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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 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.


"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA














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