Economic Reality For GM

[Guest FourAces]

GM discounts electric Chevrolet Volt up to $10,000

3:10PM EST September 22. 2012 - General Motors is offering big discounts to boost sales of the Chevrolet Volt, a plug-in extended-range electric car that struggled to attract buyers until its price began dropping early this year.

Discounts run as high as $10,000 per Volt, according to figures from TrueCar.com, an auto pricing website. They include low-interest financing and subsidized leases. Leases have run as cheap as $250 a month

Sales of the $39,995 car have quadrupled this year, and set a monthly record in August. They show that Americans, who have been slow to embrace electric cars, are willing to buy them if prices are low enough.

But electrics have a long way to go before they enter the mainstream and generate profits. Electrics and gas-electric hybrids account for 3.5% of U.S. auto sales this year.

GM is losing thousands of dollars on every Volt. News agency Reuters recently estimated losses run up to $49,000 a per car. GM denied the report. Volt's technology is also going into other cars, such as a new small Cadillac under development.

The Chevrolet Volt can run about 25 miles on its batteries and electric motors before a gas engine takes over. Because it can be recharged by plugging in, owners rarely need to fill up at gas stations. But the car has been controversial because of the government bailout of General Motors and its cost.

[AdamSmith]

Agree. This piece gets it about right:

http://247wallst.com/2012/08/28/another-setback-for-gms-chevy-volt/

...nobody wants one. It was DOA. GM should fess up, kill it, find ways to reduce the cost of the technologies (one problem among several is that the U.S. does not own competitive battery technology these days, having abandoned core R&D there ages ago, so must license it from Asia), then relaunch an entirely new model.

One early gaffe was Bob Lutz telling the press, a good while before launch -- pulling a number out of his ass in reply to a question -- that it would be priced "about $28,000." Oops.

But, as this article notes, GM just cannot bring itself to eat crow in public. So failures like this drag on, and on.

P.S. Detailed, balanced product review at CNET:

http://m.cnet.com/reviews/2012-chevrolet-volt/35332353?ds=1

[JKane]

I think that the Volt is interesting technology and I'll continue to watch closely to see where it goes--and am *very* glad it exists. The numbers cited above are absolute BS because they take the development costs and divide them by the current number sold, which is simply wrong.

Cadillac will be doing a version based on the second-gen drivetrain (further diluting the dev. costs...) which interests me, and for all it's detractors GM has actually done quite a bit better than Fisker has with the Karma and even Nissan with the Leaf. Yes, the Volt has some problems but they are to be expected in such a revolutionary technology and should be expected by early adopters. It gets better. They beat Toyata to having a plug-in hybrid by years, after all!

The current hands-down winner for best electric car is clearly the Tesla S, but they're not yet shipping in numbers and are high-end price wise--but also performance wise. They compare quite nicely to a Porsche Panamera S for price, performance, and features.

[Guest EXPAT]

Absolute cost accounting based on current inventory is an incorrect accounting principle but used by those against the product. Gee, I wonder who might be against electric vehicles? The same companies that refuse to put in electrical recharging stations in their distribution network.

[TampaYankee]

IMO, the Volt is a great car with poor timing. I would love to have one if...

One thing I do not do is beta testing. I never buy the latest gadget or model of anything. I prefer to wait a year or two of public testing before I can decide on the efficacy and reliability of the item. This is new technology critically dependent on battery technology. They are expensive and the heart of the car. It needs to be road tested and time tested before I buy.

Second, I cannot afford the price tag now that I have retired.

Neither of these makes the car a failure as there are many who have to have the latest gadget and the deep pockets to buy it. It's lackluster performance is due to one simple fact IMO -- best summed up with Bear-Stearns and Lehmann. The Great Recession killed demand for this car. It would have been a screaming sales success with $5/gal gasoline. We were at that threshold when the crash occurred. China and India were gobbling up oil resources as fast as they could competing with the active economies in the U.S. and Western Europe for oil resources. The crash killed that demand. It will return and with it $5/ gal gas and more. People will be standing in line for this type of car. Hopefully the Volt will have moved the technology along when that happens.

