General Motors, the bankrupt firm that was resurrected from the dead by the Obama Administration, is proving to be a vampire. Its Volt automobile costs $88,000 to make. It sells for under $40,000.
That’s a loss of $48,000 per vehicle.
How does the firm expect to make a profit? Volume!
These numbers are disputed by GM. But GM has yet to go public with its numbers, along with a detailed breakdown of these costs.
You can lease a Volt for about $5,000 for two years.
Then try to sell it. Surprise!
There will be more electric cars. Nissan and Honda are ready to invade this high-loss market.
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.
Its other problem is how to compete with the Toyota Prius.
It takes hours to re-charge a Volt. You can speed this up with a $2,000 commercial professional charger.
It has sold about 13,000 Volts this year. It had projected 40,000 sales in 2012. That is unlikely.
One New Jersey Chevy distributorship has sold just one Volt over the past 12 months. It sells 90 to 100 Chevies per month.
The Detroit-Hamtrack plant that makes Volts has been shut down in September. This is the second time it has halted sales this year.
“It’s true, we’re not making money yet” on the Volt, said Doug Parks, GM’s vice president of global product programs and the former Volt development chief, in an interview. The car “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,” Parks said.
Spoken like a faithful employee of a company bailed out by taxpayers.
Parks declined to comment on specific costs related to the Volt. This, I understand.
“It wasn’t conceived as a way to make tons of money,” he said. “It was a big dip in the technology pool for GM. We’ve learned a boatload of stuff that we’re deploying on other models,” Parks said.
A few taxpayers have learned a boatload of stuff about bailing out a dead car company. But there is much to be done to get the story to more taxpayers.
In contrast is the Toyota Prius, which has been on the market for 12 years, and which sells for under $25,000. Its sales are up to 164,000 so far this year.
Other such vehicles haven’t done nearly as well. Nissan’s pure-electric Leaf, which debuted at the same time as the Volt and retails for $36,050, has sold just 4,228 this year, while the Honda Insight, which has the lowest starting price of any hybrid in the U.S. at $19,290, has sales this year of only 4,801. The Mitsubishi i, an even smaller electric car priced from $29,975, is in even worse shape, with only 403 sales.
Volt is dead in the water. So are taxpayers’ hopes of ever getting out of this deal at a profit.
Parks said the company also is continuously reducing production costs on the current Volt and its successor. “There is a strong push on the cost of the Gen 2 to get the car to make money and to be more affordable . . . Virtually every component in the next-gen car is going to be cheaper,” he said.
But it will still be facing the Prius, which is in its third generation, and will be in its fourth before the Volt is in its second.
This says it all.