By on May 3, 2017

2017 Bolt

Profitability is right around the corner, but so far the sign marking the turn isn’t in sight. That seems to be the gist of comments made by Mark Reuss, General Motors’ executive vice president for product development, who recently claimed his company would be the first automaker to turn a profit selling cheaper electric vehicles.

Right now, the high cost of producing EVs makes it a money-losing proposition for automakers struggling to find an edge in the growing technology war. While Tesla might disagree with Reuss’ insinuation, the dedicated electric automaker has only ever posted a couple of slim quarterly profits, with revenue from its pricey EVs eaten up by expenditures elsewhere.

At a company like GM, piles of truck and SUV-generated cash allows for a model like the Chevrolet Bolt — a low-priced EV that beats the competition in range, but allegedly drains $8,000 to $9,000 from the company with each unit sold. That’s all going to change, said Reuss.

“That’s the mantra inside product development. That’s what all our engineers are all working toward,” Reuss told reporters at the reopening of the historic Durant-Dort Factory One in Flint, Michigan.

The automaker plans to seek EV profitability in two ways. First, by removing all the weight it can from the vehicle, reducing the number of battery cells needed to move the car. Secondly, by increasing production, thus lowering the cost of its in-house battery and motor technology. GM has a goal of selling 10 electrified models in EV-hungry China by 2020.

“We know the customers would like to drive electric cars but are unwilling to pay any more for them,” said Reuss. “That’s why we’re going to be the first company to sell electric vehicles that people can afford at a profit.”

Already, the Bolt sells in Europe under the Opel Ampera-e name, while the range-entended Chevrolet Volt has undergone a Buick makeover for Chinese customers. While the number of electrified GM products is on the rise, Reuss still wouldn’t chance a guess as to when the company might turn a profit on its EVs.

[Source: The Detroit Bureau] [Image: General Motors]

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44 Comments on “GM Product Boss Says Company Will Turn a Profit From EVs; Doesn’t Know When...”


  • avatar
    SCE to AUX

    “removing weight” + “increasing production”

    Tesla is doing those things also, along with the Gigafactory and battery recycling being key to reducing battery costs. If that plan doesn’t work, it’s over*.

    Another important component is resale value. If all EVs suffered similar depreciation as the Leaf has, mfrs would have to give away the new ones with heavy discounts.

    EV resale value is directly tied to battery degradation, which short-range EVs suffer in spades. Surprisingly, the Bolt predicts up to 40% degradation over 8-10 years (IIRC), which will not help bolster *new* Bolt sales. In contrast, Tesla degradation has proven to be substantially less, keeping resale values decent up until now.

    Another big factor: consumer subsidies. If these dry up, it will be harder to sell lower-cost EVs, volume will drop, and profits will suffer.

    * Except for my “Tesla is too big to fail” theory.

    • 0 avatar
      bumpy ii

      Leaf depreciation is partly artificial due to the tax credits, and partly due to large jump in capacity for the newest wave of EVs.

    • 0 avatar
      Thinkin...

      Where does GM state Bolt battery degredation of 40% at 8-10 years?

      All EVs come with 10 year, 100k battery/powertrain warranties (150k in CARB states I believe), and most manufacturers specify a max of 30% capacity drop in that time. Any more, and they’ll replace the battery for free.

      In the case of the Nissan Leaf, owners can swap the battery for a new one (with current technology/capacity) for $5500. While that isn’t cheap, it’s pretty close to making the car new again every 10 years – and with a better range than new.

      For perspective, in that same 10 years / 100k, a small ICE car averaging 30mpg would use 3300 gallons of gas, and 85 or so quarts of oil, costing around $10k.

      • 0 avatar
        SCE to AUX

        https://electrek.co/2016/12/07/gm-chevy-bolt-ev-battery-degradation-up-to-40-warranty/

        Note that in my original comment I said “up to 40%”. GM is saying 10-40%.

        If the worst-case degradation really happens, the Bolt will be a dud, and GM will never make money on the thing.

        • 0 avatar
          shaker

          There are people with Volts that report practically no degradation after 5 yrs 70,000 to 100,000 miles – I can’t see the Bolt being at 40% unless it’s frequently run from full to empty between LA and Vegas in August.

          Now THAT would be a good test – let’s see it, Chevy!

      • 0 avatar
        brandloyalty

        In the first 10 years a regular car will need transmission work costing at least half the cost of ev battery replacement. And the experience with hybrids is that used batteries are available for 10% of oem new battery cost.

