GM: Hell No, We are NOT Losing This Much Money on Each Volt
Included in its strong August sales report, General Motors (NYSE:GM) sold a record number of Chevrolet Volt vehicles. But with a grand total of only 13,500 out of a hopeful 40,000 estimated sales in 2012, the Volt doesn’t seem to be catching on.
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Dennis Virag, president of the Automotive Consulting Group, says that the Volt’s biggest problem is that it is “over-engineered and over-priced.” The vehicle uses expensive lithium-polymer batteries, which take hours to charge, and a commercial home charger costs around $2,000. The Volt has a $39,995 base price.
To combat this, GM pushed discounted leases, which ran as low as $199 a month. This meant that some people could pay just over $5,000 to drive a Volt for 2 years. But even if a consumer buys a Volt right off the lot, GM seems to be taking a hit.
Recent estimates put the cost of production for a Volt at $89,000. That’s a loss of $49,000 on each unit sold. With an estimated $1.2 billion spent on development, which does not include marketing costs, it could be years before GM starts seeing green on its hybrid. With Honda (NYSE:HMC), Ford (NYSE:F), and the hybrid-dominant Toyota (NYSE:TM) stepping up competition in the same market, even the second-generation Volt could be a failure.
GM disputes the estimates, saying it allocates Volt development cost over lifetime volume, not across the current quantity sold.
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