Your Tax Dollars At Work: GM Loses Its Shirts On Every Volt

Bertel Schmitt
by Bertel Schmitt
your tax dollars at work gm loses its shirts on every volt

GM loses around $49,000 on each Volt it builds says Reuters. GM sold a record 2,831 Volts in August, but that may “have pushed that loss even higher. There are some Americans paying just $5,050 to drive around for two years in a vehicle that cost as much as $89,000 to produce,” says Reuters after a deep data dive into the elusive profitability of GM’s green halo car.

Those August sales were goosed by a juicy lease deal at “a low monthly payment of $279 a month for two years, with some high-volume dealers dropping the payment to $199 a month after receiving incentive money from GM, with down payments as low as $250. The company said about two-thirds of Volt customers in July and August leased their vehicles, compared with about 40 percent earlier this year. “

Those Hail Mary leases are guaranteed to come back and haunt GM. The $199 lease translates to a residual value of around $30,000 after two years. GM better starts saying several Hail Marys and a few Our Fathers. A new Volt costs $32,500 after tax credit. Good luck finding an off-lease buyer who pays $30,000 for a two year old car and no tax credit.

In a factbox, Reuters enumerates the estimated costs to build a Volt.

Fixed cost, Development:$18,650Fixed cost, Tooling:$37,350Standard Parts, Material and Labor:$12,000Unique Parts, Material and Labor:$12,000Total:$80,000

Fixed-cost figures are based on total Volt sales of 21,500 cars through August, and will drop in the future as sales and production volume increases.

“It’s true, we’re not making money yet” on the Volt, Doug Parks, GM’s vice president of global product programs told Reuters. The car “eventually will make money. As the volume comes up and we get into the Gen 2 car, we’re going to turn (the losses) around.”

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  • Jimmy7 Jimmy7 on Sep 10, 2012

    So, in the last months of a model year with the 2013s already shipping GM offers great lease deals on the leftover 2012s. I'm shocked at this unprecedented situation which is a sure indication that the Volt is a failure.

  • Mike Kelley Mike Kelley on Sep 10, 2012

    The Ford Edsel, while averaging close to 40,000 sales per year, was an epic failure. How is the Volt anything less than a disaster selling only 2800 units a month in a country with several times the population? "The Edsel Division was in a death spiral. The more cars that failed to sell, the more dealers dropped their Edsel franchise. The more dealers that folded, the more the public was afraid to buy the car. After three model years and just 110,847 Edsels later, Ford Motor Company threw in the towel, and went about trying to forget about the whole ordeal."

  • SCE to AUX "scheme" appears 5 times in this story. We get it.I don't understand the concern. Many, many EV credits have passed to dealers/mfrs in the decade since since Cash For Clunkers, and did so for leased EVs. I've leased two EVs, and the Federal subsidy went straight to the mfr - not me. The dealer took that figure off the sale price.You'd think the dealers (especially Nissan) had never seen this before - how ridiculous.Tell you what, dealers - advise your mfrs you'd rather not take the risk, and see how that goes.
  • Crtfour It's long before the first recall?
  • Oberkanone You get a workout driving an Opel GT compared to driving experience of today. No power steering, manual transmission, and just getting into and out of the car requires extreme physical flexibility. I favor the Saab Sonett III over the Opel GT. If I'm buying a tiny two seat 1972 odd car I'm going all in.
  • Lou_BC Ford's on strike. Using photos of Fords is like crossing a picket line. ;)
  • Lou_BC Not my problem. Buying anything on credit is a risk for buyer and seller.