Reuters Gets It Wrong About The Volt
by Tom Gorham
Internet Sales & Marketing Manager
9/11/2012
According to General Motors, Reuters got the math all wrong when they wrote the article, “Insight: GM’s Volt: The ugly math of low sales, high costs“, September 10, 2012.
Chevrolet Volt
In the article, Reuters speculated that GM is losing $49,000 for every Volt it builds. GM’s basic problem is that “the Volt is over-engineered and over-priced,” said Dennis Virag, president of the Michigan-based Automotive Consulting Group.
However GM responded in Dealer News that, “Reuter’s estimate of the current loss per unit for each Volt sold is grossly wrong, in part because the reporters allocated product development costs across the number of Volts sold instead of allocating across the lifetime volume of the program, which is how business operates. The Reuters’ numbers become more wrong with each Volt sold.”
“In addition, GM states that, “our core research into battery cells, battery packs, controls, electric motors, regenerative braking and other technologies has applications across multiple current and future products, which will help spread costs over a much higher volume, thereby reducing manufacturing and purchasing costs. This will eventually lead to profitability for the Volt and future electrified vehicles.”
In fact, Volt sales have far outstripped sales of alternative electric and hybrid vehicles from Nissan, Honda and Mitsubishi. Sales of the Volt are at 21,500, (13,500 year-to-date) while it’s main competitors Nissan Leaf has sold just 4,228 vehicles, Honda Insight just 4,801, and the Mitsubishi i trailing with a mere 403 sold vehicles.
GM’s investment in electric technology and the Volt has been massive and some consider it a risky investment. However that same risky strategy drove drove Toyota to invest heavily ($10 billion) in the Prius hybrid technology. And GM’s investment in the Volt is a fraction of $5 billion Nissan is spending on it’s technology for the electric Leaf.
GM is at the forefront of the electrification of the automobile and believes it’s investment in technology and the Volt will be a payoff for it’s customers, meet future regulatory requirements, and add to the bottom line.
When American companies and manufacturers invest heavily in long-term technological solutions, it’s side-affect is advancing the American lead in science and technology. That’s a good thing. Go for it GM and godspeed!
Read the Reuters article: http://www.reuters.com/article/2012/09/10/us-generalmotors-autos-volt-idUSBRE88904J20120910
Read the General Motors response: http://dealer-communications.com/news/gm-response-to-reuters-story-on-chevrolet-volt-development-costs/?utm_source=iContact&utm_medium=email&utm_campaign=Dealer%20magazine%20News%20Weekly%20ENL&utm_content=
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