By on October 20, 2009

But have you seen my tax bill?

Having a hard time guessing the value of the Volt showcase? Join the club. Everyone knows what the Volt is by now, namely a four-seat, 230 mpg, extended-range electric sport sedan that’s currently under-budget. But what does that sell for? The closest thing to a consistent answer we’ve heard from GM on this point is zero profit at $40,000 a pop. Which is always quickly followed up with reminders that consumer tax credits will make the crucial difference in transaction prices. But what about those tax credits? EV World‘s Bill Moore relays the following message from an anonymous “former GM executive”

“Assume you will trade in your Prius when the Volt becomes available.  The feds will probably put a $20,000 kickback on the price to move them.  If they do not, Volt will not make it.”

But consumer-end stimulus isn’t the whole game (although look for the cry to go up soon in congress).Production-end subsidies for everything from an engine plant to battery research are keeping the Volt moving towards the birthing hour. Bloomberg‘s headline couldn’t explain it any better: Obama Battery Grants May Help GM Market Cheaper Electric Cars. GM’s John Lauckner explains:

We’ve already seen significant reductions in the cost of batteries even since the start of the Volt program. At this point, we’re hundreds of dollars below the $1,000 a kwh benchmark

For reference, $1,000 per kwh is the typical current cost for Lithium-ion batteries, according to Southern California Edison’s Electric Transportation Department. But thanks to heavy taxpayer investment in Volt battery suppliers,  GM is claiming it can get prices down to $500/kwh in the next 12 to 18 months. Would Toyota VP Irv Miller like to comment on that?

I’ll buy all those batteries that anyone can provide me right now. Our numbers are about three or four times that, so maybe we’re missing something

Well, is he? Ford says the cheapest Li-ions they can find are $700/kwh and are located “in Asia.” Is GM lying or is there some world-class market distortion going on? Pick your poison.

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22 Comments on “Volt Birth Watch 169: The Price Is Wrong...”


  • avatar
    afabbro

    Maybe I’m missing something, but those battery prices make sense.

    $1,000 per kwh according to SoCal Edison. Being the government, it’s safe to assume they’re a bit off.

    Ford says $700. GM says they’re “hundreds of dollars” below $1000. So those number match.

    Another 18 months to shave off another $200? I assume batteries are like most engineered products, where the going gets harder the further you go. I’m sure the next $200 won’t be as easy as the previous $200. I’d need more data to know if engineers can shave another $200 off a $700 battery, but it doesn’t sound wildly implausible.

    What doesn’t make sense is Toyota’s comments. How can they be paying $1500 to $2000, when even the government says they should cost $1000?

  • avatar
    seabrjim

    Youre not missing anything other than the fact that GM fudges everything. I guess if that really was the price we would have had much fanfare, horn blowing, and LaNeve style press releases by now.

  • avatar
    KarenRei

    “I’ll buy all those batteries that anyone can provide me right now. Our numbers are about three or four times that, so maybe we’re missing something”

    Toyota could really get a lot less obvious with the FUD. As an *individual*, I can buy Thundersky or any of a variety of other such LiP cells for $500/kWh (less if I buy in even moderate bulk).

    It’s no shock that Toyota tries to FUD li-ion, given how deeply invested in NiMH they are. But they could be less obvious about it. To pay $2k/kWh, you have to be buying A123 cells in tiny quantities, retail, or buying titanate cells wholesale. No EV manufacturer will ever have to pay anywhere close to $2k/kWh for non-titanate cells. GM’s 16kWh pack costs $8k. Th!nk’s over-20kWh pack from EnerDel is just over $10k. Nissan is citing *less* than $500/kWh for the Leaf.

    So the only company in the world it seems who can’t get batteries for this price is Toyota, who for some reason thinks they cost 4 times what all of their competitors are paying. And that company just happens to be heavily invested in NiMH. Gee, wonder what’s going on here…

  • avatar
    mwilbert

    This isn’t especially relevant to the discussion, but SoCal Edison is not the government, it is a regulated division of Edison International.

