Hybrid Vehicles 2011-chevy-volt

Published on September 11th, 2012 | by Christopher DeMorro

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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.

Unbelievably Bogus

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.

Source: Reuters


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About the Author

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or esle, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.



  • http://twitter.com/BobbleHeadGuru Farris Khan (@BobbleHeadGuru)

    Chris,

    Please take solace in the the fact that “Talking Point Minions” are outnumbered by those who actually think.

    Perhaps that is why, despite all of our economic problems, the incumbent now has a 80% probability of getting re-elected (source: FiveThirtyEight.com).

    The “Babble Speak” crowd continues to spew fake math to their minions, who are vocal, but not that great in number. I am sure there were similar lock step group thinkers that be-littled the “horseless carriage” 115 years ago.

    I drive a Volt.

    100MPG.
    100MPH.
    273ft-lbs of instant torque.
    360 mile range.
    Breakeven ZERO years, ZERO months (higher payment completely offset by fuel savings).

    That is usually all I need to say when someone asks me about my car.

  • eric

    Chris you might understand cars but your business acumen is sadly lacking. The exact numbers in the article might be a bit off. They are estimates only but if you think the volt is not a losing proposition you are the one that simply doesn’t get it.

    The Prius comparison is particularly funny. The Prius sold more vehicles in it’s first six months than the volt has in it’s first two years (even with a federal tax credit worth nearly 25% of the volts cost) Couple that with lower production costs for the Prius, lower sticker price, the fact that Toyota was not federally funded, etc. and there really is no comparison.

    Toyota was and is the most successful auto company in the world. GM on the other hand is a dinosaur that only exists due to federal life support. (Which it will no doubt need more of if it is going to survive going forward.)

    • Christopher DeMorro

      @ eric

      I stopped reading when you got your facts wrong.

      First off, the first 60,000 Prius got a substantial tax credit from the Federal government, up to $3,400 per car.

      Second, the Prius sold fewer cars, despite being on sale in more places, in its first full year than the Chevy Volt. Here are the numbers.

      http://en.wikipedia.org/wiki/Toyota_Prius#Sales

      Finally, estimates put Prius development at about $1 billion, right on par with the Volt. Hence why it took many years to recoup the costs.

      I may lack business acumen, but you sir lack very basic facts that took me all of 30 seconds to Google.

      GOOD DAY!

      • Bill Childs

        How about this number, $7,000 credit to the consumer for each volt out of the tax payers pocket. It’s Obamanomics, similar to Salindra. 4 more years? Can’t wait.

        • Christopher DeMorro

          @ Bill Childs

          The $7,500 tax credit you refer to was signed into law by none other than George W. Bush.

          How them Faux News truths working out for ya?

  • http://www.facebook.com/mark.brooks.12764 Mark Brooks

    Only 49 k? It was 250 k in march, I guess GM sold a few more volts.

    Can someone please explain why the volt isn’t allowed to Spread its R&D cost over the expected 20 year production run like every other new car being built?

    According to GM they are making money with each volt sold ( see bob lutz Bit in Forbes ).

    But hey, who should we believe, a paid political press release written by a guy who use to cover the housing market until he was fir… cough took a vacation in 2008, or the guy who actually builds and sells the car?

  • Tim French

    I read the Reuters article. Might as well try to include the costs to build the Constitution in the final price for the Enterprise. Dumb and dumber.

  • Wren

    Wow, you write poorly. Maybe turn off the screens and read a book?

    • Christopher DeMorro

      @ Wren

      Thanks for the constructive criticism! You know, I probably should read more. Once I finish the complete works of Sherlock Holmes, maybe I’ll re-read War & Peace and the Bible, both of which I have already read (the Bible twice, because I wasn’t sure what the hell I just read). I could go on and on about having muddled my way through Milton or was delighted by the colorful descriptions of Hell in Dante’s Inferno, but I think you get the point.

      I read. A lot. That doesn’t make me the next Hemingway. But I am apparently good enough to draw several thousand people back to my little blog on a daily basis. And you know what? That’s good enough for me.

      What I mean to say is I am open to recommendations.

      • Wren

        Your touchiness is adorable and sad. Your prose, such as it is, veritably froths at the mouth, your walled eyes widening in anger.

        One senses you don’t actually read all those books but their Wikipedia synopses. Though to merely consider that is to discredit the Wikipedia authors. (Not that they don’t do an adequate job of that themselves, ho ho). But you deserve some credit for taking on the classics. Or celebrities talking about the classics anyway.

        General Motors. Reuters. Really, why do you take the public’s wait-and-see consumer skepticism so personally?

        It sounds like you know and love someone on the committee and are personally hurt that the public is measuring twice, or more, before cutting their cheques. Isn’t this exactly a healthy place for skepticism?

        Reply or don’t, as it pleases you. I’m not coming back. I was reading Gas 2.0 for a while, but your high-school level writing and general hysteria over nothing, really, is a waste of time. Which is saying something, considering we’re talking about reading blogs.

        “This is the sad state of journalism, and I’ll have no part in it.”

        Haha! Don’t worry.

        For the constructive criticism: you’re welcome.

        GOOD DAY! &c.

        *With apologies to high-school kids, some of whom, I know, write with incisiveness and grace.

        • Christopher DeMorro

          @ Wren

          One does not pass a class dedicated solely to Leo Tolstoy without reading his collected works, including War & Peace, the Cossacks and Anna Karenina. But I digress.

          Though you’ve seen fit to criticize my writing style, you fail to point out any glaring examples where I have failed in my chief mission to deliver information to my readers. What you found so offensive about my writing style, I have no idea. The hysteria you point at is more akin to frustration with having to deal with the same nonsense regarding the same car, over and over and over.

          I am *NOT* sorry my “hysteria” over the constant and needless wave of negative bullshit involving the Chevy Volt so offends you. As a writer, as someone who has to wade through this nonsense on an almost weekly basis, I am tired of it. And guess what? Because it is my blog, I can say whatever the hell I want. If I want to get hysterical, I will, and people still seem willing to read what I have to say.

          Don’t like my writing? Fine. Don’t want to come back? Double fine. No skin off of my back, there are about 5,500 daily visitors who don’t seem so easily offended over my writing style. Maybe in the grand scheme of things, that isn’t a ton of people. Then again, I’m willing to bet it is more eyeballs than whatever you write will ever see.

          In fact, this post was one of my most popular in the past month, garnering thousands of views in just a few hours. Yet only you saw fit to lash out.

          Cheers mate, and thanks for all the fish.

          • Eric G

            Chris, this bloviating troll is not worth your time.

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