Buy the car and lease the battery?

<div class='quotetop'>QUOTE(apriusfan @ Aug 10 2007, 12:59 AM) [snapback]493407[/snapback]</div>

Cracks me up, how GM 'stays' green .... by releasing PR every so often on what the'll be doing some day. Mean while, the eventual collision course / effects of Peak oil keep getting closer.

 

When I first heard about the Volt, the first thought that popped into my head was "The question isn't 'Will GM screw this up?', but rather, 'How will GM screw this up?'."

This is the answer.

 

<div class='quotetop'>QUOTE(efusco @ Aug 10 2007, 07:32 AM) [snapback]493512[/snapback]</div>

The difference between being visionary and foolhardy is whether you are ultimately successful. Do you think Toyota would have been excused for the investment they made in the Prius if gas prices had tanked? The good ole boys in Detroit would have had a great belly laugh and congratulated themselves on how smart they were in not going down the hybrid path....

 

I don't think it is viable. What percentage of the market buys $35K cars, let alone $50K?? $50K is twice what I paid for my 2004 Prius with NAV. The talk is still about how stupid it is to buy a hybrid since they cost $3K-$5K more than a non hybrid and how it will take 5 - 7 years to pay for the difference in gas savings. I know it isn't ALL about recovering the price difference in savings, but any automaker will have to hit the ~$20K to ~$25K market to have any hope of selling in volume. At $3/gallon, I would currently be spending about $1K/year on gas. The Volt will cost $10K more to buy, and the battery lease is $1500 more per year than I pay now for gas.
It won't work, not even if GM gave me free hamsters and feed for as long as I owned the car. The base $35K is more than I will pay for a vehicle in today's dollars, adding what amounts to a 7 year $15K lease on top doesn't make it more attractive.

I saw the same concept on the Think and thought "Yeah, right, like $2.99 is not $3, it is $2". A Think selling here for $15K with $100 to $200/month battery lease fees for 7 years is still MINIMALLY a $24,000 car.
Think Article
And it is a MINIMAL car at that. But, it is at least closer to the price that is affordable to a much larger section of the buying public than the Volt. I don't believe the Think will 'fly' for the same reason GM's EV1 didn't sell well. Only so many people can afford an extra vehicle with very limited range. That isn't to say it won't meet the needs of some people, but at that price, it seems unlikely to sell in volume.

And: Why does the Volt have to cost so much? Are they using the old IBM "pay for all the R&D costs in the first year" model of some decades back?? I'm willing to bet that Toyota used a longer horizon on the first Prius. If I understand the basic Volt concept, it has an electricity producing unit (technically could be gas, diesel, hamsters in wheels) that run electric motors that drive the wheels, storing excess power in batteries for when the hamsters can't keep up with current demand. Just like the original hybrids of 100 years ago because transmissions hadn't been developed to transfer the ICE power to the wheels. Just like diesel locomotives of TODAY.

 

After thinking about this a bit, why doesn't GM get some tax incentives put in place? It is not as if Toyota didn't benefit from tax incentives; so, why not GM? An extreme example was the tax credits for the RAV4EV. The combination of State (CA) and Federal tax credits practically paid for the purchase price of the car.

Come on GM, start thinking! Or, you will lose yet another round to Toyota....

 

<div class='quotetop'>QUOTE(apriusfan @ Aug 10 2007, 03:24 PM) [snapback]493677[/snapback]</div>

They do. They get a tax break on every 'flex fuel' car they sell, even if the person buying it has no access to E85 fuel (which is true in most of the country). It costs little to do, stay away from parts that are degraded by alcohol. Of course, in that case, they are just taking advantage of the stupidity in the congress and senate. The same people who allowed a tax break for H2s because at over 8,000 pounds, they are classified as 'commercial' vehicles even though they have ZERO value in that regard.

 

There is probably more critical thinking going on in this thread then at GM. The "leasing the battery" could be done completely right or horribly wrong. It requires thinking beyond just finances to succeed here.

Done right: The battery is leased and warranted to provide an established level of performance. The lease is guaranteed to not increase as long as you own the car, and a fully capable battery is guaranteed to be available as long as you own your car. The owners have a choice between leasing and owning. (GM does reserve to right to replace the leased battery at anytime with the same or a higher performance battery as technology allows....with no additional cost to the owner.)

Done horribly wrong: The battery is leased and handled identically as the EV1.

Now if the Volt is engineered to make battery replacement and upgrades a straightforward "maintenance" operation, then they are on the right track. If they make battery replacement a "repair" operation, they are taking an unnecessary risk.


(NOTE to GM----It's do or die time with the Volt.)

 

<div class='quotetop'>QUOTE(bruceha_2000 @ Aug 10 2007, 02:34 PM) [snapback]493708[/snapback]</div>

Tax breaks for GM was not not what I had in mind... Also, tax breaks for GM won't get buyers to fork over the cost of the car/truck. The "commercial" vehicle tax break allows the buyer to write off the cost of the truck as a business expense (as opposed to having to depreciate the cost over 5/7 years).

