GM Discounts Volt by $10,000, 3x-4x more than US average

The Volt is a $40k car. $10k discount brings price down to $30k. Then $7500 federal rebate is $22,500.

I defy a single individual here to point me to any ad at any dealer in the country that is selling a new Volt for $22,500. Don't even bother checking, you won't find it.

I cannot believe people are still quoting that big loss number by Sandy Munro.

Why? A $37,500 car actually cost the buyer $30k, so after 3 years maybe they sell it for $20-22k same as any other $30k car.

 

If the 7500 was just a discount on the car I would agree on how it would likely work. Maybe they sell it for 20-22K.. or maybe the market see it as having more value (because of the lower TCO for fuel) and adds a bit of a premium.
Also people that got a good deal (e.g. better price from dealer, bigger kickback) don't just sell it at a lower price. They tend to get the price the market will bear, so will depend on perception/demand when the leases are up. Used leafs right now are hurting because of the battery perception, but volts are still holding their value in the 30s.

 

The price is a fair criticism. The only discount that directly subtracts from the Volt's revenue is the $2500 dealer bonus, though. That will likely disappear once the 2012s are moved off the lot.

There is no advertized customer cash back through GM. Low interest rates is more a discount on the loan revenue than on the car revenue.

The tax credit is to support and grow the automotive battery industry. They weren't established just for the Volt. While it is just for plug ins, this subsidy helps improve the batteries going into plain old hybrids.

The is making a little, or at least breaking even at this time. Not counting the R&D. Counting R&D, the Prius wasn't profitable until the second generation. Why must the Volt be profitable at the start? And then why criticize the high price? How do you propose they lower the price? A similiarly equipped Cruze is near $24k. The battery is likely around $10k. Then there is the motors, invertors, thermal management system, and charger. GM's choice is to get the profit they can or lose money.

 

I will join you in any fight to cut subsidies. I hate them.

As for the problem of e.g. oil subsidies continuing even if Volt subsidies stop -- two wrongs do not make a right. And frankly, you do not have a strong branch to sit on when you demand that oil subsidies stop but want tax dollars to continue to your favorite pet car until all the others are removed. At any rate no more than the republicans who want to stop EV subsidy but continue oil subsidy.

You should have learned your lesson from the Bush years. He had the enviros fighting for subsidy scraps while he shoveled billions toward entrenched corporate interests.

 

Volt lease is going for $200-$250 per month.

If you check out the other cars going for that lease rate, they are about $22k purchase price.

 

I think a well designed subsidies can kick-start a great technology if done right. The hybrid tax credit (0f 2006) and the current Japanese incentive are great examples. They tie the credit amount to the efficiency gained from a comparable non-hybrid car.

The current plugin tax credit is not tied to any meaningful measurable result. Tax payers shell out $417 per kWh if a car has a plug and a big battery. Bob Lutz said it costs GM $350 per kWh for the Volt battery. That means we are paying more than what it costs GM to produce.

Yet, Volt produces more CO2 per mile than a regular Prius (per official EPA figures). In effect, tax payers are paying $7,500 per Volt to increase greenhouse gas here in the US of A.

Here is another kicker, in order to reduce CO2 output of the Volt, the owner will have to turn into renewable electricity (solar or wind). Those are also heavily subsidized by the government.

I am for the renewable clean energy but the way we are achieving with Volt is just dumb. What's sad is that people are spinning Volt as green. I think it is good car. 260 g/mi CO2 is good for a compact 4 seater. However, from a plugin car point of view, it is a bad plugin. There are midsize plugins (Prius PHV, C-MAX Energi) that are cleaner, more practical, cost less and uses less tax credit ($2,500 to $3,700 vs $7,500).

In my book, a cleaner midsize plugins should get more tax incentive. Structure it that way and I think a plugin tax credit can pull great results and into mainstream.

 

The low lease rate is because of the tax credit subsidizing it. That $7500 is counted as part of the $10,000 in discounts from the article. The article doesn't spell this out. Leaving the reader with the impression that the $10,000 is coming from GM in total, and that they are taking an even larger loss per car while repeating the erroneous accounting from the other article. Then many comments to these articles shows that people believe they would still get the tax credit with the $10,000. That's simply not true.

Yes, it is. The credit is tied to number of battery cells sold. The biggest hurdle to plug ins going main stream is the battery cost. Lower the price and people will give them a stronger consideration, or allow for a larger battery for further range. Everyone is researching to improve the cost and other characteristics of the batteries' design.​

The other way to lower cost is to increase production so that savings from scale can have an impact on price. Increased factory output also gives the battery companies funds and incentives for continuing research. That's what the tax credit does. A cleaner, larger plug in maybe better for the fleet and society. The Volt, increasing battery demand 3x per vehicle over the Prius PHV, will help us get there.​

 

I reject the argument that only gov't can do something. There are so many examples of how gov't screws things up and this is no exception. When the gov't chooses to push something forward, they are picking winners and losers and that's not right for a capitalistic society.

