GM prepared to take loss on Volt

[OKIsItJustMe]

http://www.detnews.com/apps/pbcs.dll/article?AID=2008803200347

Thursday, March 20, 2008

GM prepared to take loss on Volt

Carmaker to stick with plug-in through initial sales; admits mistake in early hybrid strategy.

David Shepardson and Eric Morath / The Detroit News

NEW YORK -- General Motors Corp. could some day sell more than 500,000 Chevrolet Volts annually worldwide, but the company is preparing to lose money "for years" on the range-extended electric vehicle, Vice Chairman Bob Lutz said Wednesday.

While speaking to a group of Volt fanatics at the New York International Auto Show, Lutz said it was a mistake that GM didn't beat Toyota Motor Corp. to market with hybrid vehicles even though the Detroit automaker had electric vehicle technology dating back to the 1960s.

He said GM won't make that error again, even if it means losing money on initial Volt sales.

"We won't make a dime on this car for years, and the board is OK with that," he said. GM was hesitant to go to market with hybrids a decade ago because he said the automaker was likely to lose $250 million a year selling such vehicles.

...

http://blog.wired.com/cars/2008/03/gm-well-lose-ou.html

GM: We'll Lose Our Shirts on the Volt, But That's OK

By Chuck Squatriglia March 20, 2008 | 1:55:59 PM

The Chevrolet Volt might just prove to be the game-changing car its supporters say it is, but General Motors expects to lose money on the car "for years," said Vice Chairman Bob Lutz.

Maximum Bob's frank admission isn't terribly surprising given the resources GM is pouring into the Volt and the expense of the technology behind the range-extended EV, but you've got to admire his honesty.

"We won't make a dime on this car for years, and the board is OK with that," he told a group of Volt enthusiasts at the New York International Auto Show, according to the http://www.detnews.com/apps/pbcs.dll/article?AID=2008803200347">Detroit News.

As for the car itself, Lutz says it's still on pace for a late 2010 launch. Battery testing is going well, he said during a meeting with reporters, and the competition to supply the batteries is "a horse race" that will run "a little longer."

...

http://www.gm-volt.com/2008/03/20/lutz-945-confident-chevy-volt-in-production-by-november-2010/

Lutz: 94.5% Confident Chevy Volt in Production by November 2010

Soon after the Volt concept was first announced in January 2007 GM vice chairman Bob Lutz told the world he was 90% confident it would be built by 2010. This has become my favorite question to ask him each time I get the chance because it is a good gauge of the programs development and momentum.

Having the spectacularly cool opportunity to share the stage with him at Volt Nation, and getting to be the last one to ask a question, guess what I asked?

This time he upped it to 94.5%. He also said there is a zero percent of it never getting built. Vehicle line executive Frank Weber chimed in the background “100%”, for his confidence level.

You will soon be able to see all of this, including the Q and A and other interviews beginning tonight on video. Our videographer’s having some “technical difficulties” but assures me progress is being made.

http://money.cnn.com/news/newsfeeds/articles/apwire/104108df336a6867abc138c3e5744aab.htm

Exec: Volt Battery Deal a "Horse Race"

GM's Lutz: Competition for Volt Battery Contract a "Horse Race"

March 18, 2008: 03:20 PM EST

NEW YORK (Associated Press) - The competition to become the battery supplier for the Chevrolet Volt is a "horse race," and plans are on schedule for a late 2010 launch of the vehicle, a top General Motors Corp. executive said Tuesday.

Vice Chairman Bob Lutz, who is overseeing the development of the extended-range plug-in electric vehicle, said the automaker had hoped to name a battery supplier in April. There are two competing developers.

But GM wants to "run the two in parallel for a while longer" as it continues to test the battery packs under a variety of conditions.

"It's a horse race," Lutz said in an interview with Washington-based reporters. He said both suppliers "have extreme strengths and some weaknesses, but the balance of strengths and weaknesses are different between the two potential suppliers."

...

[wtmusic]

1. Only GM could lose money on a car that doesn't exist

:rofl:

[oldhippie]

6. Really?

Well, figuring they've sunk millions into R&D and production planning for the car, and they don't have the revenue from a single sale yet, I figure they're losing lot's of money on a car that doesn't exist yet.