        • 0 avatar
          28-Cars-Later

          “In the first 10 years a regular car will need transmission work costing at least half the cost of ev battery replacement”

          Sir, how did you arrive at this?

          2008 Pontiac GP – no transmission work, fluid changed < $100 USD
          2002 Saturn SL – no transmission work, fluid changed < $100 USD
          1993 Volvo – no transmission work

          • 0 avatar
            mcs

            2002 Mazda MPV with *maybe* 75k on it – anyway it was just out of warranty. The cost was around $5,500. At the rate it’s going, I’m not sure when my Leaf would need a battery replacement, but I wouldn’t be surprised if it makes it over 100k with less than 5% degradation.

            Note: Actually, none of my other cars have had transmission issues, then again the others were manuals.

          • 0 avatar
            28-Cars-Later

            This article probably didn’t exist yet when your issue took place but it would have set you straight:

            “The JF506E is a 5 speed automatic transmission made by Jatco. It was used in a number of different makes and models, including the VW Gold and Sharan, MG Rover, Ford Mondeo, Land Rover Freelander, Mazda MPV and the Jaguar X-Type. This transmission is considered to be a medium/large unit. Jatco is actually a spinoff off from Nissan.

            While Jatco generally make good products, there are a few things you should look out for, as is the case with all automatic transmissions. Here is what to look for.

            This is the JF506E transmission
            Source: http://www.ashcroft-transmissions.co.uk
            All automatic transmissions are susceptible to overheating. In fact, overheating is an automatic transmission’s number one enemy and the JF506 is no exception. These transmissions are designed to run at a maximum temperature of 200 degrees. For every 20 degrees you go above this temperature, you risk cutting the life expectancy of the transmission by a factor of two. To better understand the affect excessive temperatures have on the life of your transmission, at 240 degrees the life span is reduced to ¼ and by 260 it drops down to 1/8th.

            Heat will also destroy the transmission fluid. At temperatures as low as 240 degrees, the organic oil based fluids can start to turn to varnish. At that point it’s only a matter of time before the transmission totally fails. To help keep the temperature of your transmission under control, consider adding an aftermarket transmission cooler to your vehicle

            Another problem that is common with late model automatic transmissions has to do with the transmission’s internal electrical components, mainly the solenoids. There are five solenoids in the JF506E, four of which are used to control the shifting of the transmission, and the fifth one controls the lockup clutch.

            The solenoids found in an automatic transmission are nothing more than fancy electrical/mechanical magnets. They consist of a long coil of fine wire that when energized, create a strong magnetic field. This in turn moves a plunger attached to a valve in the valve body. The coil of wire can fail by breaking (usually caused by excessive vibration) or by melting and internally shorting out (caused by excessive transmission temperatures). Checking the condition of a solenoid is fairly simply. Attach an ohm meter to the two leads coming off the solenoid. A properly functioning solenoid should return a reading of between 20 and 30 ohms. Anything outside the range may indicate a problem with the transmission.

            The JF506E transmission has many electrical solenoids
            Source: forum.tdiclub.com
            Sooner or later, due to high mileage or abuse, you will be faced with a decision to replace your JF506E transmission. I highly recommend doing so with a re-manufactured transmission over one that was simply rebuilt. A re-manufactured transmission will include major internal modifications and upgrades designed to make it both stronger and more durable. A rebuilt transmission will not include this feature. A re-manufactured transmission also comes with a much better warranty; three years compared to an average 90 days for a rebuilt transmission. And in the rare event that you need to contact the company that re-manufactures transmissions, they are just a quick phone call or email away!”

            http://etereman.com/blog/nissan-transmission/potential-issues-with-the-jf506e-transmission-you-should-keep-an-eye-out-for

            https://en.wikipedia.org/wiki/Mazda_MPV

            My sincere advice is as follows:

            -Research the components used (motor, transaxle/transmission, cooling system, steering rack etc) before purchasing.

            -Make friends with a local indy transmission shop, and visit them once a year for service.

            -I have been skeptical of Jatco transaxles for years, especially after their early CVTs failed so often in the mid to late 00s. The design and mfg of your transmission/transaxle do matter. Aisin and ironically GM used to make the best.

            -Changing fluid on interval and perhaps adding aftermarket cooling will extend the life of any transmission.

          • 0 avatar
            HotPotato

            Time til transmission failure on three recent auto-trans vehicles in my world:

            VW: 65k mi
            Ford: 59k mi
            Chevy: 80k mi

            In fairness, the VW had few miles but 10 years on it, the Ford had few years or miles but was a first-year model, and the Chevy (if the dealer is to be believed) had a Chinese-built transmission.

