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."
I was, at first, stunned to hear about the Volt losing 49K per vehicle. Thankfully, this article cleared that up to my satisfaction. There seems to be a dark undertone against EVs these days. These things are coming, folks, kicking/screaming aside. It will require a vast infrastructure change, no doubt, but we are capable of it.
Chuck, thanks (again) for bringing level-headed context to this ongoing story. There are ancillary costs as well that people have thrown out in the past two years to put their own context around the Volt ($200K per car if you factor in bailout and subisidy $).
Whatever. The point made here multiple times is that the R&D will benefit other GM vehicles for years to come.
Personally, I wish the investment was targeted toward a technology that didn't require such an infrastructure build out (fuel cells perhaps?) but time will tell.
That said, the Volt is a triumph of engineering, pure and simple and great engineering ain't cheap.
I agree with you in principle. But considering that GM is a restructured (failed) company, the risk of an R&D project of this magnatude makes absolutely no financial sense. IMHO GM should be trying to stabilize their business for the first several years by getting costs under control, improving quality, and probably even restricting near term new model developments.
GM has instead gone full steam ahead on an expensive model, in an economic downturn, that serves a small (niche) market, that is full of risk. This is what gives rise to the theories of enviro nuts in the government pulling the strings at GM.
GM will fall again. Hopefully this time they will file bankruptcy like they should have before, and be sold off to a competent organization that can restart them with a clean slate.
What middle-eastern oil sheik is the mainstream media working for now? We buy $800M of foreign oil a day in the US and all we get is story after story trash-talking electric vehicles. In the beginning it seemed as though the resistance was just the normal resistance to change but it has grown into something much more. I for one will be going electric when it's time to replace my hybrid Lexus. The choice to pay engineers and engineering-oriented companies over the priveleged few oil resource owners is an easy one...
Chuck, this is a good summary of a lot of what has been discussed on this site for a while. On the other hand, one point you make needs a little more exploring. To point out that some of the technologies used in the Volt is really no different from the sharing of major components of standard cars. For example, most manufacturers have a smaller number of engines and transmissions than models. I am not talking about variations of the same model. For example, Chrylser has a V6 that was used in their LH sedans and the Pacifica, and I think the Prowler. So, until there are other cars that use components the Volt has pioneered, that cost is still with the Volt.
So, I think that the Reuters article is probably correct. Until GM gets to their sales goal, they will probably lose money. That is just the way industrial economics work (same with a chip factory, for example).
Great reality check, Chuck, and definitely worthwhile to put GM's Volt dilemma in perspective. We live in such an immediate gratification society that the impetus is to take the kneejerk reaction whether it's to dismiss a new technology or do some quick math that doesn't account for the total lifecycle picture.
I think your stance is a fair one: There is much more work to be done, but don't close the books on the Volt yet.
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