But it's not really fair to analyze it that way. GM plans to sell a lot more than 20,000 Volts. Moreover, the Volt's technologies -- battery cells, battery packs, controls, electric motors -- will be used in other GM programs, from the Spark to other electrified vehicles. "No one should expect a quick payback on this kind of vehicle," David Cole, chairman emeritus of the Center for Automotive Research, told us in an email. "My guess is that it will become five-plus years before the costs become competitive."
That's not to say there aren't reasons for concern. The Volt hasn't hit its sales projections, and the poor showing of other electrified vehicles, such as the Nissan Leaf and the Mitsubishi i, don't bode well. What's more, the Volt's near-term outlook is troubling. It still costs twice as much as a Chevy Cruze, and it runs $15,000 more than some competitors, such as the Prius c.
"If you compare it to other high-mileage vehicles, some of which come fully loaded for $25,000, it's hard to get a return on the extra investment," Dennis Virag, president of Automotive Consulting Group Inc. in Ann Arbor, Mich., told us. "You can't save enough on gas to justify the higher price."
So, yes, there are reasons for concern. And, yes, GM needs to cut the Volt's pricetag... a lot.
Still, it's too early to be making a per-vehicle assessment on the Volt. GM knew it would be playing in a new market. Its engineers knew that the up-front costs would be high. Yet the company jumped in anyway. That suggests it plans on sticking around for a while. "They had to develop the technology," Cole said. "And you can't delay engineering until all the costs are in line, because you'll be left out of the game."
If the first car off the line cost $1B, then the 2nd car only cost $ 0.5 B (that's 50% increase in productivity!) With these kind of stat's you can really drive any point home (sorry ;).
A good article, but what it was missing is the production cost side of the argument. What does it cost in material and labor (+ overhead) to manufacture each car. R&D is amortized over the whole company because, as it was noted, the technology is then available for other product lines (and also for tax reasons). GM's retirement liabilities are far more costly than R&D.
Are these cars being sold at less than the cost of production? If not, GM will be fine.
Cars like the Volt are a PR item, they don't get made to make money, and historically they don't have a long lifesapn because the economics invaribly catch up to it. Someone starts asking, "why are we doing this?" When the CEO is the President, he gets what he wants, for a little while. The Volt is just too costly to be a game changer, and it only changes the game when it can be used as strickly an electric car, so it sufferes from the same issue of practicality. Basically for what my truck cost and the milage it gets, I can drive it for at least 10 years and break even with what it would have cost for a volt that I could only drive on the electric. The Volt is nothing but an expensive toy, like having a boat or a sunny day sports car, affordable only to those that have more money than sense.
I think the mpg measurement is not a valuable measurement. To be accurate it should be an energy usage measurement. The electricity was probably generated by burning coal, so the efficiency of the coal burning, conversion and transmission should be considered in the equation.
What makes you think that being a U.S. taxpayer gives you the right to say that? Go to www.DOE.gov and school yourself what the actual benefits of jumping in this band wagon are prior to arrogantly claiming credit. Understand the politics.
As a U.S. taxpayer i say: Thank you GM for risking reputation, capital, and everything you had to jump into this band wagon and lead a revolution. Yes the time is not right but then the time is never right for innovation yet someone needs to step in and take a chance. Even though some aid was given from the U.S. government i doubt that was anything other than Seed money in the form of tax breaks. And i am perfectly OK with the way the USA decides to advance help innovation along so that we as a nation continuously better ourselves.
The Volt doesn't necessarily exist for the purpose of being the lowest-net-cost form of transportation on earth. Like other products in a free market (including boats and sunny day sports cars), it exists to sell to people who want to buy one. The trick for GM is to find enough people who want to buy a Volt at a price at which - over a reasonable time for amortization - GM can make a profit, or at least not lose an unreasonable amount of money on a product which is as much an R&D exercise for GM as it is a cash-generating product line.
And of course, if GM ever should decide that the losses are too much, and give up the effort, they know they will all be burned in effigy as the people who "Killed the Volt".
Buying an electric car is fine, if that works for you. The problem with the electric car is the same it has always been, it is either impractical, or expensive, or usually both at the same time. If you only drive limited milage every day, and your personal transport is all you do, then an electric could make sense, if it was cheap enough. Heck for that you can drive a golf cart, ride a bike or scooter, allow time to walk. The electric usually stops being practical when it is someone's only car. The electric, or even hybrids for that matter, stop making sense also from a personal finance standpoint. Normally the extra cost you will pay to use less gas will never even out with just buying a comparable gas only car. So in the end, the only reason for buying an electric or hybrid is because you either just like spending more money, or you are trying to make some kind of social/environmental statement using the badges on your car.
You need a bit of education yourself when you look at how many billions the tax payer was stuck with for GM. Sure, some of that was just the president paying off the UAW ... but the free market worked for a long time and still does work in some industries. The gov't is always the best way to make sure capital does not get allocated the most productively. Necessity used to be the mother of invention ... now it is taxPayers and political whim.
First, Charles, the article was a great read- both balanced and nuanced. The final answer is still "out there" and we don't know what it is yet, probably won't know for another 5-10 years. So it's too early to say the program is a failure, and it's also too early to say that skeptics are shills for the oil companies and Mideast sheiks. Politics of the GM bailout aside, Chrysler did receive a helping hand from the US decades ago and it seems to have worked, more or less. Maybe one day we'll say the GM assist was an overall positive. Again, the answer is still "out there"; it takes a long time for all the facts to emerge and be properly weighted in historical perspective.
I personally wish I found the Volt more attractive and that GM had priced it more competitively. Most of my driving is short range, limited in both distance and frequency. That makes me a good candidate for one of these cars, except that the cost-per-trip of casual use is through the roof for me. Also they look boring to me- was that the best exterior design they could think of?
"To be accurate it should be an energy usage measurement."
I think that, to be accurate, we need to analyze costs per mile. I don't care if a vehicle costs $0.01/mile in "fuel" if maintenance (say, an expensive battery pack replacement) costs $1.00/mile. These are not real number, but you get the idea. The whole operational costs of the vehicle needs to be considered. Ownership costs, too. A $60000 vehicle that gets 40mpg will not be cheaper over its lifespan than one that's $20000, and gets 30mpg. In a cost-only comparson, depreciation will kill the $60000 vehicle.
Some cars are more reliable than others, but even the vehicles at the bottom of this year’s Consumer Reports reliability survey are vastly better than those of 20 years ago in the key areas of powertrain and hardware, experts said this week.
As it does every year, Consumers Union recently surveyed its members on the reliability of their vehicles. This year, it collected data on approximately 1.1 million cars and trucks, categorizing the members’ likes and dislikes, not only of their vehicles, but of the vehicle sub-systems, as well.
A few weeks ago, Ford Motor Co. quietly announced that it was rolling out a new wrinkle to the powerful safety feature called stability control, adding even more lifesaving potential to a technology that has already been very successful.
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