[AdamSmith]

I withdraw my previous criticisms, in large part. Looking up competitor sales, the Volt is doing all right.

TY does have a couple of points -- one being the unfortunate coincidental timing of the economic meltdown, the other being "beta testing," i.e., the occasional regrettable battery fire.

Also, as the CNET review notes, the Volt does have some characteristics that might make a true hybrid preferable for some if not many.

[AdamSmith]

I ought to add, having thought a little more, and having talked with several Detroit acquaintances since last posting, that the car biz in general and GM in particular do seem to feel that the Volt was a failure. Hope was for much more commercial success than has been forthcoming. No fault of the infrastructure bullies (even given the oil biz hates electrons; Volt does plug in to your home outlet), just botched: pricing + marketing + demand forecasting + styling.

...Imagine that.

[Guest hitoallusa]

Battery is always a problem for cars like volt... and it has a low resell value if the second owner has to replace the battery... I hate buying cars since dealers always try to take advantage of me...

[AdamSmith]

Battery is not at all a problem for Prius.

Also, only buy 1-year-old used cars. With a good mechanic checkout, you get essentially a new car, minus only the huge depreciation of the sucker who paid new to drive it off the lot.

[Guest EXPAT]

I have a 2012 Ford Fusion Hybrid and I think it is the best car I've ever owned. And in California the hybrid batteries are warranted for ten years by law. I am spending about 1/3 to 1/4 of what I did on gasoline than my last car and it runs and rides perfectly smooth. I would highly recommend it. The 2013 model coming out next month is a sleeker design and it's already getting the best ratings of all the new cars.

[AdamSmith]

Fusion indeed is getting nothing but sterling press and reviews.

Mu-lall-y! Mu-lall-y!

...What happens when you send a rocket scientist to make cars.

[Guest hitoallusa]

Good to know... Thanks!

I have a 2012 Ford Fusion Hybrid and I think it is the best car I've ever owned. And in California the hybrid batteries are warranted for ten years by law. I am spending about 1/3 to 1/4 of what I did on gasoline than my last car and it runs and rides perfectly smooth. I would highly recommend it. The 2013 model coming out next month is a sleeker design and it's already getting the best ratings of all the new cars.

[TampaYankee]

Two points: 1. Cannot fault GM for failing to predict a chaotic event. If we shot those who did that then government and Wall St would be ghost towns.

As for the Fusion, wanted to buy one of those except for the same two points discussed above. I did get the standard model. Best car I have ever owned -- domestic or foreign.

[TownsendPLocke]

As a former(2006) Fusion owner I am happy that so many of you like them. I traded mine in for a 2012 Focus with lots of gadgets and doodads http://www.thecarconnection.com/news/1055332_heavy-metal-2012-ford-focus-titanium-gets-very-very-pricey . The dealership I deal with is great-"no hassles, no gimmicks". BTW the resale value of Fusions is VERY strong . And they will be making good deals on 2012 models as the new(2013) model will have a great looking redesign http://www.thecarcon...ze-family-sedan

I looked at the Volt at the LA car show and I was not impressed.Very poor build quality,boring exterior and an even more boring interior. It just did not look like a car that would last 4 years-let alone 10. GM really needed to work harder on this car-but(as usual for GM)they were lazy.

[Guest CharliePS]

I have a 2012 Ford Fusion Hybrid and I think it is the best car I've ever owned. And in California the hybrid batteries are warranted for ten years by law. I am spending about 1/3 to 1/4 of what I did on gasoline than my last car and it runs and rides perfectly smooth. I would highly recommend it. The 2013 model coming out next month is a sleeker design and it's already getting the best ratings of all the new cars.

I believe the warranty on the Prius battery in CA is actually 15 years, but less in other states. All the computers in the car are more likely to fail before the battery.

Nissan is starting to offer big discounts on the Leaf, because sales nationwide have been so weak. I just returned from Hawai'i, where I was surprised at the number of Leafs I saw on O'ahu, but then it occurred to me that on a small island, an electric car makes more sense than it does in most places on the mainland.