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Ralphy Boy
User Rank
Platinum
Re: Promising findings
Ralphy Boy   1/7/2013 5:22:16 PM
NO RATINGS
Yup. Now tell them they should pay the rest of the REAL PRICE since they are so happy with the car... Then see how they answer. pfft...

 

VoltDave
User Rank
Iron
Re: Perhaps not significant
VoltDave   1/7/2013 11:09:53 AM
NO RATINGS
Jim, I'm not sure where you live, but in my area most of the dealers have at least one Volt on lot, and a couple of them are successfully selling the Volt and have as many as a dozen to choose from. I hope you get a chance to test drive one, it's a great car.  It's well appointed, and drives and handles well.  My previous three cars were BMWs, and handling was a big part of the reason. 

JimT@Future-Product-Innovations
User Rank
Blogger
Re: Perhaps not significant
JimT@Future-Product-Innovations   1/6/2013 5:00:58 PM
NO RATINGS
Hey Charles, I agree with that critical point too; I live in suburbia, I have a garage for daily recharge and I have a typical, repeat able commute.  So The Volt would be a great candidate vehicle for me.  The problem is that no Chevy Dealers keep them "on-lot"; they have to be ordered.  For me, that's a barrier to purchase.  I'm not going to put any deposit down on something I haven't driven and handled first.

Rigby5
User Rank
Gold
Volt excellent transition
Rigby5   1/5/2013 12:40:12 PM
Hybrids are not the goal, but a necessary transition.

Because we have not prefected an alternate fuel yet, and have not invented an ideal storage medium, a hybrid has to have 2 redundant power sources.  That is not optimum because you have double the weight and complexity.  But it is the only way to get from the old gasoline cars that can't continue, to something else.

So it is worth the government subsidizing this essential transition a little.  And GM has done a wonderful job in making this work.  If I was in the market for a new car, the Chevy Volt would be on the top of my list.

btwolfe
User Rank
Gold
Re: Old gas problem?
btwolfe   1/4/2013 11:07:58 PM
NO RATINGS
Thanks for the details. Sounds like the Volt engineers came up with some smart solutions.

It's good to see at least one thread on this blog being non political.

dr_innovation
User Rank
Iron
Re: When the Market should choose
dr_innovation   1/4/2013 10:38:20 PM
NO RATINGS
Sorry,mikec711 , that you cannot be bothered to read.  The article I cited was from forbes, not the government.  Even the Rueters article said the cost to prduce was 20-32K.. the rest was allocation of R&D costs.   You have not provide any sources, trusted or not, saying it costs 3x its selling price.

Yes R&D costs need to be accounted for, but proper accounting is over the lifetime of the R&D payback, i.e. all the products share in the cost.  If you allocate it over a 10 year product life cycle, including the ELR and others the R&Ds per car will be much lower, per car.  The volt is still not profitable if one does that, but pretty close. 

Furthermore, since the vast majority of the R&D cost was pre-bankruptcy, its formally a already allocated cost, treated as a loss in the brankrupcy proceeding.  The loss was absorbed by the "bond holders", but thus is no longer an accountable value for cars in production. 

 

 

DeVille
User Rank
Iron
Re: When the Market should choose
DeVille   1/4/2013 10:24:58 PM
Mike, your "simple economics" argument would be persuasive if it had any factual basis. But it is based on an absurdly wrong assumption that it costs GM $100,000 to manufacture a Volt. That isn't a fact. Where did you pick up such a riduculous figure?

When a business (any business) inroduces a new product it will have invested in research and development of the product. Then there will be labor, materials, facility and equipment costs in the actual manufacture of each new unit of that product. A business plan will be used to estimate the number of units that can be sold at a given price, and so how long it would take to amortize all the costs and make a profit from the product.

In the automobile industry, most business plans for a new model assume that it will be produced for a number of years, allowing amortization of the R&D costs over a number of units. The more units produced, the smaller the relative cost of amortization of the R&D cost will be, per unit.

