REPORT: How the Chevy Volt got its $40,000 price tag, and what GM's going to do about it
2011 Chevrolet Volt - Click above for high-res image gallery
It's sort of common wisdom that when the first Chevrolet Volt models become available in General Motors showrooms (or on eBay) in late 2010, they'll be priced at around $40,000. GM hasn't made any official statement declaring this specific price – and for a while there was speculation on which way the ticker would go; would it be $30,000? $35,000? – but for now, $43,000 is the expected average transaction price, and GM will lose money on each Volt at that rate, according to a new story in AdAge.
This is much higher than Bob Lutz's original, off-hand estimate of somewhere in the high $20,000s. How GM went from that very attractive price point to the new $40k number proves that, when it comes to introducing a lot of new technology at once, the road isn't always smooth. Lutz told AdAge that GM engineers are "beavering away" to find ways of cutting costs of the Volt as quickly as possible after launch. Considering the surprising rate at which costs and projected costs escalated during the course of the Volt project – when engineers discovered, for example, that some parts from other GM compact cars wouldn't be able to be used in the Volt – it's got to be a big relief for Lutz and others at GM to see that the path to cost reduction is exactly where numbers climbed up over the past two years. The battery and new technology offer "GM an opportunity to bring the cost down much faster than for a conventional car," AdAge writes. With the electric vehicle market growing, larger suppliers are beginning to get EV-specific parts ready, which will help bring costs down, perhaps to the $30,000 range. The changes might not be ready for Job 1, but who can say no to a cheaper Volt?
[Source: AdAge]
Reader Comments (Page 1 of 2)
Tim 11:15AM (8/03/2009)
GM does NOT have to make money on the Volt (or at all).
As long as GM is considered "too big to fail" it will remain a Progressive "works program" for the UAW, the progressives will continue to redistribute taxpayer money (debt) to them.
Consider Big Auto and Big Banking the new Amtrack.
Now, let's talk about socialized medicine, comrades...
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rtshinn 11:49AM (8/03/2009)
Viewing the world through a HEPA filter?
wincros 11:58AM (8/03/2009)
Ah, bloviation from the lunatic fringe that created our economic mess. These people are pro-communist China, but concerned about socialized medicine. Anti-car bailout because it might help union workers, but no problem with bank/Wall Street bailouts. Will it be long before we here screeds against socialized schools, fire departments, armed forces and police departments?
Let us hope GM makes it and slows our slide to Third World economic status, not making anything and just exporting raw materials and agricultural products.
Tim 12:11PM (8/03/2009)
Wincros;
Why do you ASSume that I'm "pro-communist China", have "no problem with bank/Wall Street bailouts" or was in favor of the central planning (Community Reinvestment Act), artificially low interest rates from the Fed which was the catalyst for the wall street and Fanny-Freddy malfeasance (look it up) that created the bubble which burst?
The bubble (all bubbles) are caused by Fiat Money, the Fed’s and Congresses central planning.
I ASSume that you are in favor of Statist half-truths, free money, Crony Corporatism and redistributing FROM the productive to the NON-productive until ALL productivity ceases.
THAT worked so well for the Soviets, right? NO LEFT!
You are so ignorant of history that it would be funny if it weren't so sad...
(those who are ignorant of history are DOOMED to repeat it)
Geoff de Ruiter 3:17PM (8/03/2009)
@ Tim
Wow dude, take a chill pill, take a breath and stop seeing the world as all corrupt and the only way is the American way, i.e. capitalism. Way to be childish too. I feel you need to rethink you mindset about public health care. It works, and it's for the greater good of everyone, not just ones that can afford to pay. Did you not learn as a kid, be nice to others so they will be nice to you? Well the adult mentality is take care of others when in need so that they will take care of you in need. Take care.
nbarry 2:10PM (8/04/2009)
@ Geoff:
Seriously? Point to ONE example in the WORLD where socialized medicine works. You can't. People who live in countries with socialized medicine come to the USA to get health care if they can afford it. Most can't and as such, wait 6 months for an MRI, 12 months for cancer treatment, etc. Our system works for 85 percent of Americans. Why scrap a system with that kind of approval? Fix what's broken (the 15 percent), don't throw the baby out with the bathwater.
I agree that people should take care of others--through churches, communities, donations, etc. What I don't agree with is your government FORCING you to take care of others.
In 200 years we've become the richest, most powerful country in the world with the only system of health care that foreigners travel overseas to access.
World leaders in universal healthcare countries come HERE to take advantage of the most advanced, best medical care available. You know why? Because socialism is for the people, not the socialist.
Chris M 6:10PM (8/04/2009)
Tim, economic "bubbles" are not caused by "fiat money", they are caused by rampant speculation, that is, people buying a commodity because they expect the price to go up, which then causes more speculative buying which temporarily drives prices higher which triggers a mad scramble to get in on "the latest sure thing" - until the bubble pops, the prices start to fall, and all those speculators then try madly to unload their "investment", which triggers a complete price crash. It is basic economic psychology, and it works the same way irregardless of the "source" of the money. Speculative bubbles occur througout history, the most famous of which occured in the early 1600 in Holland, driving up the price of tulip bulbs to exhorbitant levels - and the Florin at that time was literally the "gold standard" in currency.
nbarry: Why have one example of successful socialized medicine, when there are hundreds? Every developed nation and most developing nations have some form of "government run" medical care - including the United States. Yes, the US has "socialized medicine", just not for everyone. It is only for the military and ex-military (Veterans Administration), Senior citizens (Medicare/Medicaid), and Politicians. A recent bill in Congress asked if those opponents of "socialized medicine" really meant it, by proposing to eliminate Medicare and all those other government run medical programs. Not one single "Conservative" dared to support such a move.
