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Hi all:

I think in one thread I was reading a week or two ago there was some mention of the topic of whether or not GM is making a profit on the Chevrolet Bolt. One of the things was that Elon Musk had commented on this. Ok, but aside from Musk, can anyone point me to links or statements or other information that would help me understand what the company has said as to whether it is making a profit on the vehicle now, or at what point it looks to do so in the future?
 

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Lots of speculation from analysts. The best is probably the UBS teardown of the Chevy Bolt EV.

There is no doubt that the (R&D + unit cost*sales volume) >> sales price*sales volume. Many estimates put a loss of around $9k per car, estimating maybe 100k cars sold. R&D is expensive.

Some sites are quick to point these out as GM is losing that much per car sold, which is totally wrong as it implies GM is losing more money if they sell more cars, and this isn't true. The correct wording would be the program will cost GM $xyz million over the Bolt EV program, money that is being spent to develop new platforms To increase margins on new cars.

I think most of these "experts" are trying to influence the stock price one way or the other, or have some other political motivation. There is no doubt that developing an all new EV like the Bolt EV is not going to immediately profitable. The point is to make it so future cars are successful.
 

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can anyone point me to links or statements or other information that would help me understand what the company has said as to whether it is making a profit on the vehicle now, or at what point it looks to do so in the future?
GM comments are not direct, they don't say what their profit/loss is on the Volt or Bolt. Some analysts try to reverse engineer the costs, and their estimates may be in the ballpark. But the ballpark is big enough to accommodate home runs, foul balls, etc. Plus, GM doesn't view Bolt investments as strictly applicable to the Bolt like an analyst would. GM is playing a bigger game. There will be Bolt variations and spin-offs. The costs will end up being spread across a wider portfolio.

Does the $10 million invested in a McDonalds franchise mean that the first Big Mac sold by the store is a $10 million loss? No, but that's how some of these "Bolt is losing money" articles treat costs. However, it's not how most businesses view costs.

Even if there is some loss, GM is using the Bolt as a platform for its soon to be released automated ride sharing where they stand to earn something like $136,000 per car compared to the $1000-$6000 they may make on their vehicles. GM may be OK with a small loss on developing the Bolt platform to get to that pot of money. The people who should be concerned are ride share drivers. GM is aiming to take all their urban business as well as offer an alternative to urban dwellers who don't want to buy, finance, insure, repair, maintain, and park a car. The Bolt AEV (autonomous EV) is aimed at them too.

I think the Bolt cost analysis has focused on the tree while GM is aiming at the bigger, more profitable forest. This should start to become more evident in 2019 when GM starts rolling out autonomous ride share in a few cities and then expands. The current Bolt EV is just the tiny tip of the GM autonomous vehicle iceberg that will disrupt the auto industry.

If you want to learn more, this (long) podcast is pretty interesting and insightful http://theteslashow.com/episodes/82-cruise
 

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Here's GM's statement:
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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. One of GM’s top priorities to help it achieve that goal, he says, is reducing vehicle mass.
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“That’s the mantra inside product development,” Reuss said. “That’s what all our engineers are all working toward.”
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“We know the customers would like to drive electric but are unwilling to pay,” Mr. Reuss told reporters. “And that’s why we’re going to be the first company to [build] electric vehicles that people can afford at a profit.”
IMPORTANT: General Motors, especially Chevrolet does not have a history of exaggeration, if anything, they are prone to understatement.
Elon Musk of Tesla Energy tends to exaggerate. If they could make an EV for $36,000 like they say, and turn a profit, they probably would have released that version first. Why? Less engineering, less P/N's, fewer cells, bigger market. I would be surprised if the $50k Model 3 initial release is profitable, mostly due to the amount of battery required. But it should lose less per car than the $36,000 version.
 

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I would be surprised if the $50k Model 3 initial release is profitable, mostly due to the amount of battery required. But it should lose less per car than the $36,000 version.
I never thought the Model 3 would be profitable, and all the signs seem to be pointing to that. Slow ramp up, production delays, quality concerns. I think Musk gambled the future of the company with expectations of high demand which just isn't there, waiting list notwithstanding. Its presence is cutting into sales of what is keeping Tesla afloat - the profitable Models S and X.

Whether or not the Bolt is profitable for GM is of much lesser concern than how to rebuild the prestigious image of the Cadillac brand and to resuscitate the Buick brand. And I think GM's management realize that a key to doing those things is going to include electrification.
 

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Profit and loss is tricky. It's relatively easy to calculate the short run variable costs -- basically what it costs to assemble the vehicle. That's called Factory Variable Cost. But that doesn't of course cover all costs. There are development costs and licensing costs and marketing costs, etc.. If you take in all the costs that GM incurs in running its business, and apportion part of that to the Bolt EV, then the Bolt EV loses money. If you just look at FVC then it doesn't.

The exact number is never going to be clear until after the fact since you only get exact numbers after the fact. The number $9K has been mentioned. That seems reasonable.

But this number is BEFORE you consider the value of ZEV credits and CAFE contributions. When you do that the Bolt likely eeks out a small profit or incurs a small loss. In either event the number will hardly matter for a company the size of GM.
 

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I never thought the Model 3 would be profitable, and all the signs seem to be pointing to that. Slow ramp up, production delays, quality concerns. I think Musk gambled the future of the company with expectations of high demand which just isn't there, waiting list notwithstanding. Its presence is cutting into sales of what is keeping Tesla afloat - the profitable Models S and X.

Whether or not the Bolt is profitable for GM is of much lesser concern than how to rebuild the prestigious image of the Cadillac brand and to resuscitate the Buick brand. And I think GM's management realize that a key to doing those things is going to include electrification.
Cadillac and Buick are profitable due to China. Cadillac in particular has a very good product line, but faces a lot of US resistance due to badging. And European resistance due to import regulations. A BMW is a fashionable badge in the US, a Cadillac currently is not, even though in most comparable models Cadillac is the superior product.
 

