GM Amps Up Volt Production

[EL PRESIDENTE]

NO ONE IS BUYING OBAMA'S MAGIC CARS!
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::MARIS61:

 

[PapaG]

NO ONE IS BUYING OBAMA'S MAGIC CARS!
\
::MARIS61:

Don't worry. STOMP says everbody will blame the GOP for it, and it will motivate the loony left to vote even more for their Jesus.

 

[Klinky]

The Volt has sold 3 of every 4 produced so far. The Toyota Prius sold about 5800 units in it's first year in North America, the Volt is about half way there at 2870, half way through the year. It is currently in a sort of build-on-demand model, in fact no Volts were produced in June 2011. It makes up an extremely tiny portion of GM's production line. The Volt project started back in 2006, so this is really Bush's magical electric car if you want to get political about it.

 

[maxiep]

Fucking great.

http://www.michigancapitolconfident...a-MichCapCon_12_1312_12_2011&utm_medium=email

I can think of a host of other cars I'd rather drive for a quarter million dollars.

 

[barfo]

Fucking great.

http://www.michigancapitolconfident...a-MichCapCon_12_1312_12_2011&utm_medium=email

I can think of a host of other cars I'd rather drive for a quarter million dollars.

Sadly, that article looks like utter horseshit. Applying all the R&D costs for any project to the first few units sold will result in the same bad analysis, for any product.
A realistic calculation would take into account the R&D costs, but also the revenue from all future sales, and also whatever benefit the R&D might have on other future models - which in this case is pretty important.

barfo

 

[BrianFromWA]

Slightly agree, barfo. The expectation is that the per-unit cost of the first run (or the low-rate production to start) will be higher, and then as production scales up the costs will decrease with sticker price remaining the same. You don't put the "future R&D benefit" in, though, because the R&D spent previously has been to design this particular version/model/etc of the car. If you want to, say, invest R&D in a new battery for the 2014 model, then those costs are generally included with the 2014 design and development costs, not anything that's already happened.

I haven't looked for the figures, but is there a projected sales number for the next 5 years or so? Something like 25k cars per year or whatever? That's what you'd apply all of these subsidy offsets to.

According to GM CEO Dan Akerson, the average Volt owner makes $170,000 per year.

A better question might be: WTH is the gov't, doing, though, heavily subsidizing cars that only the 1% can afford to drive?

 

[barfo]

Slightly agree, barfo. The expectation is that the per-unit cost of the first run (or the low-rate production to start) will be higher, and then as production scales up the costs will decrease with sticker price remaining the same. You don't put the "future R&D benefit" in, though, because the R&D spent previously has been to design this particular version/model/etc of the car. If you want to, say, invest R&D in a new battery for the 2014 model, then those costs are generally included with the 2014 design and development costs, not anything that's already happened.

Some R&D done for this car will surely transfer to later electric vehicles. No car is ever designed completely from scratch. Just as they probably didn't spend a lot of R&D effort on the Volt deciding whether the wheels should be round or oblong, they may not have to redesign (for example) the battery charge connector for the next electric vehicle.

I haven't looked for the figures, but is there a projected sales number for the next 5 years or so? Something like 25k cars per year or whatever? That's what you'd apply all of these subsidy offsets to.

I would have to assume that GM makes sales projections, at least internally, but I don't know them.

A better question might be: WTH is the gov't, doing, though, heavily subsidizing cars that only the 1% can afford to drive?

First off, it isn't the government, it's GM. Secondly, the price will come down (if not for the Volt, then for some follow-on vehicle).

barfo

 

[Denny Crane]

R&D expenses by a company are fine, and the cost of the first thing produced and sold is expensive, sure.

But all the expenses here in question are not risk capital by investors. Instead it's a boondoggle by the government and a waste and absolute misuse of our tax money.

On top of the R&D capital being taxpayer money, the government is creating revenues for the company's product by buying it when it's clearly an inferior and overpriced item.

And you wonder why we should consider not paying taxes as a form of civil disobedience against this kind of thing.

 

[barfo]

R&D expenses by a company are fine, and the cost of the first thing produced and sold is expensive, sure.

But all the expenses here in question are not risk capital by investors. Instead it's a boondoggle by the government and a waste and absolute misuse of our tax money.

On top of the R&D capital being taxpayer money, the government is creating revenues for the company's product by buying it when it's clearly an inferior and overpriced item.