 

I do not understand right or wrong in this context, but I sure understand corruption and inefficient use of resources.

History sort of suggests that capitalism does a very poor job or advancing basic research, but stuffing a battery into a Prius knock-off is hardly basic research. Advancing battery tech is well within the ability of privately capitalized companies. And of course there is the steady stream of university sourced research that is developed for consumer consumption in the private markets. IMO government has NO valid reason to subsidize development for market.

That is why it is called a market, and not a university. Put another way, society has good reason to underwrite the costs of science, but not technology.

 

That assumes that every plugin will make the best use of the battery. Take a look at the contrast between Prius PHV (4kWh) and Fisker Karma (20kWh).

Prius PHV - 95 MPGe then 50 MPG in a midsize practical car.
Fisker Karma - 54 MPGe then 20 MPG in a subcompact sports car.

Which car deserves the $7,500 tax credit?

There is also a notion that the more the battery, the better -- without considering the interior volume and the weight.

So why are we giving out more than the cost?

 

Diesels also qualified for the 2006 tax credit. It all depended on the MPG improvement over a comparable gas car.

 

A decent chunk of money that the universities spend on research comes from the government.

 

As I said the credit is to up the number of cells produced in order to built the market for automotive traction batteries. The law makes no requirement for vehicle efficiency. Only kWh because that's a good approximation of the number cells in the battery.

As a very expensive sports car, I wish the Karma didn't qualify. I don't think the Lexus LS600h should have gotten a credit under the hybrid program for same reason, but it did.

Originally the Prius PHV didn't even qualify. Since 3 of them need to sell to every 1 Volt to have the same impact on the battery cell market.

Since the subsidy is also for BEVs, the more battery the better is generally true. While we want batteries with higher energy densities, the battery companies need a stable or, better, growing market. Increasing their revenue means more they can spend on research.

Because the law was signed in 2008, thus written before that time, and the cost was higher than the credit.

 

Bob Lutz has a series of interviews Yahoo!Finance where he addresses the recent GM Volt issues. He makes some good points. He says $0 zero GM factory incentives for Volt - Rueters is wrong, but lease deal is great because GM feels Volt retains residual value. But he also says in 10 years EV will be 400-miles range at $30K car cost and in 20 yrs computers will be driving all cars, we will all be passengers. He says Volt has saved 2 supertankers of gasoline (implying near-zero energy is used by Volt).

The Future Is Electric Cars: Fmr. GM Vice Chairman Bob Lutz | Daily Ticker - Yahoo! Finance

 

Interesting. Thanks for the link.

BTW, the link of the original AP writer of the $10K story has closed its comments section and never answered any questions.

GM offers big discounts to boost Volt sales

 

There are incentives given out to build battery factory in the US. Manufacturing battery cells are taken care of with that.

As for the environment benefit from a vehicle buyer point of view, there is nothing the $7,500 takeaccount of. The plugin incentive is really additional battery subsidiary. It has nothing to do with efficiency, emission or practicality. How can a plugin be successful if those key goals are not met?

Assumption that the more battery we sell, the more successful plugins will be, is not a correct one.

When LS600h became available, it qualified for $450 tax credit. The 2006 Prius qualified for $3,150.

Now, we have Fisker Karma (luxury subcompact) and Volt (compact) qualifying for $7,500 while Prius PHV (midsize) gets $2,500.

Let me turn it around. If Prius PHV gets $7,500 tax credit (for being a cleaner midsize) and Volt qualify for only $2,500, Prius PHV will be selling many more copies than the Volt (when it is available in all 50 states).

There are two ways to increase battery production. 1) Pack more battery in the vehicle. 2) Design a practical, efficient and clean vehicle and sell more.

Both approaches can reach that goal but only #2 can guarantee the success of the plugin vehicles. That's the loophole in the current plugin incentive as it does not guarantee a success (which it was trying to achieve).

Well, clearly we need to rewrite it. Tax payers are paying more than what it costs to produce the batteries.

If Lutz is correct, it cost GM $5,600 to make the Volt battery. Tax payers are paying $7,500 for it.

 

I have never seen any other $40k car ($32.5k with tax credit) with a low $200-$250 per month lease rate.

What if the actual residual value is lower after the lease ends? Who is going to foot the difference?

GM calculates the gasoline saving by comparing Volt to a 26.5 MPG ICE car. I don't know any compact 4 seater ICE car that gets that low.

Considering the #1 traded-in vehicle is Prius, they ought to use 50 MPG to compute the gallons saved. That's what Prius PHV does!

 

Your credibility would be better if you could ignore the urge to post what must be intentionally misleading statements like that. As you almost certainly know, there are subcompact and compact ICE cars like the 2012 VW Jetta or Mazda 3 that have an EPA combined estimate of 27 mpg or less. They are easily found by doing a search at fueleconomy.gov.

I do agree, however, that GM should use a higher mpg comparison value. Many comparablely sized and performing ICE cars have a combined EPA estimate in the 29-34 range.