From comments made by Bob Lutz, as well as from GM spokesmen, it would appear that sales of Volts are already near, at or even better than break-even on manufacturing costs per unit. Sales are trending up, and economies of scale improve as more Volts are manufactured. An expensive component, the large lithium-ion battery, is trending down in cost per unit.

Already in 2012 the Volt had reached the median level of unit sales of all models of automobiles sold in the United States, that is, more Volts are being sold than sales of half the automobile models sold in the U.S. The Volt is also the top-selling plugin electric vehicle.

But GM had spent a great deal of money -- more than a billion dollars -- in R&D leading to the production of the Volt. How can that be recovered, with eventual profit to GM?

If GM were to cease production of electric vehicles, that R&D investment would have to be written off. But GM recently announced that it plans to sell hundreds of thousands of electrified vehicles over the next several model years. There will be Volts, but also other GM lines (starting with Cadillac) using the Volt technology. There will be at least one pure electric vehicle, the Spark. And there will be other variations of "electrification" in GM models. All of these will be derived from GM's investments in electric technology, and so will amortize the R&D costs. Those investments will become increasingly important in achieving the federally-mandated fuel requirements.

The decision of Bob Lutz to bring an extended-range electric vehicle into production has given GM a leg up in the very competitive automibile industry. Other manufacturers, including BMW and Ford are introducing similar vehicles. In other words, the time for this product has come. I predict it will be with us for the foreseeable future.

 

mikec711
User Rank
Silver
Re: When the Market should choose
mikec711   1/4/2013 10:00:05 PM
We're both trusting "trusted sources" and it is hard to say who is dup'd because that is being specifically hidden from the consumers because the taxPayers have already taken a bath on GM and will continue to do so and costs will be obscured as best as possible.  You seem to suggest that R&D costs need not be re-couped.  Bottom line, based on volume, R&D amortization is necessarily high on each vehicle.  ROI on this vehicle is obviously worse than a joke right now.  My simple point is that, as long as gov't is using taxPayer $s and typical gov't funny-money accounting ... my source will say $100K, your source will say < $30K ... and neither will be able to empirically prove the other wrong.  If Volt truly did have a < $30K unit mfg cost ... why are they obscuring so much information?  Are you by chance getting your info from the gov't?

dr_innovation
User Rank
Iron
Re: When the Market should choose
dr_innovation   1/4/2013 9:42:52 PM
NO RATINGS
What is the basis of youre claim, mikec711, that the volt production is 3x its cost. It seems you've been duped by bad data and biased reporting.

 The Volt is currently past "variable break even", i.e. its production cost is less what the manufacturer sells it for, see http://www.forbes.com/sites/boblutz/2012/09/10/the-real-story-on-gms-volt-costs/. 

The volt is not yet "profitable" because the R&D costs have not been fully recovered.  Various reports have tried to say the volt is 90K to make or more, because they try to allocate the R&D costs to the units already produced.  That is not how the proper accounting is done. 

 

mikec711
User Rank
Silver
Re: When the Market should choose
mikec711   1/4/2013 8:30:18 PM
NO RATINGS
First of all, if I am the start of the politics (though I specifically was not political but economic) ... I apologise.  I believe both parties are narcissistic monsters who are all-too-happy to take from some and give to others in an effort to garner support and move power from people to gov't.  That being said, the $7500 tax credit is a small part of the taxPayer support.  The manufacturing cost of your volt was approximately 3x its cost.  You sound like a person of substantial means.  If someone were to take your Volt (which you probably paid < $30K with the tax credit) and refund exactly what you paid (you will have had a car for free for a while) ... and give you the option to pay the true cost of manufacturing the volt ($100K) ... taking no profit ... would you be willing to pay for the Volt.  The decision as to whether or not a car would be purchased again is at least as much economic as it is technical and emotional.  If you had to pay the true cost of the Volt, would you?  If not, then just like the survey, it was a misLeading question.  If I saw a house that I thought was worth $120K ... but it had cost $300K to build ... and they were offering it to me for $100K (1/3 the cost, like the Volt) ... I would buy it. If they offered it to me for $300K ... I would not buy it.  Simple economics.  I don't care which politicians were involved ... the fact is, none of them should have been.

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