News source Reuters recently wrote an article about the Chevrolet Volt‘s cost-prohibitive manufacturing. The wire says a $40,000 Volt can cost up to $89,000 to make, meaning it’s the latest in a long line of General Motors products to cost more money to make than GM can off-load it for.
Detailed in the report was a dire outlook on the Chevrolet Volt that showed the GM having to halt its factory because of slow demand, customers put off by the car’s high price, and estimates that implied the automaker was losing vast amounts of money just by keeping its production lines running. Countering that, GM released a statement that called the report “grossly wrong” and said “Every investment in technology that GM makes is designed to have a payoff for our customers, to meet future regulatory requirements and add to the bottom line.”
Other than stating specific numbers, which were all figures from outside analysts, Reuters pretty much wrote the automotive equivalent of “The sky is blue” and “Water is wet.” New technology being expensive to produce? You’re kidding.
What Reuters just did was give every yokel screaming “Government Motors!” more fodder. And, truth be told, what it did was a bit of a disservice to the automaker.
The Chevrolet Volt is undeniably expensive to produce. It uses lithium-polymer batteries; your average Toyota Prius is still using nickel-metal hydride batteries that date back to the early 2000s without much technological progress. Toyota offers a similar battery to the Volt’s in the more expensive Prius Plug-in, albeit it doesn’t work with such a long range. And it offers the lithium-ion battery in other Prii as an option overseas. It will not make that battery back standard because it’s just too expensive to be competitive in any market.
But General Motors is trudging along with pushing more Volt sales in hopes to push volume and make the technology more affordable. The automaker has been offering sweet deals like $249 a month—or $199 a month in some cases—with no money down for a two-year lease. With that, customers likely have to get a new 240-volt high-capacity wall charger installed in their houses to the tune of $2,000 or so. And because customers are going to sink cost into an expensive charger, they’ll be that much more likely to get another Volt once their lease expires.
Much as the Chevrolet Volt is subsidized, so was the Toyota Prius two decades ago. The technology the Japanese automaker developed will power 12 different cars in the U.S. by the end of the year. And it’ll power more in the future.
Likewise, the Chevrolet Volt powertrain is going to find its way into the Cadillac ELR, and the car’s design is going to have an effect on every other product GM makes from here on out.
General Motors is struggling to meet its sales goals with the Volt. Planning for 45,000 sold this year, the automaker may not even reach half that. But looking at the bigger picture, the automaker had to start somewhere. Everyone does. It may just take the Volt and General Motors a little longer to get there than what was originally expected.
Sources: General Motors, Reuters