GM losing $49,000 on every Volt sold, but will make it up on volume!

Guess you did not read what lutz said.. here is a quote from Lutz's recent forbes article

So he did not say its production costs are equal to the production cost of a cruze, he said the Volt production costs, to have positive gross margins, can be about equal to the retail price of the cruze. So this is not inconsistent with saying it has higher quality..

 

The gen I Prius started with a 100,000 mile warranty in all states the same as the volt. The prius still has a 100,000 mile warranty in most states. I don't know if you are saying a prius has a longer warranty in what 13, states, that could be right, idk. It doesn't seem to be much of point if you are bashing the battery pack, is it? The same warranty for most of the prii and volts sold, is kind of relevant. If your point is you don't trust the battery, hey fine, but that is kind of nuanced, and doesn't make a good political attack, especially when you can lease the car.

The political battery attack as shown in my links was they catch fire, and run out and you need to recharge them -unreliable. That's why they didn't go with your FUD, they had better attack ads.

I thought scottf200 posted the amount above, a little less than $3K. I'm sure you can go into your gm dealer, and get a quote and delivery date. I doubt they sell them retail, though you may need to be a garage that can install them. Insurance adjusters have the amount in their computers. I doubt the price will stay this low in the future, but since replacements are rare, they can do it to keep insurance costs, cost of ownership low. Or maybe scott has a bogus price. But today's price doesn't really matter kapische. Not a good attack point. Do you want to try again.

We kind of need a review of finance 101 here. GM borrows money with bonds, so we can look at their cost of interest as their bond interest rate. A normal project would need an hurdle rate, a internal rate of return (IRR) ,much higher than the bond rate to be approved. The IRR is calculated on future sales for much longer time periods than 2 years on a first generation product. Which means the first fail in this article and your calculation is using an arbitrarily short time period. In March these articles were coming out, and of course with fewer vehicles sold they were applying much more cost to each volt. If the volt cost is $20K-$32K as that article says, and they sell 25000 per year, they can as you say cover the bond interest But if they only sell gen I, the bulk of the investment is lost.

Now lets look more specifically at the volt. It is designated as a strategic car for gm. Strategic cars don't need positive hurdle rates for their own sales, they are supposed to make a positive impact on the company as a whole. I'm sure Lutz stuck his finger up his A$$ and came up with sales that made sense for the board to approve it. The corvette R&D, can never be justified if it were only applied to corvette sales, but GM uses them for marketing and to test technology for other cars. The volt numbers certainly would include losses if only a first generation of new car was sold. In between then and now, before the volt was even sold, gm went bankrupt. In the process bonds were devalued, meaning those that loaned money to gm lost money. In accounting terms these are realized losses. They do not affect terms going forward. So you can attack the pre-bankrupt GM for defaulting on money borrowed for the volt. That is the legitimate attack. If the volt doesn't reach second generation, or if it is a failure, then you can say it was a poor investment. What you can't legitimately do is pretend interest carrying costs will disappear if you cancel the volt, or apply R&D amounts over just the cars sold so far. We have accounting rules to not do this type of accounting.

 

Retail cost of < $200/khw, case and electronics a freebie ? I have a bridge to sell you.

I thought it had been clarified that the $3k was just for the case/bmu.

Don't tell me GM is leaving that ambiguous ? Not GM, surely.

 

AG, your entire argument is a long-winded pie in the sky nirvana of a strategic asset that lets you and GM ignore all the fixed and carrying costs. How convenient.

As for battery warranty, you might like ignoring the CARB states, but take a wild guess what fraction of Prius were bought in those states the first couple years. That is what makes them relevant, not a 13/50 fraction.

 

Several times you have been given reference to a valid GM price for the battery but you still seem to be convinced it is wrong yet you have not taken any steps to confirm your suspicion. Classic troll behaviour IMO.

It is very possible that GM prices this item to keep projected repair costs depressed, that is not an uncommon practice when expecting supply prices to decrease. I routinly quoted customers with prices based on two year out projected costs, especially on contracts that lasted 4-5 years.

 

I'm not sure what your problem is? These were my points

1) The battery is warented for 100,000-150,000 miles and replacement cost in the future is unknown
2) There are good lease rates available for those that are concerned about battery replacement costs or depreciation
3) Insurance rates appear not concerned about the battery replacement cost in case of accident

We have a reported price of the battery. If you don't think it is right call your gm dealer and get back to us. They may not speak to you because you don't own the car and are not looking at buying the car, but the number should be in their system. I doubt they will sell it to you without return of a damaged volt battery. That $3000 price may include damaged battery return. Damaged battery analysis is important to battery manufacturers. Report back to us, if whatever that number is has an impact on 1, 2, or 3.

