A controversy has broken out over what it costs General Motors (GM) to produce a Chevy Volt. A Reuters reporter got things going when he claimed that GM is losing as much as $49,000 on every Volt they sell.
Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds, according to estimates provided to Reuters by industry analysts and manufacturing experts.
Cheap Volt lease offers meant to drive more customers to Chevy showrooms this summer may have pushed that loss even higher. There are some Americans paying just $5,050 to drive around for two years in a vehicle that cost as much as $89,000 to produce...
The lack of interest in the car has prevented GM from coming close to its early, optimistic sales projections. Discounted leases as low as $199 a month helped propel Volt sales in August to 2,831, pushing year-to-date sales to 13,500, well below the 40,000 cars that GM originally had hoped to sell in 2012.
Spread out over the 21,500 Volts that GM has sold since the car's introduction in December 2010, the development and tooling costs average just under $56,000 per car. That figure will, of course, come down as more Volts are sold.
The actual cost to build the Volt is estimated to be an additional $20,000 to $32,000 per vehicle, according to Sandy Munro, president of Michigan-based Munro & Associates and the other industry consultants.
It's best not to get too lost in the cost details here. Critics of the Reuters report like Bob Lutz and Anthony Ingram say, with some justification, that the true cost of the Volt must be spread over the entire lifetime of the car's manufacture. However, this is not the 1960s, it is the 21-teens. In 2012 the economy has imploded. The middle class, which used to comprise the people who might have bought these cars 50 years ago, is toast.
The truth is that making Chevy Volts will never be profitable if the actual future costs of production (even if they are declining somewhat) are factored in, and these cars are sold at a retail price which reflects those costs without tax breaks, subsidies and giveaways. Americans can't afford this car now, and they won't be able to afford it in the future. The Volt has become politicized after the bail-out of GM, which means the bullshit flies every time the subject is mentioned. Other manufacturers (like Nissan) are making electric cars, but they won't be affordable either, at least to a mass market.
A more damning critique comes from Fred Schlacter's report All-Electric Cars Need Battery Breakthrough.
Researchers agreed that the lithium-ion chemistry used in today’s generation of batteries for electric cars–and laptops and cell phones is reaching maturity, and that only incremental improvements can be expected in energy density, which needs to be higher, and cost, which needs to be lower, for widespread use in battery-electric vehicles (BEV)–cars which are powered only by electricity from the electric grid and stored on-board.
Lithium-ion batteries are adequate for hybrid electric vehicles (HEV) like the Prius, and marginally adequate for plug-in-hybrid vehicles (PHEV) like the Chevy Volt. However, the range of a fully electric vehicle such as the Nissan LEAF–powered only by electricity stored on board and without a gasoline “range extender” is too low for many drivers, who may use a BEV as a second car for urban trips while maintaining a gasoline-powered or hybrid car for trips exceeding the electric range of a BEV.
Lithium-ion chemistry in BEVs is reaching maturity, and only "incremental improvements" in energy density and cost will be made in the future. I think that says it all. As far I know, there is no miracle super-battery waiting in the wings which will replace lithium-ion batteries in automobiles. These cars will be high-tech toys for rich people, save-the-Earth types, and high-tech enthusiasts, and that's all there is to it. If you want to "save" the Earth, you shouldn't be driving at all. And then your job is to persuade the other one billion people who use cars to stop driving too. You could start with Bill McKibben...
My ridicule of those who tout technology as the solution to everything, including oil-based transport, does not also imply that I am denying that technological breakthroughs are possible. Obviously, some breakthroughs could occur. However, it seems to me that it's far too late now in 2012 to count on technological breakthroughs which can only marginally affect 21st century outcomes. That's like closing the barn door after the horse have left, and believe you me, the horse is gone.
Those of us who have followed these issues over the last decade have been subjected to a constant of barrage of techno-optimistic (and political) nonesense which flies in the face of Reality. We might just say same as it ever was and move on, and that's what I'm going to do today. Electric cars have no future, and even if they did, it's a case of too little, too late.
By. Dave Cohen
The sales environment has changed over the last 15 years however. The purchase that used to be a social/political statement is becoming more and more of an economic one with a lot of models to consider and its hard to see how the Volt fits in at the current price point. I drove a camry hybrid this summer (43/39 mpg) that lists at $26000 that I would have bought if it had a better (less camry like) suspension. On top of competing with other companies, GM's going to have to compete with itself also, as they offer light hybrid e-assist Chevy and Buick models.
Certainly electric technology is here to stay and there is some advantage in the long run to having developed your own, but IMO whether the Volt program actually pays its own way is far from decided. I think the next version will have to include a significant reduction in price for it to have a chance.
Articles like this are extremely short sided. Every disruptive technology is ridiculed at first. Battery prices have fallen 30% in the last 3 years alone. There are battery break-throughs every few months. We are just a few short years from the electric car premium being fairly small over a traditional car.
Really? Try using ARITHMETIC! There are 88 more years left in the 21st century. I find highly improbable that future inventions will not go to producing affordable non-polluting vehicles.
Cohen's pro oil industry bias is not lost on this reader. Perhaps he could sell his theory to Fox News so they can misinform America?
So Dave Cohen - The fuzzy math notwithstanding, why are you so quick to dump on the Volt? I realize the obvious bias here so maybe I am naive, but are you looking for it to fail? It has the feel of FOX News. "This is just another failure by Obama to try to pick winners and losers. Did we mention Solyndra? Oh? Yesterday?".
Texas now gets over 8% of its electricity from wind power. That is not insignificant. There is no one single simple solution. I work with fracking and believe me - it is not a panacea. And I wouldn't want it going on below my water table. Where do you think all of that injected hydro-mix is going to end up eventually? Right - nobody knows.
But if we (as a country) support the adoption of renewable energy, practice conservation and improve energy efficiency - maybe we can save what's left of the planet. A little idealistic, yes. You don't have to be a genius to project the energy needs / growth rates of developing countries for another 30-50 years and see we are going to run out of ... fresh water! That will be the limiting resource in much of the world.
But if all the economist and oil executives are right then the Volt and its Kin are about much more than just traveling oil free. It’s about enabling the transportation efficiency our economy needs to remain competitive and continue to grow outside of the oil sector as the era of cheap oil comes to an end.
If you want to see how the US economy will be save by the Volt and other EVs checkout:
- Western Union internal memo, 1878
Radio has no future.
- Lord Kelvin (1824-1907), British mathematician and physicist, ca. 1897.
[Television] won't be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.
- Darryl F. Zanuck, head of 20th Century-Fox, 1946.
There are countless more examples. As with anything in technology, there are always shortcomings at first, and then the technology is improved upon. There is countless research being done to improve energy efficiency across all domains (transportation, residential, commercial, industrial, etc.) No one said electric cars would be the be all end all of solutions to the energy crisis.
One question: how much are the oil companies paying you?