GM Losing Nearly $50,000 on Each Chevy Volt
While General Motors (GM) may be breaking sales records with its Chevrolet Volt, it has been revealed that the company is losing nearly $50,000 on each of the electric models it manufacturers, making each sale a fairly significant hit on its profit margin.
Figures obtained by Reuters through industry analysts and manufacturing insiders show that each Volt costs GM up to $89,000 to produce; with pricing ranging from $31,000 to $39,000, this represents a major loss on the more than 21,000 Volt units sold in the United States since its launch in 2010. Adding to GM’s margin woes is the fact that some of the company’s generous Volt lease offers see Americans pay as little as $5,050 over the first two years of ownership.
The thinking behind producing a car that is destined to be sold at such a loss is GM’s attempt to infiltrate what it obviously sees as a lucrative future market as the world transitions to the use of alternative fuel sources, according to analysts, but many doubt the automaker’s ability to ever make money with the Volt.
“It’s true, we’re not making money yet,” says GM’s vice president of global product programs and former Volt development chief Doug Parks. “(The Volt) eventually will make money. As the volume comes up and we get into the Gen 2 car, we’re going to turn (the losses) around.”
Held back by limited adoption of new technology and facing stiff competition from Toyota, Ford and Honda, the Volt’s future success is sure to depend on GM’s ability to keep research and development costs down while coming up with a second generation of the vehicle that has the ability to win customers over; with billions of dollars invested in the theory, GM’s future in the electric vehicle industry may depend on it.