volt costs truth

[Tom]

http://www.forbes.com/sites/boblutz/2012/09/10/the-real-story-on-gms-volt-costs/



Forbes
September 10, 2012
by Bob Lutz

I was surprised to read Ben Klayman’s piece on alleged
astronomical per-unit losses on the Chevrolet “Volt.” Ben is usually a
solid professional who checks his facts.

Let me provide a look at how a car company tracks profitability
of a product program: measured are material cost and labor, and these
are deducted from the selling price. The positive difference is called
“gross margin.” Then, one allocates per-unit “fixed cost” (advertising,
general overhead, etc.) plus per-unit depreciation and amortization of
the initial investment, based on the TOTAL NUMBER TO BE PRODUCED OVER
THE LIFETIME of the product. If the margin, after all deductions, is
still positive, then we call it a “fully accounted profit,” and the car
is a winner.

The Volt “variable cost” (labor and materials, without
revealing any confidential GM information), looks very roughly like
this: A Li-Ion battery today runs about $350 per KWh. The Volt’s is
16KWh, so that’s roughly $6000. Add $4,000 for the battery pack
structure, the cooling, the high-voltage wiring, the motor and the power
electronics. So, that’s the electric portion. Add about 20 hours of
assembly labor which we’ll round to a very generous $1000. The dealer
net price is, say, $37,000. We now have $26,000 left for the rest of the
car, which, cost-wise, is about equal to a Chevy “Cruze” which sells for
around $22,000 retail! (And the Volt has no costly conventional
transmission.) Thus, the “Volt”, by my estimate, is either close to
“variable break-even” or may be on the cusp of a positive gross margin.
Deduct the per-unit allocation for all fixed cost, depreciation and
amortization and it is, surely, still “under water”….but not by much,
and less and less so as the volume builds and other, higher-margin GM
cars, like the Cadillac ELR, piggy-back off of the Volt’s initial
investment.

Maybe the Volt, a first-generation technology masterpiece and
the most-awarded car in automotive history, will never make a really
decent profit.

But succeeding generations of the same technology will.

Full article at link.

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Today, 10:42 AM #2
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Re: Bob Lutz: The Real Story On GM's Volt Costs

Great article, thanks for sharing it.

2010 Chevy Avalanche 30k | 1989 Cadillac Brougham 140k

Quote Originally Posted by yamahr1
Hyundai has a knack for designing cars that look like they've
already been in an accident.

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Re: Bob Lutz: The Real Story On GM's Volt Costs

I'm not in love with Bob Lutz as so many are but I'm very
gratified to see that he will still stand up "yellow" journalism on GM's
behalf. That, and I know he has a lot of personal capital tied up in
Voltec. I think he wants it to define his career and I would if I were
he. I'm convinced that, as it develops, Voltec will spread through many
vehicle lines and finally make a sizeable dent in the amount of oil
being used, both here and in other nations. A proportionate reduction in
CO2 emmissions into the atmosphere can't hurt either, no matter what as
individual thinks of global warming. That can't be bad.

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Re: Bob Lutz: The Real Story On GM's Volt Costs

Bob is just saying what any first year economics student knows....

...and any journalist reporting on economic subjects worth
their salt should know... and do in fact know... but choose for their
own reasons to ignore.


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Re: Bob Lutz: The Real Story On GM's Volt Costs

Volt is a funny spot. The enviro-left hates it because it's not
a pure electric, and for no better reason that it's a GM product, and
decades ago GM built the Corvair and was mean to that nice Mr. Nader.

The right hates it because of the perception - arguable, but
probably not correct - that it was built as a sop to the left in
exchange for the bailout of GM and the favoritism shown UAW in the
bankruptcy.

And now Reuters is channeling all of that anger through an
economically illiterate reporter whose method of calculation bears no
resemblance to economic reality. Indeed, his way of thinking would damn
any product that requires heavy up-front investment in engineering and
production capital.

The good news, though, is that Volt despite its perception
handicaps, is slowly winning in the marketplace over its pure electric
rivals. And it's expanding to European models and Australian models and
to a global - we hope - Cadillac model.

