Published on September 11th, 2012 | by Christopher DeMorro
More Math Nonsense Claims Each Chevy Volt Costs GM $49,000
I wish I could understand the obsession with the Chevy Volt. There are far more interesting stories coming out of GM these days, but the media can’t get enough of lambasting the Volt. The latest ridiculous study claims that Chevy is losing as much as $49,000 for every car sold. The assertion is ridiculous, the article sensationalist, and I am sick of hearing this kind of bullshit.
The Reuters article needs to be read to believe. The assertion is that because of low sales (even though it is the best-selling plug-in vehicle in America) and a high development cost of around $1.2 billion, each Volt sold costs GM as much as $49,000. The implication is that every Chevy Volt sold costs between $76,000 and $88,000 when you factor in development costs, and the fact that low-priced leases mean some customers are driving the Volt around for two years at a cost of just $5,000.
Really? The Volt program started before its debut in 2007. The Volt came to market the last month of 2010. It was in development for at least twice as long as its been on sale. It is a low-volume, niche vehicle, even if GM had reached its goal of 45,000 vehicles sold per year. “Mainstream” vehicles like the Toyota Corolla can recoup their development costs much faster because of volume, volume, volume.
Furthermore, the technology and money invested in the Volt will be spread out across other vehicles. This will spread out those development costs even more. But taking such a narrow, tunnel-vision look at the Volt, Reuters misses the big picture and basically plays into the conservative “Damn GM!” mindset. I never thought I’d see the day when a political party actually cheered for the destruction of a major American company. It is absolute madness.
What Don’t You Get?
I wonder how Reuters feels about the Toyota Prius? By some estimates it took Toyota ten years to build up the volume needed to recoup the development costs, and they have only just gotten around to producing other vehicles with Prius technology. The Volt tear-down was done by Munro & Associates, who estimate that in addition to $56,000 of “legacy costs” in development and tooling, each Volt costs between $20,000 and $32,000 to build.
Woah woah woah, slow down there chief. How much does the Volt COST TO BUILD? Like, to pay the workers, to pay for the factory, and to pay for the actual total cost of the sum total of the parts? Reuters never gets too specific on that, instead just clumping up a whole bunch of costs related to the development and tooling, but not the building, of the Volt to get that additional $56,000. The actual spread on the cost of the Volt to build is between $20,000 and $32,000. That is a huge gap on a car that GM sells for $39,995 that leaves plenty of potential for profit in the future. Instead of going with that story, Reuters went the sensationalist route, and damn them to hell for doing it.
I am all too familiar with this ruse. When I was in college I fell for CNW’s “Dust-to-Dust” comparison of the Hummer H2 and the Toyota Prius. By taking into account the fact that the Prius battery travels around the world, while most (but not all) of the Hummer was made with parts in America, CNW claimed the Prius was worse for the environment than the Hummer. It is tailoring a pre-determined outcome to a study that fits your narrative. It is vile, disgusting, and a defamation of journalism. This is the sad state of journalism, and I’ll have no part in it.
Weak Response Lets The Lie SPread
Unfortunately, GM is doing itself no favors by weakly rebutting the Reuters article without some hard numbers. Though they call the calculations “grossly misleading,” the charge holds no weight without numbers to refuse Reuters math. I know GM doesn’t want to reveal numbers to competitors, but putting the REAL math out there, and explaining how over the Volt’s lifetime it WILL make GM money, can this nonsense stop here and now. After the bunk investigation into the Volt’s battery and a barrage of cynicism and unfair criticism from right-wing talk personalities, the Volt’s reputation is mud, despite having its best sales month to date last month.
GM probably won’t step up to the plate like that. Thus another false and malicious smear campaign begins against one of the most innovative vehicles on the market. I don’t know about you, but I am getting sick and tired of reading this kind of nonsense.