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Those low price sales might be loss leaders to introduce more people to electric drive.
As pointed out the Bolt is the trunk of an EV tree that will have many branches in the future. I would put the R&D cost aside since this is a pioneer car of it's type.

I think in terms of cash flow - add the cost of parts to the labor and factory overhead and I think GM is doing OK with Bolt. Think like an analyst: NPV, IRR, EBITDA, etc. and it's a loser but all things considered I doubt GM cares about it.
 

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Qinsp said:
“And that’s why we’re going to be the first company to [build] electric vehicles that people can afford at a profit.”
I think that tells the story right there.

But this number is BEFORE you consider the value of ZEV credits and CAFE contributions. When you do that the Bolt likely eeks out a small profit or incurs a small loss. In either event the number will hardly matter for a company the size of GM.
Indeed, GM can do this stuff as a hobby and hardly notice any losses. The margins on their trucks/SUVs are what make it all possible. The ZEV credits are more important to truck sales than they are to EV sales.
 

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I think that tells the story right there.



Indeed, GM can do this stuff as a hobby and hardly notice any losses. The margins on their trucks/SUVs are what make it all possible. The ZEV credits are more important to truck sales than they are to EV sales.
Of course don't skip this: "...Mark Reuss said the company is ahead of the competition with regard to reducing the costs ..."

GM turned on cash spigot for Advanced Propulsion. Mary Barra said half the engineers GM has on staff are currently working in this field. Big gamble on her part. A known money pit serving a small market segment is risky investment. They are ahead because GM predicts that non-ICE cars will be the future, and are positioning themselves to be the leader.
 

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They are ahead because GM predicts that non-ICE cars will be the future, and are positioning themselves to be the leader.
Part of the future would be my guess. I think their real focus is on EV for AV at the moment. Don't recall where, but I read that this could be a real money hose for GM.
 

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Part of the future would be my guess. I think their real focus is on EV for AV at the moment. Don't recall where, but I read that this could be a real money hose for GM.
I have posted and discussed it in several threads (including this thread) but this podcast sheds light on that and more http://theteslashow.com/episodes/82-cruise It was well worth the listen for me.
 

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Part of the future would be my guess. I think their real focus is on EV for AV at the moment. Don't recall where, but I read that this could be a real money hose for GM.
Unless they alter the Federal MPG guidelines, all cars will have to be FCEV, EREV, or EV. They will never hit the goals with pure hybrids which are nothing but ICE cars with KERS. There is not enough energy to recover when driving on freeways. Your fuel is used to fight aero drag, and that cannot be recovered.

IIRC, we are supposed to have CAFE numbers of 54.5 mpg for cars, SUVs, and light trucks in 7 years.

Obviously you can see the problem. Even if you double the current MPG of real SUVs and light trucks, you'd need the cars to average about 100 mpg to make up for the shortfall. Not just the subcompacts, the fleet. Without supplementing the fuel with stored battery power, you just aren't going to get a Prius to push through 75 mpg, much less get a 1/2 ton pickup to get over 40 mpg.

But knowing the Feds, they'll do what they did to GM back in the EV1 days. Set unrealistic goals, GM spends huge bucks (the only company who actually believed the Feds), then remove the rules.
 

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But knowing the Feds, they'll do what they did to GM back in the EV1 days. Set unrealistic goals, GM spends huge bucks (the only company who actually believed the Feds), then remove the rules.
The story seems to be that the automakers are lobbying that way. And if we know your state, it'll be the one to set its own rules - to what end I don't know. We'll see how that goes. Sometimes it has to be the people who push back on them. Could be a boom for the used car market in the meantime.

I think it's more than that. They don't need to introduce 20 new kinds of battery electric vehicles just for autonomous capability.
Because China. I don't think they're releasing 20 EVs here. Doesn't make any sense.
 

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I have posted and discussed it in several threads (including this thread) but this podcast sheds light on that and more http://theteslashow.com/episodes/82-cruise It was well worth the listen for me.
It was a very enjoyable seven listening hours! (JK). It was a very informative podcast. Very consistent with what Maven is doing as well.

Because China. I don't think they're releasing 20 EVs here. Doesn't make any sense.
I think you're looking at this the wrong way. GM is trying to use autonomy to get higher utilization rates from its BEVs. That's what Reuss is talking about. A typical Volt or Model S owner drives 35 miles a day. A typical Maven driver or autonomous vehicle might put on 150 or 200 miles. Basically higher utilization is the Rx for a vehicle with a high acquisition cost and low running costs. It's a nifty solution.

Plus with a common platform the more models you have the more units you sell and the less each part costs. It's not as if you have to design and produce every model from the ground up. So you can have a couple of SUVs, a couple of CUVs, a couple of vans, a sports car, and a sedan, and not spend that much on each variation. The motor changes based on different magnet size would also be part of this.
 

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Hi all:

I think in one thread I was reading a week or two ago there was some mention of the topic of whether or not GM is making a profit on the Chevrolet Bolt. One of the things was that Elon Musk had commented on this. Ok, but aside from Musk, can anyone point me to links or statements or other information that would help me understand what the company has said as to whether it is making a profit on the vehicle now, or at what point it looks to do so in the future?
One fact that is rather interesting to hear Musk comment on the Chevy Bolt...because Tesla defines gross margin similarly to most other companies outside the automotive industry by including R&D in Operating Expenses (OpEx) rather than Cost of Goods Sold (COGS).
 

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Steverino, you (and the others) are exactly right. The Bolt is the first phase of a revolution in automobiles and the cost/profit equation on it is irrelevant.
 
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