GM to Take a $9,000 Hit on Every Chevy Bolt Sold; Its SUVs Give Thanks

by Steph Willems

December 1st, 2016 10:18 AM

gm to take a 9 000 hit on every chevy bolt sold its suvs give thanks

To play the game, you’ve got to be prepared to kiss off a few bucks.

That’s what General Motors will do with every Chevrolet Bolt that rolls off its Michigan assembly line, but it’s not because the automaker suddenly felt like becoming a masochist.

Thanks to the California Air Resources Board and nine other states that signed on to its zero-emission vehicle rules, losing money on one model is the price an automaker must pay to stay in the game. And lose money GM will.

According to Bloomberg, sources close to the automaker claim that each 238-mile electric subcompact GM builds represents $8,000 to $9,000 draining from its corporate wallet. Of course, it’s not alone in this regard. Other automakers willingly field money-losing vehicles to gain ZEV credits in CARB-compliant states.

In order to sell high-profit, gas-guzzling Rams and Jeeps, Fiat Chrysler Automobiles was forced to take a $14,000 hit on every electric Fiat 500e — a car FCA CEO Sergio Marchionne has expressed a particular hatred for. Because California has no plans to stop being California, its ZEV mandate isn’t going away. In fact, it’s on course to ramp up — reaching 15 percent of sales by 2025.

To make nice with California, Bloomberg — using last year’s sales as a guide — calculated that GM must sell 7,698 Bolts or 10,082 Volts in that state.

It’s not all bad news for automakers. A popular EV can amass a cache of ZEV credits for a company to sell to less eco-friendly automakers (such as, say, FCA) for a profit. It’s hoped that electric vehicle production costs should drop as battery packs become cheaper.

[Image: General Motors]

#2017ChevroletBolt #CARB #ChevroletBolt #ElectricVehicles #EVs #GeneralMotors #GM #ZEVCredits

Comments

Join the conversation

8 of 108 comments

Stingray65 on Dec 01, 2016

I've seen no credible reports that any current EV is profitable for its manufacturer, and most of those have far smaller (and less expensive) batteries and electric motors (Leaf, eGolf, 500e, etc.) or much higher prices (Tesla) than the Bolt. Dividing a $1 billion development cost across the typically low volume EV sales, add in expensive batteries and construction materials (aluminum, carbon fiber), marketing expenses (included subsidized leases) for a product few people actually want, and it would be more suspicious if GM or any other EV maker was actually claiming a profit.

Like Reply
Krhodes1 on Dec 01, 2016

We could always ditch CAFE altogether and just directly tax cars (or fuel, or both) to a level that achieves whatever socially desirable result that CAFE is aimed to achieve. Would be a lot simpler, no? But Dog forbid we should ever pay taxes on anything *directly*. Honestly, I would love it if Trump just dismantled the whole stupid mess. Even a broken clock is right twice a day.

Like Reply
- See 2 previous
- Luke42 on Dec 01, 2016
  
  I'd be in favor of gradually replacing the income tax with a carbon tax over a decade or so. But that's even less likely now, what with the new administration trying to bring back everything bad about the 1950s...
  
  Like
- Genuineleather on Dec 02, 2016
  
  I'm sympathetic to the idea of a gas tax in lieu of more complex regulations like CAFE: charge a price for fuel that appropriately values its external costs, then allow the public to decide how much of it they're willing to pay for. However, aside from the fact that a sufficient gas tax is politically untenable, high fuel prices would disproportionately affect lower income people, who would be forced to pay more for the basic necessities that depend on fuel for their production and distribution. At least with CAFE, the (claimed) burden falls on the new car-buying public, a far more affluent demographic than the American public at large. However, even that theory has not held up: cars are faster, safer, more efficient, more luxurious, more reliable, AND cheaper than they were two decades ago. I have seen no evidence that existing environmental vehicle regulation has been a net burden on consumers, manufacturers, or the public interest. Thus, I find the hand-wringing over CAFE generally misplaced.
  
  Like
- Brandloyalty on Dec 02, 2016
  
  @genuineleather I appreciate your thoughts on this matter, but disagree on the "poor" people angle. Poor people should not have the right to pollute more than anyone else. Yes, rich people do because they can afford to. That is, the rich people who don't know any better. Public sentiment will catch up to them. I was poor once. I did not consider myself to have an inferior lifestyle. I got around using transit and by cycling rather than take taxis or drive a nasty old car. The cycling was healthy exercise as a bonus. For virtually every objection that could be raised to this scenario there is a reasonable solution.
  
  Like
Genuineleather on Dec 02, 2016

On the issue of CARB, I am continually surprised to hear people who do not live in California dismiss it as some kind of arbitrary, feel-good sop to environmentalism. California's climate is integral its prosperity, a piece of the economy critical enough to warrant unique regulation. Tourism, farming, and real estate are major California industries dependent on a stable, clean, appealing environment that is directly related to the state's carbon footprint. Even local sectors only tangentially connected to the weather like tech, fashion, and finance utilize the imagery of a perceived "California lifestyle" to market their wares at home and abroad. Add to this tremendous population density, expensive coastal real estate, and the continued growth in knowledge industries, and it becomes easier to understand why state policy favors something critical to local industry (carbon emissions and climate change) over something less directly beneficial (automotive production).

Like Reply
- Thattruthguy on Dec 02, 2016
  
  "That there's homo stuff."
  
  Like
Brandloyalty on Dec 02, 2016

This is exactly why the patchwork of debatable and clumsy programs such as CARB, other mileage regulations, ev credits, cash for clunkers etc. needs to go away and be replaced by a carbon tax. A carbon tax high enough to have the effect of all these programs but without the silliness and gaming.

Like Reply