            Most transmissions will last much longer, one hopes. But when they fail, it’s thousands of bucks unless you can do your own labor.

        • 0 avatar
          Hummer

          I would also like to know how he arrived at a tranmission costing 2750. I’ve had a 4l60e and 4L65e rebuilt for $1200 and $1350.
          These are light duty truck transmissions unless your rebuilding a grenaded Allison I don’t see that happening.

  • avatar
    S2k Chris

    Make it look like something real humans might actually want to buy and I’ll consider buying one! Make it look like a nuclear egg and buyers will run the other way.

  • avatar
    dividebytube

    For 99% of my driving needs I could live with a Bolt. It’s just those odd trips to the other side of the state where range anxiety would hit big time. And the hassle of finding a charger.

    Of course an ICE vehicle would remain in my fleet and could be used for the longer range work.

  • avatar
    Ugliest1

    “In contrast, Tesla degradation has proven to be substantially less,”

    Anecdotal: My Model S 85kWh is 3.5 years old with 84,000km (52,000mi), lost about 4% capacity over the first 1.5 years or so, and has not lost anything appreciable since (holding at 4.5% loss last couple of years). I’ve charged to 100% more than 25 times (and driven away within an hour or two), and supercharged more than 100 times over our ownership.

    So I’d say “substantially less” is an understatement. I’m in full agreement with @SCE to AUX.

    • 0 avatar
      mcs

      I have 216 quick charges and 2,394 L1/L2s on my Leaf. I try to charge to 100% every time and try to minimize running the battery low – like under 35%. The car has a new formula Nissan battery, but I think my charging strategy is doing the trick. I’m getting about the same number of miles before the car drops its first/12th bar on the meter as when it was new on a set course that I use to measure range loss. I’ll try to put a photo of all twelve bars with the 47k and 106 miles range as my avatar sometime next week.

  • avatar
    th009

    “While Tesla might disagree with Reuss’ insinuation, the dedicated electric automaker has only ever posted a couple of slim quarterly profits, with revenue from its pricey EVs eaten up by expenditures elsewhere.”

    Tesla made $22M in Q3 last year, but that’s after selling $139M in pollution credits. Without those, they would have still lost $5000 on each and every car they delivered.

  • avatar
    highdesertcat

    “GM Product Boss Says Company Will Turn a Profit From EVs; Doesn’t Know When…”

    I know when. When we run out of oil, is when.

    Until then? Drill, baby, drill!

    • 0 avatar
      SCE to AUX

      You may be right. But we will never run out of oil.

      • 0 avatar
        highdesertcat

        That’s exactly what all the discussion was about over the last 10 or so years on ttac.

        Many of the B&B believed we would run out of oil, had already hit peak oil, and were poisoning the planet’s atmosphere.

        Others believed, myself included, that we had not even discovered all of the unknown oil reserves, which remained untapped, like those in the Russian arctic, or off our shores of Alaska.

        We don’t know what we don’t know about yet-undiscovered oil reserves.

        But the actual buyers already voted with their pocket books, and overwhelmingly chose the ICE vehicle for their transportation needs.

        I’m all about choice, so I believe that EVs and Hybrids should be available to anyone who wants to buy one, or two. But without taxpayer subsidy.

        But without taxpayer subsidy, EVs and Hybrids are relegated to being an insignificant statistical anomaly in the annual SAAR.

        • 0 avatar
          Drzhivago138

          “Many of the B&B believed…”

          [Citation needed]. Not that you’re necessarily wrong, but when using weasel words (like “many”), it never hurts to back them up.

          “I’m all about choice, so I believe that EVs and Hybrids should be available to anyone who wants to buy one, or two. But without taxpayer subsidy.”

          If that’s the case, let’s drop the subsidies on fossil fuels as well.

          • 0 avatar
            highdesertcat

            “let’s drop the subsidies on fossil fuels as well.”

            Yes! I’m all for that. And……I’m also for a fuel tax increase to help pay for infrastructure repair/maintenance.

            I believe that we’ll be so energy-independent in the very near future that the cost of oil, natgas, coal, etc will be cheaper than the solar and wind infrastructure.

          • 0 avatar
            Master Baiter

            “If that’s the case, let’s drop the subsidies on fossil fuels as well.”

            THERE IS NO NET SUBSIDTY ON FOSSIL FUELS. OIL COMPANIES PAY 10S OF BILLIONS OF DOLLARS IN TAXES EVERY YEAR. JUST BECAUSE THEY ARE ALLOWED TO KEEP SOME PROFIT DOES NOT MEAN THEY ARE “SUBSIDIZED” IN SAME WAY PEOPLE USE THE TERM TO DESCRIBE SUBSIDIES ON EVS AND ALTERNATIVE ENERGY BOONDOGGLES.