  • avatar
    PeteMoran

    Gee, wonder what’s going on here…

    No need for conspiracy theories. Toyota/Panasonic have invested billions in a massive Li-Ion joint venture. Maybe they’re counting that cost as well, as any good business should.

    I’ll take Toyota numbers over GM/Ford anyday.

  • avatar
    BuzzDog

    (heavy sigh) I wish that my tax dollars were being spent on making GM’s products more competitive, rather than having the funds poured down a rat hole containing some pie-in-the-sky project.

  • avatar
    Bridge2far

    If we have learned anything from all the lies and quality concerns it is to not trust Toyota.

  • avatar
    mcs

    Has Hyundai reported any numbers on their Lithium-ion Polymers?

  • avatar
    CarPerson

    zero profit at $40,000 each

    “However, if we subtract the $7,000 per Volt in executive pork corporate overhead we add to each car we sell in that price range, we start turning a honest profit at $33k.”

  • avatar
    CarPerson

    In the past 100 years, it would be no surprise to learn that General Motors has accumulated quite a few expensive pet perks for the top executives and board members. The bankruptcy judge could have forced GM to open the books totally to a forensic accountant to dig out where all this pork is occurring but unfortunately it did not happen.

    Many years ago I got an invite to a “Conference Center” that was an extremely lavish private country club way out in the country. It was ostensibly a sub-division’s facility but it was generally understood that it was paid for and run by Corporate as a corporate playground.

    If this is still open, where does it show up on the books?

  • avatar
    Daanii2

    A lot of the pricing debates are because people are comparing apples and oranges. You can probably get a kilowatt hour of Li-ion batteries in a prismatic cell for about $600 now, maybe $500 in bulk.

    But Li-ion batteries are tempermental. And unless they are kept from getting too hot or too cold, they degrade quickly. So to put together a Li-ion battery pack, I’d say you will be spending over $1,000 per kilowatt hour, easily.

    I think Toyota’s figures, though, are as unrealistically high as GM’s figures are unrealistically low.

    And I wouldn’t trust rumors from Bill Moore at EVWorld. Rarely are they accurate.

  • avatar
    KixStart

    Bridge2Far: “If we have learned anything from all the lies and quality concerns it is to not trust Toyota.”

    Really? Because I trust ‘em. And that trust has been met with cars that deliver the goods. My annual automotive expenses are down since I switched to Toyota.

    Speaking of trust and quality concerns…

    GM is going to build just a month’s worth of Volts over the first year of production. As a consequence, for reliability purposes, when can we consider the first model year curse that accompanies all new GM vehicle to end for the Volt? Will building a piddling few somehow manage to get GM the necessary experience to start building them properly after a mere 12 montsh or will the curse of the first model year drag on for two or three years?

    KarenRei: “It’s no shock that Toyota tries to FUD li-ion,…”

    They’re FUD-ding to the choir, here. I don’t have a single Li-Ion battery over three years old that’s worth a tinker’s damn and many have crapped out far sooner than that. The 4-hour runtime Li-Ion battery in my 30 month old laptop is now good for about 20 minutes. It’s hard to imagine this level of “success” working out well as a vital $10-15K part in a $40K car.

  • avatar
    gslippy

    @KixStart:

    GM has worked hard to avoid the experience you’ve had with lithium ion cells, by carefully designing the battery pack to operate within a fairly narrow charge band and temperature band. Charging extremes and temperature swings are the primary enemies of lithium ion lifespan.

    But the Volt is still doomed because it offers poor customer value, and I believe it will offer poor driveability and ownership experiences. It requires duel fuels to achieve its mythical economy numbers, and modern car owners don’t want to be owned by their cars; it’s supposed to be the other way around.

  • avatar
    Martin Schwoerer

    KixStart: I wouldn’t compare a simple, uncooled laptop battery to an automotive battery pack. At least, I’d feel silly if I did.