What I was thinking about was something analogous to the concept of the tax credits that were available for purchase of hybrid cars (originally $3,000 for the Prius). As I mentioned in my earlier post, the combined tax credit for the RAV4EV would have covered almost the entire cost of the car. If a tax credit of somewhere around $10K were to be spread across say, 3 years, battery cost would be less of an issue.

 

<div class='quotetop'>QUOTE(efusco @ Aug 9 2007, 09:59 PM) [snapback]493352[/snapback]</div>

If the third party is smart, which, well, you know they are, they'll make sure their battery is easily swapped into GM's whatever. And they'll make sure it's both cheaper and better than GM's battery. So GM will be getting their used batteries back but can't touch the car because it's owned by someone else.

Sweet.

Of course, this third party better develop that battery pretty fast or no one is going to be buying GM's hybrid, as in "own part and lease part", car.

<div class='quotetop'>QUOTE(efusco @ Aug 10 2007, 07:21 AM) [snapback]493468[/snapback]</div>

So all that third party has to do is develop a viable battery alternative for somewhere in the neighborhood of $3,000-$6,000? Then the owner can kiss GM goodbye. Well, at least as far as the battery lease goes. I'm sure they'll be visiting the service department of their local GM dealer frequently.

 

The "lease the battery" concept reminds me of the TV commercials from Gegnas Chrysler-Plymouth in my youth. Gegnas would stand by a Fury body with plants in the engine compartment & trunk announcing the Fury planter for (some ridiculous low price). Of course it doesn't come with engine, hood, spare tire or trunk lid. Don't laugh, we'll throw in the engine, hood, spare tire & trunk lid for $xxx (the real price of the car).

So someday in the future malorn will be able to advertize, "I'll sell you a brand new Volt for only $15000. Of course it doesn't have a traction battery. Don't laugh, you can lease it for only $100 per month."

GM makes OnStar standard on all vehicles and includes service for 1 year in the purchase price figuring they will get $20 or $30 per month (whatever they charge) from the owner for years. Maybe it is even embedded in the GMAC loan. If this model works for OnStar they probably believe it will work for the battery. Maybe they will start leasing their gasoline engines as well.

 

<div class='quotetop'>QUOTE(JimN @ Aug 11 2007, 06:58 PM) [snapback]494107[/snapback]</div>

If they really want to make some money, they'll also start leasing the brakes and the steering wheel.

 

<div class='quotetop'>QUOTE(Godiva @ Aug 11 2007, 07:53 PM) [snapback]494185[/snapback]</div>

Then they better find some way to keep competitors out of the picture. That kind of abusive business practice only works in the absence of competition. For all we know, GM is floating a trial balloon to see how the market reacts.... Frankly, even if Toyota delays their PHEV by 1 or 2 years, but doesn't lease the battery and the total cost to purchase is somewhere in the range of $35K, I imagine that GM will have no choice but to match Toyota.

 

First I think the Volt needs to be sub $30,000 to have any shot at success.
I can already see the chevy dealer using the battery lease concept and using sales gimmicks like this " the battery lease is great because potentially you wont ever have to go to the gas station at all" or "just imagine you pay for the battery and the price wont ever fluctuate like the price of gasoline" Give me a break, GM has a chance to reinvent the industry and become the leader in technology and forward thinking, it's too bad that most likely they will not have the patience to grow the market in the segment and will shoot themselves in the foot.

 

Hi All,

I have not been following this thread, but it occured to me (forgive me if somebody else had this idea) that tires are not waranteed by the automobile manufacturer. So, why not sell the EV (PH or otherwise) with a starter set of batteries, with the waranty from the battery company ? This gets GM out of their wimpy buisness model problems, and keeps the battery companies honest.

The battery module would have to have a liftetime service monitor (temp/current/time and SOC). But that seems to be a small price to pay. It would protect the battery company from somebody that goes out and runs the pack to 0 SOC 7 days a week.

 

<div class='quotetop'>QUOTE(donee @ Aug 12 2007, 11:00 AM) [snapback]494333[/snapback]</div>

That is an interesting idea, but it seems a bit impractical. There are many options available for tires. If you keep certain parameters constant (things like wheel size, rotations/mile (to avoid speedo & odo errors), match tire width specification to the width of the wheels, and the like), you can have a perfectly acceptable ownership experience. Vive la difference.... And, the battery companies (I believe that GM has recently selected 2 vendors for development contracts) are probably not going to want to go anywhere near a warranty on their product's performance. Which is why GM is on the hook for the warranty (both bumper-to-bumper new car and the emissions control system warranty (which in California is probably going to be the 10 year/150,000 mile one)).

Additionally, with the battery, there are some things that different decisions will impact. For example, if you choose to go with a less expensive (and lower energy density) battery, the engine will be running more frequently, which may impact the emissions (and absolutely the mileage) certification of the car.... You can bet that GM doesn't want to have to re-set the mileage certification of the Volt when it is going to be such a critical component of GM's fleet-wide mileage number....

Personally, I think that GM should be considering subsidizing the cost of the Volt's battery with a surcharge on the gross emitters (otherwise known as trucks) that they sell. The Volt is certainly going to help the overall fleetwide average calculation.... There is a saying on Wall Street to the effect that you can make money being a bull and you can make money being a bear; but nobody makes money being a pig.... Me thinks that GM is wanting to be a pig....