GM Loses Almost $50,000 On Each New Volt Built
This is what happens when businesses act to satisfy government policy instead of actual market demand.
At this rate, GM selling more Volts just means more losses. They’d be better off selling fewer Volts.
(Reuters) – General Motors Co sold a record number of Chevrolet Volt sedans in August — but that probably isn’t a good thing for the automaker’s bottom line.
Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds, according to estimates provided to Reuters by industry analysts and manufacturing experts.
Cheap Volt lease offers meant to drive more customers to Chevy showrooms this summer may have pushed that loss even higher. There are some Americans paying just $5,050 to drive around for two years in a vehicle that cost as much as $89,000 to produce.
And while the loss per vehicle will shrink as more are built and sold, GM is still years away from making money on the Volt, which will soon face new competitors from Ford, Honda and others.
Perhaps the most absurd part of this grotesque spectacle of waste is that even as the federal government subsidizes the production of these very expensive “green” cars in a multitude of ways, from subsidies for the manufacture of the batteries they use to tax credits for those purchasing them, there exists on the market cars that are every bit as fuel efficient as the Volts which have a fraction of the price tag.
According to General Motors, the range of a Chevy Volt on a 9.7 gallon tank of gas is 344 miles, which works out to about 37mpg.
That’s impressive, but the Honda CR-Z also gets 37mpg with a traditional gasoline engine and costs just under $20,000 brand new compared to the Volt’s $31,465 price tag. Even if you subtract the $7,500 federal tax credit you can take from the price of a Volt, the CR-Z is a better price for an equivalent car.
The Volt doesn’t sell because it doesn’t make sense. The market it appeals to are the sort of people who want to buy it to make a political statement as opposed to people trying to shop smart.
To the extent that there is a market in America for fuel-efficient vehicles, the auto makers are already serving it. Vehicles, with standard gasoline engines, are on the market which are every bit as fuel-efficient as the Volt is but cost far less.
The Volt is a bad deal for General Motors, a bad deal for taxpayers and a bad deal for consumers. But the government likes them, so they’re on the market.
Tags: Asshats, chevy volt, general motors, subsidies
