARS ago. Props to GM for taking the risk.
 
If its anything like the way the press quotes costs for military equipment when its cancelled, they're including all of the research costs in that number and dividing it by the number sold. "The B-2 costs 2 billion a piece! Cancel it!" Well, the problem with that is, each additional one doesn't cost 2 billion. They're dividing research dollars over numbers produced. So if you cut their numbers in half, the R&D money doesn't go down...so then they're worth 3.5 billion- 4 billion a piece.

Which is to say, I don't believe their number. And that R&D can (and will) eventually pay itself off if they find out a way to put it in a car that people want more of.
 
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What John said. If the Volt cost a billion to develop (I saw one estimate of $750 million) then that cost would be allocated over, say, budgeted sales of 50,000 units or $20k to each vehicle. If budgeted sales are less than that, then the cost of each vehicle goes up. Sort of.

Of course, GM doesn't have to throw away the technology and processes that were developed during the design and production of the Volt, they can use it again.

GM probably isn't making any money on Volt sales right now and maybe they never will. It largely depends on how many they sell and when a "new" model is released.

Regardless of what you think of GM, none of this is any big surprise to them; they have the numbers right in front of them. It was a bold move for GM and likely something management felt like they had to do. I saw one on the road last week. Kind of a cool looking vehicle, imo.

A lot of irony here.

Murray
 
As usual, a news story is generated from inaccurate data, manipulation of the facts, and hearsay from unknown sources. I as much believe this report as I believe anything that is backed by information from the American Petroleum Institute, the AMA, the NRA, or anyone else with a ton of money and a strict agenda.

GM's response pretty much falls inline with John's and Murray's posts, Reuters got it all wrong.
 
As usual, a news story is generated from inaccurate data, manipulation of the facts, and hearsay from unknown sources. I as much believe this report as I believe anything that is backed by information from the American Petroleum Institute, the AMA, the NRA, or anyone else with a ton of money and a strict agenda.

GM's response pretty much falls inline with John's and Murray's posts, Reuters got it all wrong.

That link is flawed.....time to recall it .......:D
 
It's surprised me how little GM has spent advertising the Volt. It's only been in the past month thatI've seen commercials for it. I just leased a Chevy Traverse, and was amazed to see that they were leasing Volts for $115 a month (though you needed to have a credit score > 800, be trading in a competitor's lease, be eligible for the GM discount, and put down about a grand to get that particular deal). Was sorely tempted, but with a family of five, we need at least one large vehicle.
 
This often happens with a companies flagship car. They're relying on their other models to make up the cost right now. This is a technology that should have been pioneered with the EV1's YEARS ago. Props to GM for taking the risk.

It would be different if indeed that little car were a flagship, but when I think of a flagship car which in historical cases, has been a forgivable loss for the auto industry, I think of the Lincoln Mk II, or the 1957 Cadillac Brougham. Sadly, I can't see "flagship" in a little plastic greeniemobile with a cruising range inversely affected by the desire to achieve the speed limit. (No offense intended)

If GM wants to build a blockbuster of a popular economy car, they need to hurry the Cruze turbo-Diesel to the US market. 70mpg and far less costly to build (and buy) than the Volt.

Charles
 
Cost per unit is a function of production. The lower the production the higher the cost per unit.

The Volt would never have made it to production were it not for government incentives.
 
Cost per unit is a function of production. The lower the production the higher the cost per unit.

The Volt would never have made it to production were it not for government incentives.

Wrong. Had the economy not tanked, the Volt would have been in production anyway.
 
It would be different if indeed that little car were a flagship, but when I think of a flagship car which in historical cases, has been a forgivable loss for the auto industry, I think of the Lincoln Mk II, or the 1957 Cadillac Brougham. Sadly, I can't see "flagship" in a little plastic greeniemobile with a cruising range inversely affected by the desire to achieve the speed limit. (No offense intended)

If GM wants to build a blockbuster of a popular economy car, they need to hurry the Cruze turbo-Diesel to the US market. 70mpg and far less costly to build (and buy) than the Volt.

Charles

So you think an incredibly technologically advanced automobile, that is very much the next generation of vehicles, is somehow a worse flagship than a toy laden, gas swilling luxobarge?
 
Numbers are kinda funny. People (particularly the press) twist them to make just about any point they want.

The actual cost of the parts and labor to make a Chevy Volt is about $24,000. The rest is all R&D and the overhead required to retool a plant to make the parts. When you spread the R&D and overhead cost across the number of unit sold the cost is newsworth. Each time another Volt is sold, that number gets smaller.

The only time this doesn't happen is when the government awards a contract to a vendor, in which case the R&D and retooling cost gets passed on to the government as the product (in some cases) has no commercial value so the 1 customer (Uncle Sam) has to cover all the costs. Thus the high priced items the government buys that get twisted in the press. Yes, a toilet seat can get pretty expensive if it has to be custom made out of a specific material to keep the weight under the number specified by NASA to be used on the space shuttle and there will only ever be a dozen or so made.
 
Link to GM's response: http://media.gm.com/media/us/en/gm/news.detail.html/content/Pages/news/us/en/2012/Sep/0910_volt.html

DETROIT – Reuters’ estimate of the current loss per unit for each Volt sold is grossly wrong, in part because the reporters allocated product development costs across the number of Volts sold instead of allocating across the lifetime volume of the program, which is how business operates. The Reuters’ numbers become more wrong with each Volt sold.

In addition, our core research into battery cells, battery packs, controls, electric motors, regenerative braking and other technologies has applications across multiple current and future products, which will help spread costs over a much higher volume, thereby reducing manufacturing and purchasing costs. This will eventually lead to profitability for the Volt and future electrified vehicles.

Every investment in technology that GM makes is designed to have a payoff for our customers, to meet future regulatory requirements and add to the bottom line. The Volt is no different, even if it takes longer to become profitable.

GM is at the forefront of the electrification of the automobile because we are developing innovative technologies and building an enthusiastic – and growing – customer base for vehicles like the Volt.
 
The TV news picked this up several nights ago. The only response I can offer is, “Duh.” The vehicle is selling at about 1/3 of its financial planning volume, so the engineering, development, tooling and validation costs are spread over far fewer vehicles than the bean-counters anticipated. That’s a recipe for a substantial paper loss on every car, though I believe that GM is telling the truth in saying that the dollar estimates in the Reuters story are too high.

If or when the annual volume hits the targets, GM will at least break even on the Volt. We saw this with the Toyota Prius, which was reportedly dumped below cost for years until the volume rose high enough to cover the fixed costs. Reuters even implied as much in their article without using the “D” word. We’re seeing it again with the slow-selling Nissan Leaf that reportedly cost even more to develop and tool than the Volt and is selling at less than 1/3 of the Volt’s annual rate. With the exception of the Prius and the possible exception of the Ford and Lincoln hybrids, alternative-fuel vehicles are still a lovely idea in search of a defensible business case.
 
Cost per unit is a function of production. The lower the production the higher the cost per unit.

The Volt would never have made it to production were it not for government incentives.

Wrong. Had the economy not tanked, the Volt would have been in production anyway.

Are you thinking of bailout money? I don't believe that is what is meant by government incentives in this case.
 
Are you thinking of bailout money? I don't believe that is what is meant by government incentives in this case.

No, I was referring to incentives. At the customer level as well as the manufacturer. Tax credits, "energy credits" and such.
 
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