And you wonder why we should consider not paying taxes as a form of civil disobedience against this kind of thing.

The Volt was under development for several years. It didn't just start because the Obama administration thought it would be cool to have an electric car. The Volt R&D effort began well before the government bailout and therefore was not based on taxpayer money.

I'm a little confused by your assertion that the government is 'creating revenues for the company's product by buying it'. Is the government buying a significant number of Volts? Link?

barfo

 

[Denny Crane]

The Volt was under development for several years. It didn't just start because the Obama administration thought it would be cool to have an electric car. The Volt R&D effort began well before the government bailout and therefore was not based on taxpayer money.

I'm a little confused by your assertion that the government is 'creating revenues for the company's product by buying it'. Is the government buying a significant number of Volts? Link?

barfo

http://www.michigancapitolconfidential.com/16192

Details 18 government deals that included loans, rebates, grants, and tax credits. These things cost the taxpayers real money.

DoE awarded a $105.9M grant to the GM Brownstown plant that assembles the batteries. Compact Power was awarded $100M in refundable battery credits. $3B total.

You can't just shrug it off as if the taxpayer isn't paying that $3B.

And

"Chevy Volt sales inflated with taxpayer fleet buys" (and GM missed their sales target of 10,000 Volts sold, by 4,000.

 

[mook]

Pretty interesting analysis of the article on the Economics forum of Reddit by a variety of posters:

TLDR: The article is, as barfo opines, horse shit.

 

[Denny Crane]

Pretty interesting analysis of the article on the Economics forum of Reddit by a variety of posters:

TLDR: The article is, as barfo opines, horse shit.

How do you know if you didn't read it?

LOL

 

[mook]

How do you know if you didn't read it?

LOL

Huh? I don't understand.

"TLDR" stands for "Too Long, Didn't Read." It's often used as a quick summary for those not willing to wade through a wall of text.

I put that TLDR on there as a courtesy in case people weren't willing to wade through the full forum discussion I linked to. I certainly read it and the original article. I would think that's rather obvious, or why would I bother commenting? Why are you being a jerk about this?

 

[barfo]

And

"Chevy Volt sales inflated with taxpayer fleet buys" (and GM missed their sales target of 10,000 Volts sold, by 4,000.

Oh, gee, a faux news clip without any numbers, just an assertion that Volt sales have been inflated by fleet sales to the government. No numbers, no credibility.

barfo

 

[Denny Crane]

Huh? I don't understand.

"TLDR" stands for "Too Long, Didn't Read." It's often used as a quick summary for those not willing to wade through a wall of text.

I put that TLDR on there as a courtesy in case people weren't willing to wade through the full forum discussion I linked to. I certainly read it and the original article. I would think that's rather obvious, or why would I bother commenting? Why are you being a jerk about this?

You and your reddit thread don't refute the numbers in the least.

Crying "bullshit" doesn't cut it. Did, or did not the government give $100M each to two of GM's divisions to fund development of the Volt?

Let's start with that. The government did, hence it isn't bullshit at all.

 

[Denny Crane]

Oh, gee, a faux news clip without any numbers, just an assertion that Volt sales have been inflated by fleet sales to the government. No numbers, no credibility.

barfo

And you have less credibility than Fox News.

http://venturebeat.com/2011/05/25/us-government-volt-discount/

Govt. buys more than 100 Chevy Volts.

http://articles.mcall.com/2011-11-1...ectric-cars-ppl-electric-utilities-chevy-volt

$30.5M in federal grants to municipalities to buy Chevy Volts.

http://dailycaller.com/2011/12/18/g...olt-is-going-flat-in-business-and-politics/2/

20% of Volt sales (1000+) to government or government contractors.

 

[barfo]

And you have less credibility than Fox News.

Oh, you wound me, sir!

Govt. buys more than 100 Chevy Volts.

Wow, 100 Volts. That totally supports your position.

$30.5M in federal grants to municipalities to buy Chevy Volts.

It seems that's not very accurate. Your next link says 64 Volts were bought via this program. So we'll have to assume that most of the $30.5 million went for something else.

20% of Volt sales (1000+) to government or government contractors.