Could you explain how you would make money on a car that didn't exist yet if you were a hotshot auto executive?

Just askin'.

[OKIsItJustMe]

11. Making money on something that doesn't exist is easy

It's called fraud. ;-)

[DemocratInSoCal]

2. Just As Long As Mr. PUTZ Doesn't Have To Decrease His Bonus

He won't make that error again.

But PLEASE don't punish him, just because the company is going down the tubes.

He's doing such a fine, fine job as Vice Chairman, he deserves every penny of his bonus.

[whistle]

3. Where does a dead fish rot first? In the head of course and that has been the U.S. auto makers

...systemic problem for decades, top executive management has been brain dead going back to at least the 1970s.

[gateley]

4. Why is there an assumption it would lose money?

I'd JUMP at the chance to buy an EV. I've been eagerly awaiting the arrival of the Tesla Roadster. And a lotto win.

[OKIsItJustMe]

5. Those batteries will not be cheap

http://blog.wired.com/cars/2008/03/gm-well-lose-ou.html

...

Johan Willems, global director of communications for GM, told us he couldn't confirm the Detroit News story but said "it is absolutely normal" to "not prioritize making money for some time" when adopting new technology.

"We need to get people rallying behind new technology and the Volt will not be an exception to that rule," he said. "In general, it takes a couple of generations of learning before a certain volume can be reached and that with volume the making money question is solved."

...

Consider that the suggested retail price for a Volt is about the same as what Zap will charge you to upgrade a Prius to a 30 mile EV range. (You supply the Prius, oh... and sorry about your warranty...)
http://www.greencarcongress.com/2008/03/zap-begins-sell.html


So, buying a Volt (in comparison, it seems) will be like buying the battery pack and getting the rest of the car thrown in for free.

[gateley]

7. I know that Biden proposed

(and I don't recall if he got it passed) funding research into lithium ion batteries. I guess I'm hopeful that if there's money behind the research, the technology will improve and the cost will come down.

At this point, it's just a wish for me -- like winning the lotto. :7

[OKIsItJustMe]

10. Sure!

And, GM selling cars that use lithium ion batteries will mean there will be lots of money going to the companies that make them (which presumably will partly be spent on R&D, which will bring the cost down.)

That's why GM assumes that (eventually) they'll make money on the Volt, even though (initially) they'll lose money on it. Toyota used the same logic on the Prius. Initially, they lost money on every one they sold.

[wtmusic]

19. Yep right now they're far too expensive and dangerous

to be used in a cellphone. Or a laptop. Or power tools. Or...

[OKIsItJustMe]

28. There may be something to what you say...

http://www.consumeraffairs.com/news04/2005/cpsc_cell_batteries.html

Feds Warn of Cell Phone Battery Hazards

May 13, 2005
You may not think of cell phones as dangerous but as their use rises, so does the risk of fires and other unexpected mishaps. There've been scattered reports of cell phones exploding and catching fire and even of cell phones emitting sparks that ignite gasoline fires. In response, the industry and the Consumer Product Safety Commission (CPSC) have issued some safety tips.

...

http://www.cpsc.gov/cpscpub/prerel/prhtml07/07011.html

NEWS from CPSC
U.S. Consumer Product Safety Commission

Office of Information and Public Affairs Washington, DC 20207
FOR IMMEDIATE RELEASE
October 23, 2006
Release #07-011 Firm's Recall Hotline: See Options Below
CPSC Recall Hotline: [phone]
CPSC Media Contacts: Julie Vallese or Scott Wolfson, [phone] or [phone]
Sony Media Contact: Rick Clancy, [phone]

Sony Recalls Notebook Computer Batteries Due to Previous Fires

The following product safety recall was voluntarily conducted by the firm in cooperation with the CPSC. Consumers should stop using the product immediately unless otherwise instructed.

...

[wtmusic]

32. Now you're being silly.

GM's going to pull you off the web if you're not careful.

[DCKit]

25. I did the math awhile ago and a car that large...

would require at least $30K worth of Li-ion batteries (at current prices) to attain status as a commuter car. However, Li-ion production is ramping up and several producers are making deals with various EV companies in order to further develop the market.

While I agree with "the head rots...", any news on this front is good news. Even if it does come from the guys that murdered the electric car.