    KarenRei: thanks for the highly interesting post!

    Daanii2, are you really saying you don’t trust Bill Moore because the rumors he reports are rarely accurate? Since when are rumors accurate? You always have to take rumors with a grain of salt. Judge a guy on his judgement, not on the rumors he relays.

    Edward: consensus is that prices of Li Ion batteries will easily decrease by 8-10% per year, as we are talking about a scalable technology. But it’s not only scalable, it’s also subject to market distortions due to various governments helping battery makers to buy market share. That’s normal for a technology that is considered to be crucial for a major future market. So, a substantial price reduction within 18 months sounds like wishful thinking, but it’s not totally out of the ballpark, I would say.

  • avatar
    97escort

    Former Car Czar Rattner tells what he found at GM and why Wagoner had to go:

    http://money.cnn.com/2009/10/21/autos/auto_bailout_rattner_excerpt.fortune/?postversion=2009102103

  • avatar
    PeteMoran

    @ 97escort

    Excellent link! Thanks. Simply amazing stuff.

  • avatar
    KixStart

    Martin Schwoerer: “KixStart: I wouldn’t compare a simple, uncooled laptop battery to an automotive battery pack. At least, I’d feel silly if I did.”

    Then let me do it. I don’t worry about such things.

    Most of the batteries in my care are rarely abused; the 4-hour laptop battery, for example, doesn’t get exposed to numbing cold or searing heat and it has never been used for 4 hours (and no longer could be). The Volt pack may be actively temperarature controlled when the Volt is plugged in or in use but it’s also going to spend days in parking lots on Phoenix or Minneapolis where conditions aren’t so friendly.

    GM’s charge management strategy, in fact, doubles the size, weight and cost of the battery (which makes the Volt heavy, adds drag, requires more power). The LEAF appears to be on course for a battery that’s more fully used, much cheaper per KWH and is expected to fail but will be inexpensive enough to lease and replace after a few years (possibly with an improved version). This may be a winning strategy with lower expense than a battery that is overbuilt so that it won’t appear to fail.

    Toyota gains no advantage by buying a battery that is more expensive than necessary; they put their vehicles on the market to sell, not to win points or green cred (see monthly Prius sales for confirmation). They want a price point and they want a profit. If they could get batteries they believed met requirements for less, they would buy them.

    97escort,

    Great find, thank you for bringing it to our attention. TTAC should blog it where people will certainly see it.

  • avatar
    Morea

    Reducing the description of something as complex as a battery-powered automobile to one metric ($/kWh) is just silly. Any engineer who has designed anything more complex than a paper airplane knows things are way more complex with an infinite number of trade offs.

    I am not Toyota fan boy but the company delivers the goods, the others not so much. Who would you trust in a pinch?

  • avatar
    geeber

    What it is interesting about the Money article is that it highlights how little has changed with GM’s culture since John DeLorean wrote his book, On a Clear Day, You Can See General Motors, in 1979.

  • avatar
    Geotpf

    Bridge2far :
    October 20th, 2009 at 8:24 pm

    If we have learned anything from all the lies and quality concerns it is to not trust Toyota.

    Toyota is still swimming in a sea of red dots from Consumer Reports. The only reason that an occassional slip up makes news is that everybody expects perfection from them. With GM (and Chrysler and the Germans and…), you expect lousy reliability and usually get it; with Toyota, you expect perfect reliability and usually get it.

  • avatar
    Bunter1

    Geotpf-exactly.

    Toyotas reliability is always held to a higher standard.
    Hey, that’s life at the top.

    Bunter

  • avatar
    KarenRei

    “Toyota/Panasonic have invested billions in a massive Li-Ion joint venture. ”

    Exactly. They’re way behind everyone else, just now starting to try to catch up on li-ion. But meanwhile, they have a *huge* NiMH infrastructure.


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