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[Jim_Higgins]

Post by Tom
http://www.forbes.com/sites/boblutz/2012/09/10/the-real-story-on-gms-volt-costs/
Forbes
September 10, 2012
by Bob Lutz

<snip>

Bob Lutz?

Yawn.

[Tom]

Post by Jim_Higgins

Post by Tom
http://www.forbes.com/sites/boblutz/2012/09/10/the-real-story-on-gms-volt-costs/
Forbes
September 10, 2012
by Bob Lutz

<snip>
Bob Lutz?
Yawn.

must hurt the volt is starting to do good, of course you loved the leaf,
volt currently outselling leaf 10 to 1

[Jim_Higgins]

Post by Tom

Post by Jim_Higgins

Post by Tom
http://www.forbes.com/sites/boblutz/2012/09/10/the-real-story-on-gms-volt-costs/
Forbes
September 10, 2012
by Bob Lutz

<snip>
Bob Lutz?
Yawn.

must hurt the volt is starting to do good, of course you loved the leaf,
volt currently outselling leaf 10 to 1

Is that before or after bankruptcy #2? Now? After bankruptcy #2?

[Tom]

Post by Jim_Higgins

Post by Tom

Post by Jim_Higgins

Post by Tom
http://www.forbes.com/sites/boblutz/2012/09/10/the-real-story-on-gms-volt-costs/
Forbes
September 10, 2012
by Bob Lutz

<snip>
Bob Lutz?
Yawn.

must hurt the volt is starting to do good, of course you loved the leaf,
volt currently outselling leaf 10 to 1

Is that before or after bankruptcy #2? Now? After bankruptcy #2?

it takes a smart man to root for the failure of an american company
thatsupports 10s of thousands of jobs in this country. i have lunch
with a bunch of retired gm auto workers every couple of months this
friday is one of them YOUR INVITED

[Canuck57]

Post by Tom
must hurt the volt is starting to do good, of course you loved the leaf,
volt currently outselling leaf 10 to 1

That is pure bu11sh1t and you know it.

Leaf has outsold Volts by over 40 times and still does.

Prius outsells Volts by over 200 times.

China manufactures more vehicles in a 8 hour shift than GM has ever sold
in Volts.

Of 80,000,000 vehicles produced per year, less than 20,000 are Volts.
Market share is less than 0.025%.

And every Volt sold costs the US/Canadian taxpayer money. Yet Leaf and
Prius make money.

China now produced more than twice as many vehicles as does the USA, as
they don't have corrupt government, incompetent GM management and greedy
unions to worry about.

Even the Ford Edsel did far far better in sales and market share.

Bottom line, Volt is the biggest loser in Detroit's history. But hey,
it is "Government Motors" efficiently wasting taxpayers wealth and grand
kids debt.

[Tom]

Post by Canuck57

Post by Tom
must hurt the volt is starting to do good, of course you loved the leaf,
volt currently outselling leaf 10 to 1

That is pure bu11sh1t and you know it.
Leaf has outsold Volts by over 40 times and still does.
Prius outsells Volts by over 200 times.
China manufactures more vehicles in a 8 hour shift than GM has ever sold
in Volts.
Of 80,000,000 vehicles produced per year, less than 20,000 are Volts.
Market share is less than 0.025%.
And every Volt sold costs the US/Canadian taxpayer money. Yet Leaf and
Prius make money.
China now produced more than twice as many vehicles as does the USA, as
they don't have corrupt government, incompetent GM management and greedy
unions to worry about.
Even the Ford Edsel did far far better in sales and market share.
Bottom line, Volt is the biggest loser in Detroit's history. But hey,
it is "Government Motors" efficiently wasting taxpayers wealth and grand
kids debt.

leaf dosnt outsell volt check figures again
pirus plugin does not outsell volt check figures again
prius plugin cost 39K+ and only gets 15mi on a charge
China dosnt have a corrupt govt you better move then
Show me where the cost of the volt is paid for by taxpayers
the same rebates also apply to leaf volt and other manuf. also.
when you make up shit to prove a point it ends up being a pile of shit.
You should seek treatment before you harm yourself

[Ed Pawlowski]

Then, one allocates per-unit “fixed cost” (advertising,
general overhead, etc.) plus per-unit depreciation and amortization of
the initial investment, based on the TOTAL NUMBER TO BE PRODUCED OVER
THE LIFETIME of the product. If the margin, after all deductions, is
still positive, then we call it a “fully accounted profit,” and the car
is a winner.