+1

 

Its a quick summary that you will get in an intro finance class.

I'm not ignoring anything, but perhaps you should take an introduction to finance. Since you didn't understand it, I will try again. Volt is not a profitable project in its first generation, and gm knew this when they green lighted the project. Companies often do this with strategic projects. Much of the debt used to finance R&D was written off, and no longer carries interest costs. Canceling a project will not eliminate costs already sustained, and should not be used in financial decisions. Its ok, many college students don't understand their finance classes.

What you can't do is assume that if you kill a project that past costs disappear. The operating profit from the volt is small, and can not be calculated without knowing the gm's real costs. From the article these operating profits are between $5,000-$17,000 before marketing and advertising expenses. This is a far cry from a operating loss of $49,000 before those same expenses

I am not ignoring anything, but I'll bite, how many prii did toyota sell outside of california with a 150,000 mile warranty between 2001-2012. The volt has a long warranty. You made it sound like the prius had a much longer warranty in the whole nation. Seems like a major exaggeration to me on your part, but you explain it to me. What number is larger 13 or 37, and I don't even know what the warranty is in those 13, do you? You make it sound like states like california and texas should be ignored when thinking about the volt. Volt includes a 150,000 mile warranty in california that gets it an extra $1500 rebate and HOV stickers. When you bought your Prius in NM, it did not come with a 150,000 warranty either, and that did not stopped you. I am sorry that you don't think 100,000 miles/8 years is good enough, but it is what it is. No sugar coating, no whining.

Or is your point that you don't trust the prius so it needs a longer waranty in your state now. Again if you are worried about after the warranty period, lease the car. Since you don't want the car, why are you so focused on the waranty? You can read toyota's pr on why the battery is dependable in the prius with a 100,000 mile waranty.

- Tommy Boy

 

Today my neighbor took a ride with me to lunch and said he really enjoyed slumming in a $90,000 car. He said he had seen the headline but didn't read the article.

He knows I have expensive tastes, and a tight wallet, so he was impressed that I got a $90,000 car for $12/day.

He paid for lunch, $18. It used to cost us about $8 in gasoline to get to lunch and back so we established that who ever drives gets their lunch paid for by the other. Between not paying for gasoline and the free lunch I think I am making a profit, but that is my math, not SageBrush's.

 

Yeah, Government Motors will still be in the political news and the Volt will continue being a political "football" - as Ackerman has said.

DBCassidy

 

I even provide the part number above ...

Google search: Let me google that for you

 

I've been trying to find the price on the PIP battery, but no luck so far. I think a total for both PIP batteries for comparison would be interesting.

 

Just keep in mind that the PiP battery is much smaller capacity wise, like 1/4.

 

But I doubt if it's inexpensive. I'll find out the price sooner or later.

 

I recently looked at pricing for the HV battery in an 07 Prius (not a PiP) and it was $2500 from a dealer but I found some discounters selling it at as low as $1600. The 07 uses NiMH rather than Li-Ion.

 

I have no problem getting the price for the regular traction battery. The plug-in battery price is the one I'm looking for. The PIP has two big batteries.

 

I thought one. The beta cars had two.

 

I thought there's the usual one behind the back seat and then the plug-in battery where the spare used to be. I'll have to give the Toyota dealer a buzz.

 

Yes, you are correct, one big battery that takes up nearly the entire back. I guess it works in a big way that EV works in a small way in the standard GenIII. Still checking on a price.

 

Both you and AG are missing the obvious: what is the price today ? All repairs do not have to be warranty; accidents are an obvious example. So while GM might quote themselves a clown price, they have to know how much they will charge 3rd parties TODAY.

You are welcome to google the question; I have. Auto sites estimate 8-10k USD. GM avoids the question whenever it comes up, and talks about hoped for drops in battery costs by the time the warranty is up. Compare the GM obfuscation with how Toyota handled the issue 10 years ago: they said (paraphrased ) "today the cost is X, but we anticipate that cost to drop significantly by the time the warranty is up."

My last attempt to appeal to a pinch of common sense that so far you have refused to demonstrate: if your price was correct, it would undercut wholesale pricing. Think about that.

 

There was a Volt owner on GM-Volt.com that had an out of warranty battery replacement done, he had damaged the vehicle somehow, and the battery was replaced using the $2500 gm parts price plus dealer labor. I think the total was something like $3500.