          • 0 avatar
            TrailerTrash

            MB

            You cannot take away this fake fact.
            The faithful will always look at any tax break and twist and shout it into the EV credit/carbon credit comparison.

            It’s the same argument as “let those without sin cast the first stone”.
            Thus any sin then justifies denial of justice.

          • 0 avatar
            shaker

            There are still enough ozone action days, particulates, sulfuric compounds, etc. in the air of our cities to justify using less oil and more renewable energy for our commutes. Plenty of lung disease and asthma to go around.

            Exxon doesn’t care.

          • 0 avatar
            mcs

            @masterbaiter: I actually own a small Permian Basin oil company. While I do pay a lot in taxes (including to the State of NM that I’ve never even been in), I do get money back from the government. I think the subsidy in question is the oil depletion allowance that I receive for my wells.

            My EV has the distinction of being paid for with both EV subsidies and oil depletion allowances. I also divert my oil profits into battery technology investments.

          • 0 avatar
            highdesertcat

            MB, oil cos ARE subsidized, by way of tax write-offs and various accounting methods.

            Yes, they do pay a lot in taxes. So does Donald Trump.

            But I bet both take advantage of every tax loophole and rebate their accountants can find and justify to lower their tax burden.

            Did you know that some huge corporations like GE don’t pay any taxes at all?

            It was a big deal when that all came to light.

            And there were a lot of Big Business entities that got those breaks.

            Joe Sixpack and Sally Homemaker didn’t get any breaks. So I like Trump’s tax initiative but doubt that Congress will pass it.

            Not even the $24K standard exemption.

  • avatar
    JD321

    ““We know the customers would like to drive electric cars but are unwilling to pay any more for them,” said Reuss”

    “We know the customers would like to wait an hour to charge electric cars for a lousy 150 miles but are unwilling to pay any more for them”

    There ya go…Fixed it fer ya.

    • 0 avatar
      mcs

      Newer charging technology being implemented by GM’s competitors gets charging time down to 250 miles in 15 minutes. 150 miles would be 9 minutes.

      • 0 avatar
        JimZ

        Chargepoint has been working on 400 kW charging which gets you 100 miles in 15 minutes.

        https://electrek.co/2017/01/05/chargepoint-400-kw-charing-electric-vehicle-range/

        250 in 15 minutes is basically getting into gigawatts. just how practical do you think that is?

      • 0 avatar
        JimZ

        and keep in mind that 1.1 gigawatts is more or less the electrical output of a single nuclear power plant.

        • 0 avatar
          Big Al From 'Murica

          Whatever…They were getting 1.21 gigawatts back in 1955 with just a metal pole running into the motor and a timely lightning strike.

  • avatar
    Sjalabais

    GM can’t meet demand in Norway: 4000 Opel Ampera-e have been sold before the car has been officially shown. Order one today, and you’ll receive it in the fall of 2018…when it’s certainly not fresh anymore.

    • 0 avatar
      shaker

      Gee, those people give a damn.

      • 0 avatar
        28-Cars-Later

        Gas is expensive there and Norway as a nation is rich as can be with a 5.196 million person population. They are essentially what Saudi Arabia could have been had it been managed properly from the 1970s onward (31.54 million in 2015 up from 5.8 million in 1970).

    • 0 avatar
      JimZ

      Norway is a horrendously distorted market.

      • 0 avatar
        Sjalabais

        Yeah, nobody’s claiming any different. The electric car subsidy is a blatant misallocation of public funds. But…Opel has little presence in Scandinavia. The crap cars that they have churned out since the Lopez years in the mid-90s have broken their back. Now, they suddenly have one car to sell in spades, which could have an effect on their other produce, too. Yet, they decided to make it exclusive. I know, what does GM care with Opel now sold to Peugeot, but it either way was a fact that I felt benefited the discussion here.

  • avatar
    HotPotato

    GM might to better to follow VW’s plan: make a platform that can take any powertrain, and then sell the same car with whichever powertrain people want. That way you can use economies of scale, not shoddy interior plastics, to get costs down.

    Taking weight out is a good idea. But aluminum is a little expensive and a little tricky to work with, and carbon fiber is a lot expensive and a lot tricky to work with. (Witness the BMW i3, which doesn’t really do anything better than the Fiat 500e but leases for four or five times the monthly payment, because…carbon fiber?)


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