The Volt needs a Jolt

Reuters: GM Is Losing Nearly $50K on Each Electric Volt

by:  at the Blaze

General Motors posts a $49,000 loss for each new Volt plug-in hybrid it produces, Reuters reports.

You know what this means, right? It means that for each new Chevy Volt, the taxpayer bailed out company loses what the average American makes in a year.

And on top of that, rock bottom lease offers made during the summer may have inflated the above number. According to the report, some motorists paid only $5K to drive around in a new $80K Volt for two years. Oh, yeah, and Volt production has been put on hold at GM’s Detroit-Hamtramck plant.

What we’re trying to say is that it will be a very, very long time (if ever) before GM makes a profit on the Volt.

The problem with the car is that “the Volt is over-engineered and over-priced,” according to Dennis Virag, president of the Michigan-based Automotive Consulting Group.

But hey! If it’s any consolation to GM, Nissan, Honda and Mitsubishi are all having a hard time marketing their electric and hybrid models as well. But even that minor bit of consolation disappears when you consider the fact that Toyota has had great success with its Prius model (meaning it’s possible to have a successful electric-hybrid).

“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,” the Reuters report reads.

“But the Volt’s steep $39,995 base price and its complex technology — the car uses expensive lithium-polymer batteries, sophisticated electronics and an electric motor combined with a gasoline engine — have kept many prospective buyers away from Chevy showrooms,” the report adds.

But more than just steep prices, many Americans simply prefer a car that gets better mileage and has the infrastructure in place to help charge and maintain it.

“It’s true, we’re not making money yet” on the Volt, Doug Parks, GM’s vice president of global product programs and the former Volt development chief, told Reuters in an interview. The Volt “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,” he added.

But some analysts disagree with Parks.

“I don’t see how General Motors will ever get its money back on that vehicle,” said Sandy Munro, president of Michigan-based Munro & Associates, which specializes in vehicular analysis.

It currently costs GM “at least” $74K to produce the Volt, including development costs, Munro added.

“That’s nearly twice the base price of the Volt before a $7,500 federal tax credit provided as part of President Barack Obama’s green energy policy,” Reuters notes.

Again, as stated earlier in this article, with these type of costs tied into the vehicle’s production, it may be a very, very long time (if ever) before GM sees a profit on the Volt.

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About thecommonconstitutionalist

Brent is not a scholar. He’s not an author or speaker (yet). He hasn’t published a book nor does he write articles for magazines (yet). He has no advanced literary degree or pedigree (never will). He is just an American who writes and shares what interests him. He cares about the salvation of this country and a return to its Constitutional roots. He believes in God, country and family.
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4 Responses to The Volt needs a Jolt

  1. AC Points says:

    Definitely a long term proposition. The Prius took 4 years to start making a profit on the production side and only then begin to pay back development costs. Now 15 years later they’ve sold 4,000,000.

    On the plus side for the Volt, the cost of gas is going to continue to go up in the long run, and the
    5 year cost to own for the Volt is comparable to other hybrid models already. On the minus side, plug in electric technology is still a tough sell vs regular hybrids and will remain so for some time and the high initial price point definitely excludes a lot of potential buyers.

    • My personal beef with the Volt has nothing at all to do with the car. They can waste as much money as they wish on it as long as it is private investment. Stop wasting our money. It’s like solar or wind or any of these dopey alternatives. They can’t make it on there own and if they can’t, they should fail.

  2. keri says:

    The complete list of faltering or bankrupt green-energy companies:

    1.Evergreen Solar ($25 million)*
    2.SpectraWatt ($500,000)*
    3.Solyndra ($535 million)*
    4.Beacon Power ($43 million)*
    5.Nevada Geothermal ($98.5 million)
    6.SunPower ($1.2 billion)
    7.First Solar ($1.46 billion)
    8.Babcock and Brown ($178 million)
    9.EnerDel’s subsidiary Ener1 ($118.5 million)*
    10.Amonix ($5.9 million)
    11.Fisker Automotive ($529 million)
    12.Abound Solar ($400 million)*
    13.A123 Systems ($279 million)*
    14.Willard and Kelsey Solar Group ($700,981)*
    15.Johnson Controls ($299 million)
    16.Schneider Electric ($86 million)
    17.Brightsource ($1.6 billion)
    18.ECOtality ($126.2 million)
    19.Raser Technologies ($33 million)*
    20.Energy Conversion Devices ($13.3 million)*
    21.Mountain Plaza, Inc. ($2 million)*
    22.Olsen’s Crop Service and Olsen’s Mills Acquisition Company ($10 million)*
    23.Range Fuels ($80 million)*
    24.Thompson River Power ($6.5 million)*
    25.Stirling Energy Systems ($7 million)*
    26.Azure Dynamics ($5.4 million)*
    27.GreenVolts ($500,000)
    28.Vestas ($50 million)
    29.LG Chem’s subsidiary Compact Power ($151 million)
    30.Nordic Windpower ($16 million)*
    31.Navistar ($39 million)
    32.Satcon ($3 million)*
    33.Konarka Technologies Inc. ($20 million)*
    34.Mascoma Corp. ($100 million)
    *Denotes companies that have filed for bankruptcy.

    The problem begins with the issue of government picking winners and losers in the first place. Venture capitalist firms exist for this very reason, and they choose what to invest in by looking at companies’ business models and deciding if they are worthy. When the government plays venture capitalist, it tends to reward companies that are connected to the policymakers themselves or because it sounds nice to “invest” in green energy.

    The 2009 stimulus set aside $80 billion to subsidize politically preferred energy projects. Since that time, 1,900 investigations have been opened to look into stimulus waste, fraud, and abuse (although not all are linked to the green-energy funds), and nearly 600 convictions have been made. Of that $80 billion in clean energy loans, grants, and tax credits, at least 10 percent has gone to companies that have since either gone bankrupt or are circling the drain.

    CORRECTION:

    Figures for four companies have been updated: Beacon Power received $43 million from the U.S. government, not $69 million as originally reported. Azure Dynamics received $5.4 million from the federal government, not $120 million as originally reported. Compact Power Inc. received $151 million as part of the stimulus, not $150 million as originally reported. Willard and Kelsey Solar Group received $700,981 in government funding, not $6 million as originally reported.

    The following companies have been removed from the original list: AES’s subsidiary Eastern Energy, LSP Energy and Uni-Solar did not receive government-backed loans, based on additional research. The National Renewable Energy Lab did received $200 million in stimulus funding, but it is a government laboratory.

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