By on January 18, 2010

By the power of government intervention! (courtesy:whitehouse.gov)

Subtitle two: we don’t believe a word of it. The report comes from an exclusive interview of GM Chairman/CEO Ed Whitacre at the Volt fanboy site gm-volt.com. GM-volt’s Lyle Dennis asked Whitacre if GM would lose money on every Volt it sells, a fact that GM executives have never tried to substantively deny. Until now. Whitacre’s answer:

“We’re not in business to lose money,” he said. “We did enough of that already.”

The Volt “is going to sell in the low 30s,” said Whitacre. “We’ll get a margin on that.”

Oh really? Because it sure seems that GM plans on selling the Volt for $39,500-$45,500, and that the “low 30s” number is dependent on a tax credit. As for Whitacre’s claim that the Volt will make profit, the lack of time-constraints on his prediction is all you need to know. With enough sales and over enough time, almost anything will create profit, especially if the government is distorting the battery market for you. Meanwhile, GM still has to overcome $40k sticker shock (sorry, but you can’t exactly advertise post-tax break prices) and at least a few years of loss on the Volt. But if the gm-volt comments section proves anything, it’s that you can never go wrong misleading the fanboys.

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16 Comments on “Volt Birth Watch 182: Whitacre Projects Volt Profit At “Low $30k” Price Point...”


  • avatar
    Contrarian

    Let’s talk recovering their investment. Let’s assume they want to pay it off at a rate of $10k per car (and that’s pretty high) over 3 years:

    I think $1B is a good ballpark for Volt development costs, so:

    $1B/$10k per car = 100,000 cars over 3 years. optimistic, but their material,labor and manf burden costs will need to be less than ~$30k/car to turn a profit. With all their legacy and UAW burdens, I don’t see it happening. But that is rough math.

    • 0 avatar
      Disaster

      1 billion is a conservative number…probably only the amount invested in the couple years.  I bet if you followed the dollars you will find GM has spent 5 times that in their EV programs leading to the Volt release.
       
      I have no doubt EV’s will be in the future.  But I doubt they will look like the Volt and be powered by the same cells.  They will have to get lighter and smaller and be powered by more cost effective cells to ever be successful.

  • avatar
    AJ

    With the taxpayers paying the difference, they can sell it for whatever they want. Now that is the new GM.

  • avatar
    psarhjinian

    The Volt “is going to sell in the low 30s,” said Whitacre. “We’ll get a margin on that.”
     
    He didn’t say “positive margin”.
     
    Now, that said, $30K is more accessible, and there’s nothing really wrong with loss-leaders.  The problem is when everything you sell loses money.  Historically, GM has a lot of that kind of problem.

  • avatar
    zerofoo

    Who spends $30k on a car to save money on gas?  This car is a huge mistake.
     
    By the way Ed, margins only exist if you can sell the damn things.
    -ted

  • avatar

    If GM even mentions that our taxes help offset the MSRP (which cannot be in the low 30s, not on the sticker) the backlash from fiscal conservatives will almost negate the greenwashed positive press this car is certain to receive.

    While lacking the delivery of Lutz, this is certainly just as looney. Whitacre’s already turning into a GM man.

    • 0 avatar
      psarhjinian

      …the backlash from fiscal conservatives will almost negate the greenwashed positive press this car is certain to receive.
       
      Yes and no.  Fiscal conservatives tend to be conservative in general and anti-environmentalist by and large.  They wouldn’t buy this car.  Pinkos (who don’t like the bailout because it’s wealth redistribution in the wrong way) but don’t mind investment in green technology, would probably put a bag over their head and think of England, but buy it anyway.
       
      A fiscal conservative boycott of the Volt would have about the same effect as a social conservative boycott of Subaru for being LGBT-friendly.

  • avatar
    KixStart

    Lutz recently (last two weeks or so) remarked, again, that the price would be in the neighborhood of $40K and that GM would lose money on it.

    Can’t find a link, sorry.

  • avatar
    skcusmg

    As usual with Clueless Motors, the left hand does not know what the right hand is doing. Lutz and Wagoner were always contradicting each other in public, nothing has changed.

  • avatar
    lilpoindexter

    The 335D Starts at $43,950.  I know which car I’d rather have.