[msongs]

8. gm HAD an electric car that could have cornered the market by now & they killed it nt

[OKIsItJustMe]

9. Yes, yes, yes... Who Killed the Electric Car?

A simple question:
If GM made such a boneheaded move, why is it that no other major car company (domestic or foreign) has taken advantage of the opportunity to market an EV?


http://blogs.edmunds.com/karl/239

[wtmusic]

13. Because they're being paid off by oil companies, a la National City Lines

Way too much money at stake.

[OKIsItJustMe]

14. Amazing!

Every car company in the world was paid off!

Okay, so now why are EV's in development by so many companies? Have the oil companies run out of money?

[wtmusic]

18. EVs are in development by a handful of small companies

which don't pose a threat.

Your company's annual profit 2007: $4B (you once referred to GM as "we", but don't worry...your secret's safe with me).

Exxon Mobil annual profit 2007: $40B (note the zero).

See the threat posed to big oil by EVs and why a billion or two spread among the majors keeps everyone happy? Not to mention the threat to their own parts/service, on which they are depending more than ever.

I know you're smart enough to see the incentive here, I just know it. :-)

[OKIsItJustMe]

20. "Small companies" like Subaru, Mitsubishi and Nissan you mean?

http://www.evworld.com/news.cfm?newsid=17805
http://www.evworld.com/news.cfm?newsid=17808
http://www.evworld.com/news.cfm?newsid=17799

Don't get me wrong. I've never been a fan of GM. However, I'd kind of like to support American workers, and the Volt looks to be the best option I have.


I know you love Chris Paine. Have you read anything about what he has to say about GM's current efforts?
http://www.time.com/time/specials/2007/article/0,28804,1669723_1669725_1670578,00.html

...

No one would mistake Chris Paine for a General Motors shill. In his 2006 documentary Who Killed the Electric Car?, the filmmaker laid out a damning case against GM for unplugging the EV1, the electric vehicle it manufactured in the 1990s and then discontinued in 2003, preferring instead to produce high-margin but gas-guzzling trucks and SUVs. "They were a technological leader, and they fumbled that leadership away," Paine says. Ask him about the U.S. carmaker now, though, and Paine sounds almost admiring. "Their new hybrids are making a difference, and their plug-in technology is a real advance," he says. "GM is making some really good moves now."

...

[wtmusic]

23. I still don't think you read your own links

"Subaru of America, Inc. will begin evaluating its R1e electric vehicle (EV) in the United States this summer in conjunction with the New York Power Authority (NYPA)." Begin evaluating? I'm so excited I could just...just...z-z-z-z

"It also serves as a preview of Nissan’s future small car strategy for the North American market, which includes plans to sell a redesigned gasoline-powered, next-generation Cube at Nissan dealers in the United States and Canada beginning in 2009."

"The four-door iMiEV can run for 80 miles on a full charge. Mitsubishi plans to begin selling the car in Japan to fleet customers in mid-2009 and to the general public in 2010." IN JAPAN. Then from the NYT link: "Aikawa said Mitsubishi will consider bringing the car to the U.S. or Europe after 2010 if there is enough demand for a small electric car."

I don't need to remind you that GM had an electric car that ran 175 miles on a full charge nearly 8 years ago, and that as an avid follower of the EV movement for twenty something years I've seen these "EVs are three years away" ads for just as long. And yes, I'm a big fan of Chris Paine and I disagree with him here--GM hasn't been a technological leader for 50 years, at least in terms of what they offer for sale. They've been dragged kicking and screaming to the EV table and if that generates a true, workable EV I will be pleasantly and miraculously surprised, but I have no such expectations -- and no doubt whatsoever that the oil industry is "subsidizing" their lack of interest.

[OKIsItJustMe]

27. I'm sorry, but the EV1 was not economicially viable.

At the time, EV's were not economically viable for other companies either. That's why Toyota introduced a Prius, rather than the EV they had tested in California.

At its introduction, the Prius (far from a true/pure EV) was barely economically viable.

At this point (with increasing gas prices and improving battery technology) EV's are becoming economically viable. That's why GM (and other companies) are now actively pursuing EV's.

[wtmusic]

31. Don't apologize. Learn.

http://ev1.org/

[tinrobot]

12. Don't forget, they lost money on the EV1 as well...

Seems like a trend.

