GM Loses $50k for Every Chevy Volt They Build
In a report sent to Congress in mid-August, the White House raised the expected loss on the bailout package to $25.1 billion, a figure that has increased by 15% since an earlier forecast. A large part of the revision is due to the downturn in GM stock prices.
Now that we have new information about one of GM's flagship models, it is easy to see why.
According to estimates provided to Reuters by industry analysts and manufacturing experts, Chevrolet is losing as much as $49,000 on each Volt it builds. The highly marketed flagship car is on pace to miss sales estimates by over 50%. Other GM models are underwhelming as well, but don't have anywhere near the same loss per car.
Year-to-date sales to 13,500, well below the 40,000 cars that GM originally had hoped to sell in 2012. Many of those sales are actually leases worth as little as $199 per month and a $250 down payment. Total sales are now around 21,500.
Due to the massive automaker bailout package, taxpayers have already reduced the price tag by directly subsidized production of the car through various parts manufacturers and emergency funding for GM. As the Wealth Wire reported earlier this year, each Chevy Volt sold by the end of 2011 cost taxpayers about $250,000 in local, state and national incentives.
Each vehicle costs an estimated $89,000 to produce after all related costs are added up. The company hoped to recoup the costs as it produced and sold more of the plug-in hybrid cars, but sales are still lagging two years after the model was unveiled.
GM is still years away from making money on the Volt, assuming they will at all. It will face new competitors from Ford, Honda and others car manufacturers within the next couple years.
Doug Park, GM's VP of global product programs and the former Volt development chieft acknowledged the situation: "It's true, we're not making money yet. [The car] 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."
The next generation Volt won't be on the streets for at least three years. With the massive gap between expected and actual sales so far, you have to wonder if the estimates are too optimistic even for a five year return on their $1.2 billion investment.
"I don't see how General Motors will ever get its money back on that vehicle," said Sandy Munro, president of Michigan-based Munro & Associates.+6
Add a Comment (Pro Members Only)
More like this...Chevy Volt Costing Taxpayers $250K Per Car!
And the average Volt owner makes a whopping $170,000 a year...
Another Obama Backed Green Energy Co. Goes Bankrupt
First it was Solnydra, then Beacon, now Ener1. Obama continues to swing and miss with green energy companies...
Fried by the Volt
GM recently announced that they will halt production, and sales predictions, of the Chevy Volt. This has state vs. private company innovation written all over it.
6 Myths Every Investor Should Know About Electric Cars
Much of the criticisms on electric cars are based on inaccurate or false information. Here are six myths from the electric car department, and what the facts actually point to.