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GM says the 2011 Chevy Volt, America's first mass-market electric vehicle, will be offered in the low 30s (possibly before tax credit), and that it will make a profit.
Its unclear whether Volt's price tag in the low 30s is with or without tax credit

The 2011 Chevy Volt, designed and manufactured by General Motors, faces tremendous challenges as the highest profile electric vehicle launch to date.  Among the most pressing are performance -- currently the Volt can not tolerate very hot climates well -- and pricing.

Many factors, including the cost of the battery pack, the cost of the vehicle warranty (which could possibly include limited battery replacement coverage), and cost of design have led analysts to predict that the Volt will be quite expensive for a mass market vehicle -- in the range of $40,000 USD.  A $7,500 USD tax credit on electric vehicles will bump this price down substantially, but many have voiced doubts about how many consumers will bite at a $32,500 USD price point.

However, according to GM-Volt.com, the cost may be significantly less, improving the Volt's prospects.  The blog spoke with GM CEO Ed Whitacre and quotes him as saying, "We’re not in business to lose money, we did enough of that already.  [The Volt] is going to sell in the low 30s.  We’ll get a margin on that."

Noticeably absent was any mention that the low 30s price estimate included the government tax credit.  If that figure indeed proves to be before the credit, it could mean GM has a major surprise in store for the market.  If GM can hit the market in the high 20s after a  tax credit, it could steal a substantial amount of business from hybrid makers like Toyota and Honda.

Again, Mr. Whitacre's comments do not entirely rule out that the "price" he's quoting is after tax credit, though that is how GM-Volt.com has interpreted them.  Regardless, if GM can merely make a profit on the electric vehicles it is producing, that will be impressive.

If GM can achieve either goal -- a price in the 20s after tax credit, or a margin on the vehicles it sells, its bold experiment could pay off.  After all, its position is similar to that of Toyota, when the Japanese automaker entered the world market with the Prius in 2001.  At the time hybrids were unproven and doubts were high; now the car is the bestselling car in Japan and climbing U.S. sales charts.  The Volt has the potential to achieve similar success, if GM can live up to its big promises.

Update 1: Tues., January 19, 2009, 11:05 p.m. -

Turns out that like most things that sound to good to be true, the notion that a "low 30s" price might be pre-tax credit turned out to be wishful thinking.  A GM spokesperson contacted AutoBlog, commenting that while GM "has not officially announced final Volt pricing, a price in the low 30's after a $7,500 tax credit is in the range of possibilities."

While it may be disappointing to many that the Chevy Volt won't hit in the high 20s, this comes as little surprise.  Returning to the Prius parallel, if GM can indeed turn a profit, though, that will still be quite impressive.  Hopefully that prediction by Mr. Whitacre was not simply more wishful thinking.

 



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Cooked books
By wookie1 on 1/19/2010 10:46:22 AM , Rating: 3
Since the gov't now owns and controls GM, and is bent on electric cars, the accounting will be all messed up. What I mean is, how can anyone determine if the car is profitable when the gov't is subsidizing large chunks of R&D and manufacturing? I believe that there was an article here on DT not long ago about a >$100M grant to GM's manufacturing to help prepare to build the car. Add to that many other gov't money infusions and the $7500 tax credit, and it really isn't possible for outsiders to determine if the car is "profitable". It will of course appear profitable, because the costs to build it are heavily subsidized and that won't be factored in. Of course, competitors will have a difficult time making a profit on any similar vehicle since they have to invest their own money on it and the investments will count against profitability.

We knew before that GM was too big to fail, now even the Volt is too big to fail.




RE: Cooked books
By shin0bi272 on 1/19/2010 11:20:02 AM , Rating: 2
+1 to you my friend... just sorry I already voted and commented before seeing your post.


RE: Cooked books
By Motley on 1/19/2010 1:26:01 PM , Rating: 2
I don't think the government will own GM for very long. GM is repaying their loans to the government even quicker than anticipated.


RE: Cooked books
By CosmoJoe on 1/19/2010 2:01:54 PM , Rating: 2
This means nothing until GM is out from under Govt control and no longer receiving massive amounts of taxpayer aid. GM just posted another loss. This company, as it exists now, is not looking like a strong company which can stand on its own. It is banking everything on the Volt and as many have said, we may never know if this car is a financial success for the company if everything about it is heavily subsidized.


RE: Cooked books
By steven975 on 1/19/2010 3:34:13 PM , Rating: 2
with their planned production, the Volt will be just a blip on their income statement. One positive uptick offset by losses upon losses.


RE: Cooked books
By wookie1 on 1/19/2010 2:14:39 PM , Rating: 2
Yeah, but they're repaying it with OTHER money given to them from the gov't! It's like making your car payment with your credit card, especially if your car loan and credit card are issued by the same bank! It's just money going from one of the banks money accounts to another, with nothing coming from you.


RE: Cooked books
By hashish2020 on 1/19/2010 2:21:09 PM , Rating: 2
...well that is what happens when you let Korean and Japanese companies import with artificially low exchange rates for 25 years---if you think that isn't a subsidy...

Even Adam Smith agreed that governments can distort world markets


RE: Cooked books
By foolsgambit11 on 1/19/2010 6:13:07 PM , Rating: 2
I see your point, and acknowledge that it's a good one. But Lutz wasn't talking about profitability in the sense that you are. He meant that GM's production costs would be completely covered by the money it receives from the sale of the Volt. If you leave out all the government subsidies, the math becomes a lot simpler:

(1) (GM's) R&D costs
(2) plus production and shipping costs
(3) minus sales revenue
(4) ???
(5) Profit!!!

(I'll give you a hint - the ??? is where we all chip in an help GM out, enforced by a friendly IRS agent)


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