A recent report of controversy comes from Reuters, which claims that it costs as much as $89,000 to produce Chevy’s halo car, the Volt, which starts at $39,145. Obviously, that would mean the car is operating at a huge loss — way more than estimated. The lofty number was achieved via quotes from analysts and sources, along with a simplified arithmetic that tallied per-vehicle development costs based on the number of Volts sold through the end of August. But as Bob Lutz pointed out in his latest Forbes editorial, Reuters is doing it wrong.
Lutz opened his write-up with the following:
The statement that GM “loses” over $40K per Volt is preposterous. What the “analyst” in whom poor Ben Klayman placed his faith has done is to divide the total development cost and plant investment by the number of Volts produced thus  far. That’s like saying that a real estate company that puts up a $10 million building and has rental income of one million the first year is “losing” 9 million dollars, or several hundred thousand per renter.
Indeed, development costs associated with the Volt’s program will thin out as more and more Volts find homes — which continues to be at an increasing rate. However, not sugar coating anything, Lutz also mentioned that the Volt may never make a decent profit, being the loss leader that it is. But from the Volt’s initial investment will at least stem the Cadillac ELR, which is expected to launch late next year in the mid to high $50,000’s — which has a much better bet at making the accounting team smile.
Comments
It’s car guys versus bean counters version 2.0
wait but then what about the buick version?
Its always going to be a tough sell at $40k. How many sales can GM take from Fords Cmax and Fusion hybrids before they land in numbers.
As usual, Mr. Lutz offers up the voice of reason.
Reuters should do their homework before publishing drivel.
I’m always curious as to why the US automakers don’t apply this tech to full size SUV or a Roll Royce Pheaton sized super barge. At the stratespherical price level such a car or luxury SUV would and could live at, it would be more likely to be a profit maker.
I’d buy a 50,000 Tahoe or Yukon that got 30+mpg.
I am with you on this one, however, I bet that it would cost even more to produce a larger car since you have more weight. I am not sure they would be able to even make a $50K price point either. Maybe we can find out from someone what the reasoning is behind not making the larger vehicles.
Actually larger cars have always been historically more profitable than smaller ones. And EV tech is expected to go down, predictably. In a few years we could very well see a $15-$20,000 EV that turns a profit.