[Javaman]

22. That's because they leased it and didn't sell it. nt

[tinrobot]

24. Each car cost GM approx $80K

In order to make a profit, that means a retail price of over $100K. I'm not sure if that many people would have purchased it at that price. The technology was ahead of it's time and expensive. GM was bound to take a loss for the first few years. Sadly, GM couldn't see the vehicle far enough into the future to amortize those costs.

[wtmusic]

26. Bingo

No one disputes the car would be a loser for a few years. They were handmade at the rate of 5/day. But there is nothing inherently expensive in the "ingredients" of the car -- few moving parts -- and economies of scale would have cut that price into fourths, assuming GM wouldn't try to tack losses from their parts division onto the profit margin.

Would you pay $24-30K for a car that never needed tuneups, mufflers, filters, oil, was clean as a whistle, and you could drive for pennies on the dollar?

[OKIsItJustMe]

29. Can you sell me one? GM couldn't at that time and cannot today.

In a few more years, perhaps. (Along with the other companies that are working on EV's.)

[wtmusic]

30. There was always a waiting list for the 465 1999 EV1 Electric cars

even though they were only leased and cost $500 per month plus 50 cents per mile. Most on the list did not have a chance to get a car. NO other model was confiscated and destroyed like this, even alleged mistakes like the Corvair and Edsel, which are still on the road and still have car clubs and fans.

You continue to parrot the GM company line despite overwhelming evidence to the contrary. Do you think global warming is a "crock of shit" too?

[OKIsItJustMe]

33. No, I'm quite concerned about global warming

On the other hand, I think far too much effort is wasted on fighting ghosts.

I don't believe the Bush administration faked the events of 9/11 (although I do believe they dropped the ball, and subsequently took advantage of the events of that day.)

By the same token, I don't believe in a vast conspiracy between auto manufactures and oil companies to deprive us of electric vehicles. It's all a simple matter of economics, and (in some cases) some stupid business decisions.

I don't care all that much for GM, but, "don't attribute to malice, that which is adequately explained by stupidity."

[lectrobyte]

15. I'd love to see a plug-in hybrid from anybody, but GM's move towards a

series hybrid instead of parallel hybrid design just seems like something that was doomed to fail.

[OKIsItJustMe]

21. No, series (IMHO) is much better than parallel

And I'm not alone in that opinion:
http://www.greencarcongress.com/2008/03/calcars-weighs.html
http://www.evworld.com/article.cfm?storyid=1206

[gravity]

16. This should be expected

I bet Toyota lost money the first few years with the Prius, but they made it up from later sells. Toyota made the name Prius synonymous with hybrid which helps them win over hybrid sales today which are now profitable.

Another major thing is that the Prius helped Toyota sell other cars. Even if people didn't want to buy a Prius, they bought a Toyota because of the image of being a green company and its cars being known for fuel efficiency.

GM is hoping for the same sort of success with the volt. Even if the car isn't profitable, it will make more GM much more profits by selling more cars while establishing them the leader of plug in hybrids.

[TreasonousBastard]

17. Looks like GM's betting heavily on...

this technology as the bridge to whatever's next. Toyota may still be losing money on each Prius sold, but it's got great PR and brazillion patents to show for it. If they can get the batteries, the Volt will have waiting lists at the dealers. (And the usual dealer markups for popular cars.)

The Volt does make a lot of sense, and backyard inventors have been successfully fooling around with this idea for a long time-- biggest problem with a real car company is how to make hundreds of thousands of them that will pass all regulatory hurdles and actually work in the real world with real customers. Tain't easy, from what I've heard.

FWIW, I like a lot of what I see GM doing. The latest hybrid drive is great for people who actually need trucks-- a 25% mileage gain on a Tahoe or Silverado saves more gas overall than typical gains on smaller cars, and you can still haul your horse trailer. BTW, the new Malibu (aka Saturn Aura and Pontic G6) was named Car of the Year by a bunch of auto writers at the NY Auto show.

Can't please the "GM SUCKS" crowd around here, but I see it arising from the ashes and preparing to kick ass.

(The first of the new 'Vettes was auctioned off for over a million bucks but #2 and on will only cost a piddling $110,000)