Volt Birth Watch 177: Can't We Spend $100m On Something?

Edward Niedermeyer
by Edward Niedermeyer

“A Flush GM to Lavish Cash On New Vehicles,” goes the NY Times headline, forshadowing the kind of profligacy that only happens when you have $42.6 billion of taxpayer money burning a hole in the corporate pockets. From the next generation of truck and SUV platforms to the Cadillac Alpha (known in-house as “BMW Fighter”), that money is going towards products…. at least it is when it’s not going to faltering overseas operations. And in most cases that’s a good thing. For example, Mark Reuss explains “ with the BMW fighter, the steering in that vehicle is going to be absolutely critical. In the past we would have gone to the lowest cost source, but not anymore.” Well, good on ya, mate. When it comes to the Volt though, the money doesn’t seem like it’s being quite as well spent.

The NYT explains:

At a meeting last month, directors offered to put another $100 million into the Chevrolet Volt if the company could get the battery-powered sedan into production sooner than its current start date in November, according to people with knowledge of the board’s move.

Dedicating more money for the Volt would not necessarily move up its timetable, said Jon Lauckner, G.M’s vice president for global product planning. But it could allow G.M. to build more vehicles for consumers to test-drive before full manufacturing begins.

“We have already reduced the Volt’s development time by about seven months,” Mr. Lauckner said in a recent interview. “Our date with destiny is November of 2010, but it could be useful for us to have the money to get some vehicles to consumers earlier than that.”

What’s the most worrying aspect of this situation? Is it that the Volt program is so rushed that $100m won’t speed it up any more? Or is it that GM felt it had to burn the cash on the program anyway, even if it only meant a few extra pre-production vehicles? Or is it the fact that the extra $100m raises yet another barrier to profitability for the Volt? There’s no argument that GM should spend cash on its future products, but reports like this make it sound like spending money is an end unto itself. For a firm that will never fully repay the American taxpayer, that’s a disturbing sign.

Edward Niedermeyer
Edward Niedermeyer

More by Edward Niedermeyer

Join the conversation
2 of 32 comments
  • Tparkit Tparkit on Dec 08, 2009

    Coupla points: - when the Volt rolls out, it won't be priced at $40,000. The sticker will be much less, with the taxpayer making up the difference. - the cost to produce a Volt will likely be much higher than $40,000 a copy, but the extra will simply be capitalized, or allocated away to other cost centers so the Volt program doesn't appear to be such a boondoggle. - this NYT article is a calculated puff piece. It makes GM look strong and committed to top-quality, competitive products. It helps insulate the Obama administration from charges it is pouring tens of billions down a rathole. The Volt is dragged in because GM hopes it can provide political cover for profligacy. We're not wasting money, we're investing in a brilliant, Green future that will benefit generations of Americans to come. We'll get a second chance to invest if the government floats the IPO. I wonder how the US government will bribe China's government to buy the shares.

  • Porschespeed Porschespeed on Dec 09, 2009
    The outrage happened at the voting booth when the repubs lost the house in 06 and the senate and the WH in 08. No one is happy when the government wastes money except the people getting it. The order of magnitude just seems to keep going up from billions (clinton) to tens of billions (early bush 43) to hundreds of billions (late bush 43) to now trillions (obama). You probably aren't old enough to remember when we changed from the world's largest creditor nation on the way to the world's larget debtor, where we are now. Pivot point was about 1976. Carter Billions. Reagan Hundreds of Billions. Bush Sr. Hundreds of Billions but not as many as Reagan Clinton some up, some down. Net, net few hundred Billion. About the same as Bush I. Bush II - Trillions. Obama- Same as Bush II. Just more Trillions. Will become less of a problem as we bring back 70's style inflation to pay back what we borrowed.
  • The Oracle Going to see a lot of corporations migrating out of Delaware as the state of incorporation. Musk sets trends, he doesn’t follow them.
  • Foo Eh. Net present value is in the red, once you add in rapidly rising insurance, late by months basic repairs-and-no availability, battery replacement, future hazmat recycling fees, and even faster depreciation. Wait until litigants win for "too heavy" in accidents... The math is brutal but if you value virtue signalling, some will pay anything.
  • Lynchenstein @EBFlex - All ICEs are zero-emission until you start them up. Except my mom's old 95 Accord, that used to emit oil onto the ground quite a lot.
  • Charles The UAW makes me the opposite of patriotic
  • El scotto Wranglers are like good work boots, you can't make them any better. Rugged four wheel drive vehicles which ironically make great urban vehicles. Wagoneers were like handbags desired by affluent women. They've gone out of vogue. I can a Belgian company selling Jeep and Ram Trucks to a Chinese company.