General Motors Company (NYSE: GM) loses as much as $49,000 per Chevy Volt
it builds, according to one news organization's report, but the article
is not as self-evidently accurate as it may first appear.
Reuters, a London-based
news organization that is part of Thomson Reuters, made the assessment
of losses on each Chevy Volt sold based on figures from automobile
analysts who compared and contrasted the hybrid's selling price with
what it has cost to produce each Volt sold thus far, including
development outlays and factory expenses.
General Motors has sold approximately 21,500 Volts since the gasoline-electric hybrid was introduced in December 2010, and development costs of the high-tech car are estimated at between $1 billion and $1.2 billion by Reuters' calculations. Production costs for the Volt are estimated at between $20,000 and $32,000, a wide margin to be sure. The Volt retails for a base price of $39,145 (before a federal tax credit of $7,500).
The issue with Reuters' math, though, is that it only takes into account the 21,500 Volts sold so far, as if GM would never sell another one. If that is taken to be true, then each Volt sold has cost GM around $55,000 in development costs. However, each Volt sold spreads out the development costs incrementally, pushing down the R&D cost per unit. GM has acknowledged that it has not yet sold enough Volts to break even, but it suspects that it will reach the break-even point by the time the second- generation Volt is introduced onto the market in about three years' time.
"It's true, we're not making money yet," GM Vice President of Global Product Programs Doug Parks said about the Volt, according to Reuters. However, the Volt "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."
Read more: http://www.ibtimes.com/articles/382612/20120910/general-motors-gm-chevy-volt-cost-losses.htm
General Motors has sold approximately 21,500 Volts since the gasoline-electric hybrid was introduced in December 2010, and development costs of the high-tech car are estimated at between $1 billion and $1.2 billion by Reuters' calculations. Production costs for the Volt are estimated at between $20,000 and $32,000, a wide margin to be sure. The Volt retails for a base price of $39,145 (before a federal tax credit of $7,500).
The issue with Reuters' math, though, is that it only takes into account the 21,500 Volts sold so far, as if GM would never sell another one. If that is taken to be true, then each Volt sold has cost GM around $55,000 in development costs. However, each Volt sold spreads out the development costs incrementally, pushing down the R&D cost per unit. GM has acknowledged that it has not yet sold enough Volts to break even, but it suspects that it will reach the break-even point by the time the second- generation Volt is introduced onto the market in about three years' time.
"It's true, we're not making money yet," GM Vice President of Global Product Programs Doug Parks said about the Volt, according to Reuters. However, the Volt "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."
Read more: http://www.ibtimes.com/articles/382612/20120910/general-motors-gm-chevy-volt-cost-losses.htm
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