Volt Birth Watch 152: Born To Lose

Automotive News [sub] dug deep for its latest piece on the Volt project, a sprawling opus which fills in a number of the missing pieces in TTAC’s own Volt Birth Watch. From the birth of the concept (“I was getting so pissed off about reading about how the wonderful, far-sighted Toyota is the only one who understands technology”) to its design (“Within 15 minutes, [John Lauckner] had the vehicle basically laid out”) GM’s Bob Lutz takes us inside GM’s moonshot. So what’s the view like from that tin can now, Major Bob?

After “[Lauckner] did all the calculations, what the vehicle weight would be. I was smart enough to realize this made a hell of a lot of sense,” explains Maxstronaut Lutz. Too bad he wasn’t smart enough to realize that the Volt would cost more than $25,000.

When I said I hope to sell it in the 20s, I just thought, ‘Well, if a conventional car of that size with a conventional four-cylinder engine, we can sell it for 15 or 16 thousand dollars, then let’s notionally add $8,000 for the battery and we’re at $25,000. That’s the way my brain worked on that one.

Even the famously clueless GM management knew from experience that Bob’s baby would be trouble. “One senior executive, senior to me, said: ‘Bob, we lost a billion dollars the last time we tried that [with the EV1]. What do you want us to do, lose another billion?'” To which Lutz’s answer was apparently “Yes.”

The problem wasn’t even that the Volt would need an $8,000 battery pack; almost all of GM’s synergies and efficiencies of scale are useless when it comes to the Volt. “There are no systems synergies in that car; everything is stand-alone,” Lutz explains. “But that was just because the electric guys had to do their job, the cooling guys had to do their job, the hydraulic guys had to do their job, and there wasn’t time to go back through it and say, ‘Wait a minute, how come we have two of these?'” Worse still, GM’s supplier options were extremely limited.

And then there’s the issue of price. Though the Prius, which bugged Lutz enough to launch the Volt program, sells for $22K-25K, the Volt has a projected transaction price of $43,000. Which means GM will have to sell to dealers for a significant loss. Sure it qualifies for a $7,500 tax credit, but that isn’t recouped until tax season and it doesn’t reduce insurance costs.

The Volt project could easily have been killed, says AN [sub]’s GM source. And considering that the program’s billion-dollar pricetag could have developed three new vehicle platforms, it probably should have been. “But the Volt’s high public profile — stoked by a massive public relations effort — made that virtually impossible,” is how AN phrases it. Couldn’t the bailout have had something to do with that decision?

Meanwhile, Lutz admits that “vehicle price is going to be a big issue for a long time to come.” So much so, in fact, that GM engineers are already “beavering away,” (to use the Lutzian phrase) to cut costs out of the car. Which always augurs good things to come at General Motors. Especially for a car that starts at $43K.