Volt Birth Watch 159: MSM Double Negative on Volt's Chances of Success

The numbers for the Chevrolet plug-in hybrid electric Volt—running costs vs. the competition and the manufacturer’s margin—don’t add up. Never did. Right from its inception, GM was demurring on the timeline for the theoretical vehicle’s theoretical profitability. Early adopters, economy of scale, yada yada yada. Even after GM’s prearranged a $7500 tax credit with Uncle Sugar—an outrageous tilting of the playing field in the former bankrupt’s favor—the Volt remains a guaranteed, sure-fire money loser. Even if the price of gas soars, the Volt will not be an economic proposition. These facts have been largely lost on the mainstream media (MSM), whose myopia for all things green and beautiful has blinded them to the equations that will seal its fate. And even when they do crunch the numbers, they refuse to see the light. To wit CNNMoney. Make the jump to do the math. Otherwise, GM’s headlong rush down the obfuscation highway has a new champion: “So it’s not impossible that the Volt could become a sales success, even if the strict dollar analysis does not work out for it.”

Driving a typical 14,000 miles a year, or 38 miles a day, the Prius would use about 280 gallons of gasoline.

With gas at its current price of about $2.65 a gallon, that would come to about $742 a year in gas, or $421 more than the Volt owners would pay if they can stick with electricity.

Even if gas goes back to the record high of $4.11and stays there, gassing up a Prius would cost about $1,150 a year, giving the Volt an $830 a year cost savings.

But a Prius costs $25,428, on average, according to sales data from Edmunds.com, while GM will probably have to spend $40,000 or more to build each Volt.

While Volt buyers will get a $7,500 tax credit that reduces the still undisclosed purchase price by that amount, the fact is that GM will have to subsidize much of the remaining $7,000 difference in cost to make it competitive with the Prius.

At current gas prices, the $421 a year savings over a period of six years that a new car is typically owned, would mean that a Volt would only be cost competitive with a Prius if was about $34,500 before the tax credit.

That means GM would have to take about a $5,500 loss on each Volt if it is to be strictly competitive.

If you assume modest sales of 20,000 Volts the first year, that would mean about $110 million in additional losses for the cash-strapped automaker.