How GM's Loss on the Chevy Volt Translates to Your Gain

Electric cars have gotten a lot of attention in the past few years as a literal driving force behind clearing air pollution and decreasing our carbon footprint. GM unveiled its concept for its electric car, the Volt, in 2007 and expected a large consumer-base to follow. Fast-forward five years and General Motors is reportedly losing up to $50,000 per vehicle on each Chevy Volt sold.

For the American consumer, this may turn out to be the customer's gain. The Volt may be particularly lucrative for citizens who can receive federal tax credit as well as possible state incentives for purchasing a hybrid vehicle, according to the U.S. Department of Energy. GM is also gearing up to sell Volts as quickly as possible, offering motorists more options with the high-tech, green vehicle.

Lucrative Lease Deals

In an attempt to speed Volts off the sales floor, Forbes reports some lease deals on the auto have dipped as low as $159 per month. Not bad for a nearly $40,000 vehicle. Even without a profitable lease deal, the starting price of the Volt remains lower than other hybrids, including the Telsa Model S sports sedan, which starts at $57,000, according to TheCarConnection.com.

Prices for the Volt vary based on your specific choices. You can contact your local dealers to check out the options you want and how much they cost. No matter what you end up paying as the consumer, it's not nearly the cost GM is forking over to build it.

Sales Slouch

The bottom line on the Volt is it has not met GM's sales expectations. While the corporation hoped to sell 60,000 Volts per year by the time 2012 rolled around, it’s year-to-date sales through August racks in at 21,500 units. While short of the estimated 40,000 GM should have sold to meet the annual benchmark of 60,000, it’s at least more than half of the estimate.

The Hype

Even if sales are pretty dismal, the punch-in-the-gut reaction is not coming from the low number of units sold. The astonished reaction is coming from the high estimated money value on the loss on each vehicle, which Forbes puts at $50,000 per unit. The five-figure loss-per-vehicle initially reported by Reuters came about from analysts who looked at the investment GM made in the Volt as well as the cost of materials. That made the manufacturing cost of each Chevy Volt somewhere around $80,000.

What the analysts may have overlooked or underestimated was the production cost over the lifetime of the production. Manufacturers can pull the plug on the Volt-- in this case literally-- at any given time. Other electric cars have experienced similar growing pains, with Forbes noting the Prius was in production for years before it actually started making money for Toyota.

The Bottom Line

What should matter more than the Volt's performance on the sales floor is its performance on the road. TheCarConnection says it remains one of the most affordable hybrids with notable mileage on both and electric side of the coin. It can travel 25 to 40 miles on electricity alone, compared to other hybrids who putter out after 6 to 15 miles. Paired with an estimated 37 mpg, the Volt is a gem on the road. The problem for GM is actually getting the car out on the road and into the garage of the American driver.

SOURCE

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