Consider this: if "socialized medicine" in other countries was really as bad as some right-wing pundits pretend, why isn't there any movement in other countries to privatize it? After all, most are democracies, with leaders elected by popular vote, and many have referendum voting as well. Perhaps, just like Medicaid in the US, it is just too popular and too beneficial to consider eliminating it.
tim 10:27AM (8/05/2009)
Now we know that Chris M is a socialist and has ZERO knowledge of simple economics.
Yes, the bubble was caused by greedy speculation, but that speculation was caused by cheap and easy fiat money and socialist central planning. Ah, the picture looks completely different when you step back from the mirror, right comrade Chris M?
By the way, Single payer kills MANY more through low quality rationed health care than it saves by helping the poor. We ALREADY help them with medicare & medicade and dozens of other programs designed to keep the poor on the public dole out.
dg 12:06PM (8/03/2009)
Perhaps I'm the dumbass here, but what the hell does this mean:
"to see that the path to cost reduction is exactly where numbers climbed up over the past two years."????
After reading it over like 4 or 5 times I'm getting that the price of batteries and "new technology" skyrocketed over the past 2 years, but in the next two years and beyond they're be reduced dramatically.
If that's what it means it could have been worded better, and how did prices on "new technology" and batteries jump up so much over 2 years? That doesn't seem right to me, but I don't claim to know everything so it's be nice to get that explained.
Thanks,
-Dumbass
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Sebastian 12:32PM (8/03/2009)
Sorry db. Yes, the intent was to say that designing and building all of this new technology was expensive, but now that a lot of the heavy lifting has been completed, future advances should bring these new technology costs down quicker than they could be reduced in conventional cars. Hope this makes sense now.
dg 1:02PM (8/03/2009)
Ahhh, makes total sense. Thanks. R&D... of course!
Matt 1:21PM (8/03/2009)
What about cars like the Prius? I don't really remember, but I didn't notice the R&D for hybrids being THAT much. Can't GM make some long term contracts that figure in the R&D over the life of the contract? Or, are they trying to recoup $$ from early adopters that are going to purchase the car at virtually any cost?
...it'd better have some swanky interior
dm00012 12:16AM (8/04/2009)
"to see that the path to cost reduction is exactly where numbers climbed up over the past two years."????
I think it means that "when engineers discovered, for example, that some parts from other GM compact cars wouldn't be able to be used in the Volt" That's where the prices climbed.
why not the LS2LS7? 12:27PM (8/03/2009)
Is this $40,000 before government rebate or after? $47,400 seems like a pretty high price to me to pay for this car. I know it costs a lot to bring a new technology to market, but most people aren't going to accept that as an excuse and will balk.
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Matt 1:15PM (8/03/2009)
Yeah, I'm hoping that $40k is before any rebates. Lets say I drive 100 miles every week day; that's roughly 2,200 miles a month. If gasoline is $3.00/gal, and I get 30 mpg with my current car, I'm saving $220 per month on gasoline. Assuming electricity is free (it's not, but for ease of calculation) and I get 0% financing for five years I'm saving about $13,200 over the life of the loan. That savings means this car has ~$10k savings built right in. If you have a $7,400 rebate (is that right? I thought it was $10k) to add to that savings you're down in the 20's and these are going to sell like hot cakes.
I wish I knew what kind of ER mileage this thing gets. If I had that and a cost per mile for electricity we could do some real figuring.
why not the LS2LS7? 1:24PM (8/03/2009)
The rebate is $7500. That would make it $39,900 after rebate, much like how the Tesla Model S is expected to be $57,400/$49,900 after rebate.
augustus 3:10PM (8/03/2009)
Matt the problem is that ER range is a function of how far you drive. Also the Volt isn't going to drive the first 40 miles on battery alone, probably just the first 10 or so before the extender kicks in. The Volt needs to burn gas because gasoline isn't stable over a period of many months.
The longer your commute the lower the gas mileage you will get. Personally I would appreciate GM giving us the mathematical function but I doubt that you will be able to get that from them. Also I am curious to know how the EPA will score the vehicle as getting a higher score helps Chevy on their fleet CAFE average (and that really is where the Volt makes a difference to Chevy- they can sell more profit making trucks and fewer CAFE mandated Aveos).
Alan 5:19PM (8/03/2009)
"the Volt isn't going to drive the first 40 miles on battery alone, probably just the first 10 or so before the extender kicks in"
I thought the whole point was if you commute less than 40 miles a day you *never* have to burn any gas. As for gas being unstable over a few months I've read quite a few conflicting opinions on that, but I think the general view seems to be that in a well sealed tank gas is stable over a long period of time.
Nixon 8:23PM (8/03/2009)
augustus said: "the problem is that ER range is a function of how far you drive. Also the Volt isn't going to drive the first 40 miles on battery alone, probably just the first 10 or so before the extender kicks in."
This is completely wrong. The all-electric range is 40 miles, not 10 miles. This is a function of the software controlling the amount of discharge of the battery. The battery will not be completely charged or discharged, so the range is a software limited function.
alexdonegan 3:21AM (8/04/2009)
The $40,000 price tag is BEFORE any rebates. So the price will be around $32,500