Falsehoods about the Chevy Volt just keep on coming. Earlier this year Fox News and Charles Krauthamer lied about non-existent fires in Volts.
Now renewable energy haters, global warming deniers, and the anti-Obama crowd are crowing about a Reuters story that claims GM loses as much as $49,000 on each Chevy Volt it builds.
Problem is, this isn't true.
Reuters admits that it divided the billion dollars or so in development costs by the number of Volts sold through August. That's crazy. After someone sent me an email about this supposedly shocking news, I replied to him with:
Somebody makes a widget that cost $100,000 to get into production. They sell 10 of them in the first week for a profit of $100 each. Then someone claims, "They're losing $9,900 on each widget!" (because they've made $1,000 and they put $100,000 into development: $99,000 divided by 10 equals $9,900.) That claim is absurd, because they've just starting selling the widget. Whoever says that doesn't know how business works.
As GM says, and I've read, there will be a Volt 2 in a few years. The Volt technology almost certainly will be used in other cars. The Volt has won North American and European Car of the Year awards. It's a success. This is more disinformation from people who don't want to admit that the United States auto industry is alive and well, while Osama Bin Laden is dead. Very unpatriotic, in my opinion.
Aside from my political asides, this is pretty much how GM responded to the misleading Reuters story.
Reuters’ estimate of the current loss per unit for each Volt sold is grossly wrong, in part because the reporters allocated product development costs across the number of Volts sold instead of allocating across the lifetime volume of the program, which is how business operates. The Reuters’ numbers become more wrong with each Volt sold.
In addition, our core research into battery cells, battery packs, controls, electric motors, regenerative braking and other technologies has applications across multiple current and future products, which will help spread costs over a much higher volume, thereby reducing manufacturing and purchasing costs. This will eventually lead to profitability for the Volt and future electrified vehicles.
Every investment in technology that GM makes is designed to have a payoff for our customers, to meet future regulatory requirements and add to the bottom line. The Volt is no different, even if it takes longer to become profitable.
GM is at the forefront of the electrification of the automobile because we are developing innovative technologies and building an enthusiastic – and growing – customer base for vehicles like the Volt.
My wife and I own a Volt. We love it. (Here's the reasons why.)
When our three-year lease is up in June 2015 we're looking forward to getting a second generation "Volt," whose technology probably will be available in other GM models by then. According to Consumer Reports, the Volt had the highest customer satisfaction of any car sold in America. It's a huge success story.
The Obama administration, of course, had nothing to do with development of the Chevy Volt. The production design model was unveiled in September 2008, before Obama was even elected. Yet somehow right-wingers believe that disparaging the Volt, an all-American car, will reflect poorly on Obama.
That's bad politics.
Ohio, where the Volt is built, is vital to Romney's election chances. But Ohio is trending in favor of Obama, in no small part because of Romney's willingness to let GM go under. Bad-mouthing the Volt isn't going to help the G.O.P. cause in Ohio and other states where lots of jobs have been preserved by saving the auto industry.
I also don't understand how anyone can expect GM to make money from the Volt in the first year or two of production. The Volt is part of a long-term GM automotive strategy. In the same way as Amazon loses money on each Kindle tablet that it sells, but is happy to do so, so is GM planning to make money on the Volt. It'll just take a while longer.
GM acknowledges the Volt continues to lose money, and suggests it might not reach break even until the next-generation model is launched in about three years.
"It's true, we're not making money yet" on the Volt, said Doug Parks, GM's vice president of global product programs and the former Volt development chief, in an interview. 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," Parks said.
Lastly, so what if some of the government's auto bailout money is considered to be supporting GM's Volt losses? We're talking hundreds of millions of dollars, at most, given that the entire cost of Volt development was around a billion dollars.
New energy-related technologies always have gotten government aid.
The oil and gas industry has fed at the taxpayer trough for many, many years, eating up many more billions than electric car subsidies have. Thus the outrage of conservatives who decry federal support for renewable energy and alternatives to conventional car technology is misguided.