backtop


Print 83 comment(s) - last by fasfdhfd0000.. on Jan 29 at 4:05 PM


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.

 



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

By Yawgm0th on 1/20/2010 4:00:38 PM , Rating: 2
Your units are wrong after the second sentence, but it doesn't change your point.

But California is less than 1/9 of the country. $0.12/kWh is ridiculous. In the midwest, we pay more like $0.07 - $0.09/kWh. At around $0.8kWh here in Minnesota, assuming 2.5 M/kWh, I'd be paying $0.032/mile. I don't drive a Prius because accelerating at a reasonable rate is useful, and having a week, light car on snow is at times dangerous. I get a much more common 30mpg with my car (Saturn Ion 2007, 2.4L automatic) and pay just under $.10/mile (gas is more like $2.60 = $2.90 in the Twin Cities). I'd say that at about a two-thirds reduction, $.0.032/mile is great savings.

The issue is the cost of acquisition, not the cost of energy. Saying each car lasts 150,000 miles without needing extensive repairs/maintenance (with regular costs being the same) and that at that point I replace the car, I end up paying about $.25/mile to drive the Volt, averaged out over the life of the car. That's at the post-tax $32,500 price. My car would be less, at $0.23/mile based on its cost of approximately $19,500 -- overpriced for a car of its class, admittedly. That's a $3,000 difference when all is said and done.

That is not counting for interest. I'd have to finance the Volt (and I did the Ion). Accounting for interest, the Volt would need to last over 200,000 miles to be cost competitive. Bring the Prius in and the numbers get silly, but who wants to drive a Prius? ;)

Gas in Minnesota would have to be close to $8/gallon for the Volt to have a competitive TCO. In California, it's probably more like $12/gallon.

Between the cost of acquisition, issues with the battery at certain temperatures, and uncertainty over how long the battery will last in comparison to a transmission in a traditional ICE vehicle, including hybrids (the Volt battery should go out much, much quicker than a non-plug-in hybrid), it's hard to make an economic case for the Volt. TCO comes out too high no matter how conservative you get with the cost estimates.

In fact, if you look at an economic cost of cleaning up or reducing air pollution from cars, it would actually be smarter for the government to spend money directly on that (even if you include CO2, which is not pollution) than to subsidize every Volt by $32,500. The emissions reduction is just not enough to justify the tax break, even from a save-the-environment standpoint.


“So far we have not seen a single Android device that does not infringe on our patents." -- Microsoft General Counsel Brad Smith














botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki