[Kraven]

https://www.bloomberg.com/news/articles/2017-06-01/chevy-s-bolt-creeps-along-while-tesla-readies-for-a-sprint

A few interesting points made in the video:

Cost premium today for the EV drivetrain is around $9K. They expect that premium to come down to around $3,500 by 2025. Offsetting that cost premium is lower fuel, maintenance, etc. so narrows that premium further. One of the biggest drivers in cost reduction is the cost of producing the battery itself.

According to UBS, as much as 23% of all global car sales in 2025 will be EVs.

 

[viking79]

The article has many questionable facts/misleading statistics. The Bolt has outsold the Leaf for the 5 full months it has been on sale in the US, and Chevy appears to have a large positive margin on the Bolt EV, discounting R&D, so each Bolt sold is not a loss of $7500, rather each Bolt sold reduces the R&D expense of each car. Given that each Bolt EV sold has some ZEV credit value which probably covers R&D losses, it is probably positive for Chevy as a whole.

 

[saghost]

The article has many questionable facts/misleading statistics. The Bolt has outsold the Leaf for the 5 full months it has been on sale in the US, and Chevy appears to have a large positive margin on the Bolt EV, discounting R&D, so each Bolt sold is not a loss of $7500, rather each Bolt sold reduces the R&D expense of each car. Given that each Bolt EV sold has some ZEV credit value which probably covers R&D losses, it is probably positive for Chevy as a whole.

Where does the large positive margin information come from?

I never really believed the articles claiming GM was losing $9k on every Bolt sold, but I haven't seen anything definitive about the actual margin or lack thereof...

 

[Barry]

I really can't see Chevrolet producing a car that does not create an overall benefit to the company in some way (either with operating profit, valuable offset credits, access to regulated markets, maintaining market share, or whatever). They have no reason to do that, and the stockholders and board would not stand for it or allow it to continue.

If they really are produced at an operating loss, it is helping the company in some other way, so it is not really a loss.

 

[DonC]

First, I don't think that the Bolt EV is losing money after ZEV and CAFE credits are factored in. You see the term "losing money" tossed about in many articles but I doubt the authors have any idea of what they're talking about. Some of that may be a lack of understanding and some of that is the complexity of the subject. Once you start looking at development costs and shared parts things necessarily become sticky. And then of course you have things like factory variable costs and margins calculated in different ways. It's a difficult subject.

Second, I think it's fairly obvious what GM is doing with the Bolt EV. It has decided that the first market in which EVs can be profitable is autonomous vehicles. Consequently, the Bolt EV is primarily important for GM in this market, and what they're doing in other markets -- such as sales to individuals -- is less important. Rather than look at the Bolt EV as an electric car play, it's better to look at it as an autonomy play. From this perspective, everything about the Bolt EV, from its design to the roll out, makes sense.

 

[jcanoe]

So then why does Chevrolet not offer Adaptive Cruise Control (ACC) on the Bolt? It would seem that all of the pieces needed for autonomous driving would also be able to support ACC.

 

[Sean Nelson]

So then why does Chevrolet not offer Adaptive Cruise Control (ACC) on the Bolt? It would seem that all of the pieces needed for autonomous driving would also be able to support ACC.

It may be that they've decided that the sensor package they're going to use for an upcoming autonomous version of the Bolt won't use radar, so developing a radar capability for it would be a dead end. Most autonomous vehicles use lidar sensors rather than radar as the main component of their sensor suite.

 

[hvacman]

It's pretty easy to do a quick calc to see how "profitable" the Bolt is.

Assumptions:

- base Bolt MSRP = $38,000.
- base Sonic MSRP = $17,000.
- GM at least breaks even on a Sonic.
- R&D & tooling are "sunk costs" and not factored into the cost/profit equation.
- GM net revenue per base vehicle is 83% of MSRP (after dealer profits, hold-backs, incentives, etc.) = $31,500 for a Bolt, $14,000 for a Sonic.

- A base Sonic less motor/drive train/fuel/exhaust systems has about the same production cost as the base Bolt less-battery-pack/motor/power electronics.

- The Bolt's EV/power electronics have about the same production costs as the Sonic's engine/drive train/fuel/exhaust systems.

- The Bolt's battery pack production cost, all-in with charge controller and TMS, is about $190/kWh (as estimated by GM way back) x 60 kWh = $11,400.

Analysis:

- IF the Bolt's production cost = (Sonic production cost + Battery pack production cost) AND Sonic production cost is </= $14,000, THEN base Bolt production cost = $14,000+ $11,400 = $25,400/Bolt.

- THEREFORE, since GM net sales revenue per Bolt >/= $31,500, THEN GM very likely breaks even or makes a profit on each Bolt.

 

[sosmerc]

I have driven the Bolt and I like it. But after driving my Volt Premier with ACC I would not consider ANY other car unless it came with that feature as an option.

 

[DonC]

It's pretty easy to do a quick calc to see how "profitable" the Bolt is.

There have been a two reputable break downs of the cost to make a Bolt EV. Both come in at roughly $32.5K. However, this doesn't mean much. That number is factory variable costs, which represent a significant but not total amount of total costs. To cover all costs you'd need another $7500 to $9000. Plus GM sells the Bolt EV to dealers, so the cost to you is not all revenue to GM.

Basically you can't add the cost of a battery pack to a Sonic to get the cost of a Bolt EV just as you can't add the cost of a battery pack to a Cruze and get the cost of a Volt. Lots of parts are not common, and parts used in low volume are expensive.

All this means that autonomous vehicles that displace labor and are used heavily will be the first market where the price will be high enough to cover the costs.

 

[Sean Nelson]

There have been a two reputable break downs of the cost to make a Bolt EV. Both come in at roughly $32.5K. However, this doesn't mean much. That number is factory variable costs, which represent a significant but not total amount of total costs. To cover all costs you'd need another $7500 to $9000.

By "all costs" do you mean development costs and/or factory overhead costs (i.e., you have to pay about the same amount to heat the factory, cover its property taxes, etc. no matter how many cars you build).

Because if you're including those kinds of fixed costs then even if they did amount to $7500-9000 they wouldn't be a disincentive to producing more vehicles. So even if they filled their CAFE requirements there would be no reason not to produce more.

 

[Steverino]

Thing is, no one knows for sure and you can be sure that whatever the worst number guess is by a self-appointed analyst, it will be treated as fact in headlines and discussions and any underlying caveats and nuance will be lost or ignored. We have even seen it posted here. Only GM knows and they aren't saying one way or the other.

 

[obermd]

One thing to consider - the source of this report. Bloomberg has always been iffy on GM yet they swoon at just about everything Elon Musk says and does. I'm not saying Musk is bad but simply commenting on the reporting. The Bolt beat the Tesla Model 3 to market by a year. In addition this is a typical GM rollout of an entirely new product - slow with a ramp up. This ensures the factories involved have a chance to stop their production lines to fix production issues without too much impact on the overall production rate or causing major issues down-line.

 

[Ladogaboy]

I don't know. An unnamed industry insider familiar with EV costs told the press that GM had to be losing at least $9,000 on every Bolt EV sold. You know, almost verbatim what Elon Musk told investors on his most recent conference call. So that must be true. GM is losing their shirts building the Bolt EV. Case closed.

 

[Qinsp]

Musk has a pretty good idea what a 60kWh car cost to build. If he's competent and not being lied to by sycophants that is. I'd worry about that second option since he changes critical members of his staff like most of us change socks. If I was worried about keeping my job, I'd certainly hide anything Elon didn't want to hear.

But if you assume he's on the level, he came out to the press and said, "The Model 3 will lose money at $35k" which many of us already suspect.

 

[Bacardi]

Interesting article...

"Speaking to reporters yesterday, GM Executive VP of Global Product Development Mark Reuss said the company is ahead of the competition with regard to reducing the costs associated with electrified vehicles and ultimately being able to sell them at a profit."

Read more: http://gmauthority.com/blog/2017/05...e-first-to-make-evs-profitable/#ixzz4iwjMlZwG

Even states how to get there, reduce mass...

 

[Steverino]

Musk has a pretty good idea what a 60kWh car cost to build. If he's competent and not being lied to by sycophants that is. I'd worry about that second option since he changes critical members of his staff like most of us change socks. If I was worried about keeping my job, I'd certainly hide anything Elon didn't want to hear.

But if you assume he's on the level, he <just> came out to the press and said, "The Model 3 will lose money at $35k" which many of us already suspect.

Fixed it for you.

But remember, Tesla car engineering (they use robots and computers and stuff) is so far ahead of other car manufacturers that they can build a $35k EV with similar (or perhaps greater) range to the $35k Bolt for at least $9k less than it costs GM. At least this seems to be what some are saying by inference, that Tesla's cost for the $35k Model 3 is $35,000 or less, while GM's cost for the $35k Bolt is $44. That $9k spread must be due to Tesla's robots and superior buying power. If only GM had robots and computers and buying power.

 

[DonC]

By "all costs" do you mean development costs and/or factory overhead costs (i.e., you have to pay about the same amount to heat the factory, cover its property taxes, etc. no matter how many cars you build).

Because if you're including those kinds of fixed costs then even if they did amount to $7500-9000 they wouldn't be a disincentive to producing more vehicles. So even if they filled their CAFE requirements there would be no reason not to produce more.

I wasn't being very precise. I was just making the point that there are short run variable costs and long run variable costs, and that in the short run the latter are fixed or sunk costs.

Agree that in the short run GM would have an incentive to sell Bolt EVs so long as revenue was above short run variable costs. But I don't think that's the case. Not all short run variable costs are factory variable costs, and it seems that, at best, revenue more or less equals factory variable costs. Also keep in mind that, unlike other industries, the auto industry includes research and development in cost of goods sold. So GM's accounting would include these costs in short run variable costs (note that Tesla does it the more standard way, which is why it can claim to have better gross margins than others in the industry). Like I said, cost accounting can be complex.

Even states how to get there, reduce mass...

I suspect GM is further along the cost reduction path than others -- though Toyota is usually at the head of the pack -- but making a profit is not all about cost. Profit is the difference between revenue and cost, so if you can produce more revenue you can live with higher costs. This is why GM is looking to autonomy, where the machine can replace labor, as the most likely market for profitable BEVs.

 

[Qinsp]

Fixed it for you.

But remember, Tesla car engineering (they use robots and computers and stuff) is so far ahead of other car manufacturers that they can build a $35k EV with similar (or perhaps greater) range to the $35k Bolt for at least $9k less than it costs GM. At least this seems to be what some are saying by inference, that Tesla's cost for the $35k Model 3 is $35,000 or less, while GM's cost for the $35k Bolt is $44. That $9k spread must be due to Tesla's robots and superior buying power. If only GM had robots and computers and buying power.

What the lemmings don't understand is how little labor costs affect the retail of a car, and that the capital expense, human labor, quality control, and floor space required of robotic systems is not 'free'. Cheaper, but not free.

The truth is that for Tesla to make a Chevrolet Bolt, it probably WOULD be upside down $9k a unit in 2017. Tesla will have to make a simpler car to get the costs down on the Model 3. But there is no indication yet that will their gameplan.

I predict you will not see a significant number of $35k Model 3's produced until at least 2019 unless Tesla opens up their own printing presses to make $100 bills.

 

[Bacardi]

What the lemmings don't understand is how little labor costs affect the retail of a car, and that the capital expense, human labor, quality control, and floor space required of robotic systems is not 'free'. Cheaper, but not free.

The truth is that for Tesla to make a Chevrolet Bolt, it probably WOULD be upside down $9k a unit in 2017. Tesla will have to make a simpler car to get the costs down on the Model 3. But there is no indication yet that will their gameplan.

I predict you will not see a significant number of $35k Model 3's produced until at least 2019 unless Tesla opens up their own printing presses to make $100 bills.

I most agree and have a slightly different take, the lifecycle...This is a Volt forum so let's look at the Gen1...Because of the lifecycle, the 2011 Volt was the most expensive to produce while the 2015 was the cheapest despite the slighter larger battery and having more content...Lots incorrectly apply 100% of the R&D and tooling to first model year only...Heck, this was GM's response to the an article that claimed GM was taking a $49K loss on the vehicle:
"GM executives replied that Reuters' estimates were significantly flawed as they also allocated the vehicle's research and development program costs only against the number of Volts sold in the United States (as of August 2012), instead of spreading the total costs over the entire lifetime of the model, as well as including those units sold in Europe and other countries. GM explained that the investments will pay off once the innovative technologies of the Volt are applied across multiple current and future products"