Or government contractors? You mean private enterprise? Like "General Electronic"?
Even the 20% figure is just speculation in the article:

Considering that only about 5,000 of these things have sold, even if only … 1,000 have gone to townships and General Electric, you’re talking 20 percent” of sales, he said.

Your links are weak. You've shown that government bought 180 Volts, 116 to GSA, plus 64 to federally funded utilities. 180 cars is not a significant number. I'm pretty sure government buys tens of thousands of other vehicles.

barfo

 

[Denny Crane]

You asked for links, the links have real data.

The government not only bought MORE than 100 chevy volts, they bought the first 160 of them. If that isn't supporting volt production to you, then you have a problem understanding how it worked.

GE's CEO works for the government, directly for Obama. In exchange for tax breaks and credits and other subsidies, it pays $0 in taxes. Chipping in to buy a few cars is the least they can do in return. It's called quid pro quo, barfo.

And that $30M wasn't entirely spent on Volts says more about governments wanting the Volts, though it says Obama used stimulus money to try to coerce those municipalities to buy Volts.

 

[mook]

http://www.freep.com/article/C4/201...p-2-300-more-Volts-sale-supplies-trail-demand

Chevrolet has almost 2,600 dealers who are authorized to sell the Volt, but about 700 of them had yet to receive a model to sell. Still, about 2,300 Volt demos were sitting at stores, unable to be sold. Dealerships had been required to keep the cars on their lots for six months before selling them as used vehicles, a policy GM hoped would bring in new customers who wanted to experience the car’s battery- and gas-powered ride.
...
Including the demo models, GM dealers have 4,100 Volts available for sale. Another 1,100 are on their way to a GM store, which will make the number of Volts available enough to double the 5,000 Volt sales so far this year. GM had said it would build 10,000 saleable Volts at its Detroit-Hamtramck factory this year, a number which has attracted attention as sales have lagged it. To compare, U.S. customers have bought 8,000 of Nissan’s pure-electric Leaf.

“What we’ve seen over the last few months is as availability improves, sales improve,” GM’s Henderson said. “It’s just that old adage: You can’t sell ‘em if you don’t have ‘em.”
...
GM’s distribution process over the first year has involved spreading the small number of assembled Volts across its huge Chevrolet dealer base. Starting this winter, dealers who sell more Volts will be able to get several more for their lots, as is the case with most vehicles. GM plans to build 45,000 Volts next year for U.S. sale.

I hadn't realized they were going to ramp up production to 45k next year.

By way of comparison, in 1997 Toyota sold 300 Priuses in the first year, then 17k in the second. It was only in the 7th year of production when they finally sold more than 100k. There have been 2 million sold in total. http://en.wikipedia.org/wiki/Toyota_Prius

So it seems to me the sales forecasting on this car is pretty aggressive.

 

[PapaG]

http://www.freep.com/article/C4/201...p-2-300-more-Volts-sale-supplies-trail-demand

I hadn't realized they were going to ramp up production to 45k next year.

By way of comparison, in 1997 Toyota sold 300 Priuses in the first year, then 17k in the second. It was only in the 7th year of production when they finally sold more than 100k. There have been 2 million sold in total. http://en.wikipedia.org/wiki/Toyota_Prius

So it seems to me the sales forecasting on this car is pretty aggressive.

If the government continues to buy the vehicles, they can project X amount of cars. The Prius grew because it made sense. The Volt is a turd, and even Chevy dealers try to direct their customers to the Cruze once they get through the doors of the dealership.

Lots good, and linked, news items on the Volt at this link.

http://nlpc.org/category/keywords/chevy-volt

 

[EL PRESIDENTE]

Chevy has halted Volt production due to low demand.

http://www.cnbc.com/id/46608011

Chevy's electric car, the Volt, is running on empty. With sales lagging and inventories building, GM has decided to idle production of the Chevy Volt for five weeks. During that time, about 1,300 workers will temporarily be laid off.

GM executives can not be happy that this move will once again raise questions about the viability and long term prospects for the Volt.

But in reality, they had no choice.

Volt sales have been so slow this year, the company needs to adjust production to demand. And so far, Volt demand has fallen well short of original expectations.

Back when GM launched the Volt, it boldly targeted sales of 10,000 in 2011 and 60,000 in 2012. Last year, GM sold 7,671 Volts and just 1,626 this year.

Why have sales been slow?