    • 0 avatar
      psarhjinian

      Nice as the 335d is, it’s not remotely a competitor.  That car is for rich Europhile dieselheads who, given BMW’s sales of the car and the incentives they’re piling on, don’t seem to exist in any significant number.  The 335d’s sales performance should be a lesson to anyone who thinks auto enthusiasts know or represent anything about the market.
       
      The Volt is meant for commuters who want to, for whatever reason, be it economic or environmental, not use gas.  There are a lot more of these people, if Prius sales and markups are any indication.

  • avatar
    psarhjinian

    Who spends $30k on a car to save money on gas?  This car is a huge mistake.
     
    Question: How many people are going to pay the premium for a more powerful engine just to save a few seconds of time?  Answer: you’re asking the wrong question.
     
    A lot of people will pay a premium not so much to save money, but to not use gasoline wherever possible.  I know this is very hard for auto enthusiasts to understand, but economy and emissions are just like speed or handling: there’s a premium for it, and there’s a market for it.  There are people who will gladly pay for this level of economy, just as there are people who will pay for a Prius versus a Matrix, RAV or Camry.
     
    The problem we have is that since we, as enthusiasts, don’t see the value in this car, we assume there’s no market.  My mother-in-law speaks the same way about anything more elaborate than her Corolla CE, and doesn’t understand why someone could make the cost/benefit justification for a Camry, let alone a 3-Series, 911 or Chevy Tahoe.

    Disclaimer: I like the idea of this car. I think a lot of people who live within the typical commuting radius will find it very appealing, too, as will fleets who can easily support the power infrastructure.

    • 0 avatar
      jkross22

      Enthusiasts understand this, but don’t agree with it.  There is a difference.
       
      As with all new products from GM, it’s best if we take a wait and see approach –  not just to see how/if it sells, but it’s selling price, repair record, real world mileage, etc.  The public’s trust in GM has eroded to the point of simply not believing many of the claims they make.  For example, the picture of Fritz, the Volt and a sign that said 230 mpg was his “Mission Accomplished” moment.
       
      No one does smoke and mirrors like GM.

    • 0 avatar
      KixStart

      psarhjinian writes, “A lot of people will pay a premium not so much to save money, but to not use gasoline wherever possible.  I know this is very hard for auto enthusiasts to understand, but economy and emissions are just like speed or handling: there’s a premium for it, and there’s a market for it.  There are people who will gladly pay for this level of economy,…”

      Define “a lot.”  I think this number isn’t particularly big.  And “gladly pay… for economy?”  That’s practically an oxymoron.

      In a note further up, you mention the BMW’s sales.  Well, look at the price.  It’s $43K.  The median car price is something like $22K.  The Prius is pretty well within that budget and even those thinking “Corolla” but who put a premium on major fuel economy can at least consider the car.

      Ah, yes, those that would get off gas altogether…  Have you been inhaling the fumes at GM-Volt?  For $22K, you can dramatically reduce your consumption of fuel… and many do… but many don’t.  And there’s a diference between an extra $2-3K (less if you consider the Prius “mid-size”) and an extra $13K to satisfy an abstract desire.  Especially if you’re married, have kdis or other obligations.

      Psharhjinian also writes, “Disclaimer: I like the idea of this car. I think a lot of people who live within the typical commuting radius will find it very appealing, too, as will fleets who can easily support the power infrastructure.”

      I’m not opposed to the idea, myself.  However, GM’s implementation of it is extremely expensive (maybe it’s just premature… battery prices need to fall) and the engine is way too big.  Think of the gas engine, the recharger, as a life boat.  You don’t expect to use it much at all.  On a cruise ship, the lifeboats are practically insignificant, in terms of the total mass of the ship.

      On the Volt, the “lifeboat” is big enough to propel a Cruze-sized car under normal circumstances.  That’s way out of proportion to its supposed mission.  It’s way too big.  The entire system suffers as a result.  More mass in the engine means more frame needed, more brakes, more everything.  More of everything reduces performance and range.  This car should have a tiny range-extender and be purely optimized for battery operation.

      In fact, a better arrangement would be a trailer-mounted extender.   Not going too far?  Leave the genset at home.  Or, better yet, don’t buy one… rent one when you need one.

  • avatar
    Steven02

    I wonder if the making money statement is because much of the costs of the program went away under bankruptcy.  Say the cost on the books is only 500million, and they sell them in Europe and the US, I could see this making money, but only because GM went bankrupt earlier.

  • avatar
    Cheevie

    maybe he’s talkin’ euros…


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