[ad#post_ad]The Volt is a remarkable award-winning car capable of traveling on gas or electricity that was hatched from a sketch in a mere 39 months.

All the while the car has been described as GM's savior, or alternatively its Hail Mary pass.  Designers and engineers had to get it right, the whole company's future rode on in, and right they did.

In the beginning the Volt's godfather, former GM vice chairman Bob Lutz told the world a bit prematurely that the Volt would sell for comfortably under $30,000.  Indeed it was certainly the hope early on that such a price point could be achieved.  But like all new technology, the Volt was to be costlier than hoped.

Many new and specialized components had to be built specifically for the Volt, and its heart and soul, the lithium-ion battery, topped the scales at a cost of around $8000 to $10,000, it is believed.

After years of waiting GM finally announced the price in late July; $41,000 before the tax credit.  What they have never announced was how much the car actually costs them to build.

We do know from former CEO Ed Whitaker that there is a very small margin of profit for each car, but too slim to make a business case for the car in its early years.

In his new book called Overhaul, Steve Rattner who used to head the government's auto task force, disclosed GMs cost to build the Volt.  This is a closely guarded corporate secret that Rattner was privy to through his work to restructure GM though its bankruptcy.

Rattner is currently the subject of legal proceedings and despite the questionable ethics and behavior of doing so he wrote the following:  “At least in the early years, each Volt would cost around $40,000 to manufacture (development costs not included)."

Rattner admitted in an interview with the New York Times that he "didn't know the precise number," but agreed that despite the costs, on developing the Volt GM was “right to do it,” to silence critics  “who’ve said for many years that the company was behind the curve.”

GM spokesperson Rob Peterson would of course not confirm these values, though GM has a history of getting small or no margins on small cars.  Even the famous high volume Chevrolet Cavalier was known to be sold at  loss.  “We haven’t released any numbers related to costs,” said Peterson.  "The importance of the Volt is more than a single profit-and-loss statement."  Indeed.

Rattner agrees the introduction of EVs are important, but doubts any automaker is in a position to profit on them in the early years.  “E.V.’s are everybody’s latest fantasy,” he said. “No doubt they are important and they are real, but they won’t have an impact on profitability and sales for the foreseeable future.”

Rattner also thinks the idea of start-ups like Tesla rising up and competing successfully with major automakers is a bit far-fetched.  “E.V. markets will be dominated by the existing companies,” he said. “They have the scaled operations and the dealer networks. The idea that a bunch of E.V. companies will come along and G.M. and Ford will go out of business is kind of crazy.”

Source ( New York Times )


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