What is that number? If you plan to sell 10 million of the product and
you do, the "fully accounted profit" is realistic. What happens when
reality strikes and you sell only 1,000 of them? Seems to me then you
have a "full accounted loss". Nice accounting procedure though; keeps
the investors baffled for a while.

Are these numbers real?
http://www.csmonitor.com/Business/In-Gear/2012/0911/Chevy-Volt-GM-s-green-guzzling-green-car
But overall, Chevy is still a long way from meeting its projected
45,000 target for this year, with year-to-date figures around the
13,500 mark.

And, says Reuters, GM could be losing as much as $49,000 on every Volt
it makes.

Based on the above, about 20,000 may be sold this year. Target is
45,000. Let's use 5 years lifetime. At current rates, that is
100,000 sales against 225,000 projected. That more than doubles the
amortized cost of tooling, engineering, etc.

I have no idea if the $49k is right or wrong, but they certainly are
not meeting projections and I doubt they are meeting financial
expectations. Yes, the electric car may be the future and this may be
a good first step, but lets cut the BS and get GM to use real numbers
for the stockholders.

Would I invest my money into the Volt? Hell no. Not unless I was
willing to invest now for earning a decade or so from now. We'll see.

[g***@gmail.com]

Post by Tom

Then, one allocates per-unit “fixed cost” (advertising,
general overhead, etc.) plus per-unit depreciation and amortization of

the initial investment, based on the TOTAL NUMBER TO BE PRODUCED OVER

THE LIFETIME of the product. If the margin, after all deductions, is
still positive, then we call it a “fully accounted profit,” and the car
is a winner.

What is that number? If you plan to sell 10 million of the product and
you do, the "fully accounted profit" is realistic. What happens when
reality strikes and you sell only 1,000 of them? Seems to me then you
have a "full accounted loss". Nice accounting procedure though; keeps
the investors baffled for a while.

A pluginhydrid like the Volt may be interesting but it is too expensive.

The costs gm uses to motivate the price are not real.

The fabricate what ever they like to put on it.

They have over inflated costs on everything and they will die again.

[Canuck57]

Post by g***@gmail.com

Post by Tom

Post by Tom
Then, one allocates per-unit “fixed cost” (advertising,
general overhead, etc.) plus per-unit depreciation and amortization of

the initial investment, based on the TOTAL NUMBER TO BE PRODUCED OVER

Post by Tom
THE LIFETIME of the product. If the margin, after all deductions, is
still positive, then we call it a “fully accounted profit,” and the car
is a winner.

What is that number? If you plan to sell 10 million of the product and
you do, the "fully accounted profit" is realistic. What happens when
reality strikes and you sell only 1,000 of them? Seems to me then you
have a "full accounted loss". Nice accounting procedure though; keeps
the investors baffled for a while.

A pluginhydrid like the Volt may be interesting but it is too expensive.
The costs gm uses to motivate the price are not real.
The fabricate what ever they like to put on it.
They have over inflated costs on everything and they will die again.

Correct. THe archilles heel of Government Motors mentality is economics,
the same economics that bankrupted them in the first place. While
liberal-money for nothing idiots run the show, it is no surprize the
Volt is a loser.

I did a TCO of a Volt versus a F150 V8 with all the options, A/C and
heat that works, tow hitch and all. Fuel, insurance, battery lifetime,
engine maintenance, oil changes, electricity, all accounted for.

It came down to this, no mater how you drive, be it 100,000 miles per
year or as a local grocery run at 5000 miles per year, F150 is much more
economical in every way imaginable, and a much more comfortable vehicle
to drive in cold or in hot weather.

People who buy Volts are stupid, with more money than brains. Only
reason to buy one is delusional ego, to say you own one. But it is
assured to cost you much more. A BMW is a much better deal too.