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GM Losing Money On Chevy Volt
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GM Losing Money On Chevy Volt

A new Reuters report claims that General Motors loses nearly $50,000 on every Volt that it builds. The story is all the more vital because tax payer dollars are on the line. The auto company says that reports have it all wrong on the costs of the electric car.

General Motors Chevy Volt has been a high profile program and now the company's facing alot of questions about whether or not they're losing money per vehicle that they build. According to an article in Reuters GM loses at least $49,000 per unit. So, how did they get there?

Here's the math. The R&D that went into the electric car was about $1.2B. All told, they've sold about 21,500 units between this year and last year. That means they've lost about $55,000 per car. GM has since stated that Reuter's estimate for each Volt sold was grossly wrong, in part because they allocated product development costs across units sold instead of across the lifetime volume of the program, which is how businesses operate. Experts say that it is a little too soon to call this a definative money loser. The car sells for $39,995 after the $7,500 government rebate and because of that price it's a little rich for some people. They've had to offer some leases as low as $199 per month.

And speaking of government rebates, if you were to extrapolate the $7,500 across the number of cars sold, that's $161M in federal tax rebates that have been allocated through the program.

GM reports an upward swing in sales recently and that incline is said to be in large part because of their summer promotion, leasing the automobile for as little as $199 per month. Critics say that this deep discounting is in fact a sign that the alternative powered vehicle is actually in trouble and Chevy has not been able to reach it's sales goals for the year.

Sales have reached over 13,000 units so far for 2012 but that is well below the 40,000 units needed to meet sales goals. While selling more than 25,000 units is unlikely by the end of 2012, sales are moving in the right direction. GM admits that profits are not expected for their alternative power vehicle for several years.

Understandably, when you've got a company getting a government bailout people are going to focus on whether or not the Chevy Volt is actually going to be a money maker. As of right now it is not.


Street Talk

This is too bad as electric cars looked like a way to wean the U.S. off of the thirst for gasoline.

Reply
  about 9 years ago
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