Some of it is due to the slow ramp up in sales last year. While the entire country saw ads for the Volt, the car was sold most of the year in select markets. Then the controversy and investigation into Volt battery fires left a cloud hanging over the electric car.

But the biggest factor may be the price of the Volt. At $33,500, the Volt is not cheap. Yes, for that price owners can get impressive mileage and pay a fraction what others are paying for gas. Still, with 22 models for sale offering at least 40 MPG, a lot of buyers looking for fuel efficiency are content to buy a hybrid or gas powered car for well under $30,000.

Ironically, this shut down comes as gas prices are soaring. This is exactly the time when an electric car should be an easy sell. That's clearly not the case with the Chevy Volt.

 

[PapaG]

Chevy has halted Volt production due to low demand.

http://www.cnbc.com/id/46608011

No worries. CEO Obama is going to buy one in 5 years!

This thing is a bigger flop than the Edsel.

 

[julius]

No worries. CEO Obama is going to buy one in 5 years!

This thing is a bigger flop than the Edsel.

I like the look of the Sledsels.

 

[PapaG]

I like the look of the Sledsels.

I don't mind the look, either. Sat in one at Disney World/Epcot in December. I just don't like the look enough to blow $33k for the basic version.

 

[julius]

I don't mind the look, either. Sat in one at Disney World/Epcot in December. I just don't like the look enough to blow $33k for the basic version.

I went to a car show in Canada once (a few years ago), and there were 3 of them there. They were really nice looking. Not worth the money their owners think they're worth (but most old cars aren't. As much as a 57 Nomad is bad ass, I wouldn't pay 25-40,000 for one).

 

[PapaG]

I went to a car show in Canada once (a few years ago), and there were 3 of them there. They were really nice looking. Not worth the money their owners think they're worth (but most old cars aren't. As much as a 57 Nomad is bad ass, I wouldn't pay 25-40,000 for one).

I thought you meant the Volt. I've never been in an Edsel.

 

[julius]

I thought you meant the Volt. I've never been in an Edsel.

Oh, never been in a Volt. I too wouldn't pay that much for a car. but that's because i just wouldn't pay that much for a car.

 

[mook]

Given what I wrote earlier about the Prius sales in early years, it looks like sales projections were wildly off the mark. Had they projected a Prius-like introduction (17k in second year) they'd still be below expectation (1626 so far extends out to 9756 annualized) but it wouldn't be shockingly bad. Sticker shock and the exploding batteries definitely seems to be holding it back. (FWIW--it seems to have pretty similar sales to the Nissan Leaf. Fewer sold last year, but more sold in February.)

Still, though, it seems a little premature to be writing this vehicle's epitaph. If gas hits $5/gallon for an extended period, it's going to be a much more attractive option.

 

[EL PRESIDENTE]

Given what I wrote earlier about the Prius sales in early years, it looks like sales projections were wildly off the mark. Had they projected a Prius-like introduction (17k in second year) they'd still be below expectation (1626 so far extends out to 9756 annualized) but it wouldn't be shockingly bad. Sticker shock and the exploding batteries definitely seems to be holding it back. (FWIW--it seems to have pretty similar sales to the Nissan Leaf. Fewer sold last year, but more sold in February.)

Still, though, it seems a little premature to be writing this vehicle's epitaph. If gas hits $5/gallon for an extended period, it's going to be a much more attractive option.

For those making $175k a year, the average income of a volt buyer.

....

 

[PapaG]

Given what I wrote earlier about the Prius sales in early years, it looks like sales projections were wildly off the mark. Had they projected a Prius-like introduction (17k in second year) they'd still be below expectation (1626 so far extends out to 9756 annualized) but it wouldn't be shockingly bad. Sticker shock and the exploding batteries definitely seems to be holding it back. (FWIW--it seems to have pretty similar sales to the Nissan Leaf. Fewer sold last year, but more sold in February.)

Still, though, it seems a little premature to be writing this vehicle's epitaph. If gas hits $5/gallon for an extended period, it's going to be a much more attractive option.

Or, drop the price of the bare-bones Volt to $16k for the rest of the year, and charge for add-ons. Sure, it will never turn a profit at that price, but perhaps you can get some brand loyalty, and people willing to spend more on their next electric vehicle.

We're looking to replace my wife's 2003 Passat, and I'd probably even pay $20k for a Volt (assuming it won't burn down our house).