From Green Right Now Reports
GM’s Volt has endured a lot of opinions. It’s been praised as transformative and skewered as too expensive and impractical, the latter charge being embodied by that darn backseat that cannot accommodate three people.
But the knives came out in force this month, following relatively strong sales in August which saw 2,831 Volt sales, a record in the car’s short history. That brought the total Volts in consumer hands to 21,500, a number that looked good to supporters but weak to those tracking the arc of EV development.
No sooner had electric car advocates like Green Car Reports chirped about “new heights,” than Reuters put out a big piece arguing that GM was losing “as much as $49,000″ on each Volt, “according to estimates provided to Reuters by industry analysts and manufacturing experts.”
The triple-bylined article examined the high cost of developing this new technology and questioned the value of cars that are still priced much higher (about $33,000 after the federal rebate) than many consumers can bear. It showed how the Volt, at this point in time, is swamped by development costs:
Spread out over the 21,500 Volts that GM has sold since the car’s introduction in December 2010, the development and tooling costs average just under $56,000 per car. That figure will, of course, come down as more Volts are sold.
GM took issue with the numbers and the analysis. So did Bob Lutz, the popular former vice chairman of GM, retorting in a Forbes article:
The statement that GM "loses" over $40K per Volt is preposterous. What the "analyst" in whom poor Ben Klayman [one of the Reuter’s writers] placed his faith has done is to divide the total development cost and plant investment by the number of Volts produced thus far. That's like saying that a real estate company that puts up a $10 million building and has rental income of one million the first year is "losing" 9 million dollars, or several hundred thousand per renter.
As the volume of sales build, the Volt will make good, Lutz wrote, and “other, higher-margin GM cars, like the Cadillac ELR [electric], [will] piggy-back off of the Volt's initial investment. He continued:
Maybe the Volt, a first-generation technology masterpiece and the most-awarded car in automotive history, will never make a really decent profit.
But succeeding generations of the same technology will. Meanwhile, the happy Volt buyers (most satisfied owners of any nameplate in the market) are getting more than they paid for. (Is that so bad?)
We won't even factor in the profound halo effect the introduction of the Volt has had on GM's reputation as a leader in environmental automotive technology; it's priceless, and could never have been achieved without it.
For consumers, the full value of electric cars like the Volt and the Nissan Leaf (and more to come) also is realized over time. Driving such cars will never (in the case of the Leaf) or only rarely (with the Volt) require an owner to purchase gasoline. And the electricity costs are far, far lower than the price of gasoline, per mile.
The 2012 Volt can go 35 miles on an electric charge alone before switching over to gasoline, and the 2013 Volt will last 38 miles before the gas motor has to kick in.
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