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]
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.
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.
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).
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.