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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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RE: Of course it's including the tax credit
By shin0bi272 on 1/19/2010 11:18:20 AM , Rating: 2
Can someone explain to me how the government (and yes I know they own GM) giving me money to buy a car makes the production of that car cheaper? The car still costs 40k+ to make unless they strip out stuff like 91TTZ said or get the batteries cheaper somehow. Just because the Gman decides Im being a nice little progressive and bending over and taking it in the wallet so I deserve 7500 extra dollars, doesnt mean that the car is cheaper to produce. That will just lead to GM losing more money each year and the government having to give them more money to keep them in business while they are handing me money too. So in the end wont the losers here be the tax payers?

I mean eventually your tax dollars are gonna be given to GM and anyone who does what the environmentalists say and buys one of these cars. Cause the way a tax credit works (except for cash for clunkers) is you go buy the car at 40k+, GM loses money on it, then next april you file your taxes and the government pays you money (which is classified as an outlay of misc funds) for your favorable action of purchasing a car they deemed worthy. That results in lower tax revenue for the government at tax time and because of that we'll run higher deficits every year this credit is around. That results in higher taxes eventually and more bailouts for companies owned by the government (see fascism) all of which are paid with tax payer dollars.

So isnt the government paying you to do what they want and then taking money from you later to keep their programs and companies running? How is that turning a profit?

Not saying dont buy the car... that's up to you... Im just lost as to how this means GM turns a profit


RE: Of course it's including the tax credit
By theapparition on 1/19/2010 11:37:42 AM , Rating: 3
I don't agree with subsidies and tax credits, but to answer your question:
quote:
Can someone explain to me how the government (and yes I know they own GM) giving me money to buy a car makes the production of that car cheaper?

Increasing the production of any item reduces it's cost. Imagine how expensive an iPod or GPS device would be if they only made a few. Sell thousands, and prices are somewhat affordable. Sell millions, and now they are downright cheap. Billions and now they are the surpirse at the bottom of cereal boxes.

So the thinking is that if the government can artificially create demand, production increases and costs decrease. Once again, let me reiterate that I do not agree with that conclusion, just trying to explain it.


RE: Of course it's including the tax credit
By shin0bi272 on 1/19/2010 2:07:08 PM , Rating: 2
That kinda makes sense. If the government could sell enough of them to make the price go down so that it could actually turn a profit. They did artificially create demand with the cash for clunkers and now I would postulate that all the people who bought cars in c4c wont be purchasing cars this year like they might have without c4c. Essentially they didnt really create any demand they just displaced future demand to last summer which is already leading to lower buying now. But thanks for explaining it that does make sense now I appreciate it.

Motley: The government giving you a tax rebate doesnt reduce the cost of producing the car it reduces your price of the car theres a difference. The car's tires are still the same price for GM to purchase and install. The windshield, the engine, transmission, etc. are all the same price for them to purchase and install. That means the cost of making the vehicle is the same but the price to the buyer after the fact goes down.


By foolsgambit11 on 1/19/2010 6:02:39 PM , Rating: 1
True, the rebate doesn't reduce the cost to produce the car. But that's not really germane. GM gets paid for the full price of the car - it gets the $7500 from the Government and the rest from you. So if they price it at $40k pre-rebate, and it costs them $35k to make, even if you only pay $32,500 (or $32,499 more likely), GM doesn't lose $2500, they make $5000.

That's good for GM's budget, not so good for the Government's. Let's say GM sells 5000 Volts while the rebate program is going on - it'll probably cost the Government more than $40 million after administrative costs. $40 million to help sell 5000 cars. Wow.

The hope with c2c, by the way, is that it will, in the long run, increase demand more than it reduces demand. If everybody who bought a car during the c2c program holds out until they would have bought the car after their current one, then there's no increase in demand overall. But if, by moving their purchase forward, it moves all their future purchases forward as well, then overall it increases the total demand in the long run. Not much. But some. Not saying it'll work, just expounding on the theory a bit more.


By Motley on 1/19/2010 12:21:42 PM , Rating: 2
By the government giving a tax credit, the cost of the car is reduced significantly. There are a lot more people that would be interested in buying the car at $30k than $38k, and that increases the quantity of cars needed to be produced. Many costs of a manufacturer are "set up" costs. It may be programming the robotic arm to precisely weld points A,B,C on the car, or creating a mold for the plastic trim. So the more cars selling, the more cars these costs can be spread over. It doesn't reduce the cost of doing them, but it's cheaper per car.

A $20,000 plastic mold for 1000 cars = $20 each car. If you sell 5000 cars it's $4 each car.


RE: Of course it's including the tax credit
By someguy743 on 1/19/2010 1:42:02 PM , Rating: 2
The bottom line is ... in order to get the prices of the (now) expensive batteries for the Chevy Volt to come down, you need subsidies and incentives in place so that the R&D costs and the new factories can be finished and optimized, etc. Once the big factories are built you'll see "economies of scale" kick in and the price of the batteries will probably go down 50-70% ... according to what GM and others have said.

It'll be like with HDTVs. They were expensive at first. Then the competition kicked in and the factories got built. THAT lowered the prices of HDTVs a lot. You also probably don't realize how much this product called GASOLINE is subsidized by the government do you? How do you feel about that?

Read this: http://www.setamericafree.org/saf_hiddencostofoil0...

Another good reason WHY the government should be subsidizing the Chevy Volt is because of what George W. Bush said in a "State of the Union" address about 5-6 years ago ... WE'RE ADDICTED TO FOREIGN OIL !!! Oilman T. Boone Pickens says the same thing. It's a bigtime military, economic, and diplomatic problem. Remember in 2008 when GW Bush was over in Saudi Arabia kissing the hands of the fat cat oil sheiks trying to get them to lower their crude oil prices? These same oil sheiks have people around them that are inclined to give money and other assistance to radical terrorist groups like Al Qaida.

We need to "grow our own" energy here in America. Create more energy jobs here. We can make plenty of ELECTRICITY here to "fuel" our Chevy Volts and tell the oil sheiks and petrodictators "we don't need no stinking oil". :)

http://www.youtube.com/watch?v=2ixqMYKodeg&feature...


By shin0bi272 on 1/19/2010 1:56:09 PM , Rating: 2
Right I understand that the price goes down eventually if you sell enough (look at the ps3). But if you are selling them at a loss to begin with then your giving people additional money to buy the thing for the first few years or so youre loosing over 7500 bucks per car (since the government owns gm now and all that).

We have been addicted to foreign oil for a long time and lots of presidents have tried to gin up support for stopping it but none ever have... I just doubt battery powered cars are the answer to getting off foreign oil... Mainly because the bulk of the lithium to put in the batteries comes from china anyway last I heard.


"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation














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