GM looking for Volt tax break to bring cost below $40k
GM is working hard to produce a game-changing electric vehicle for the masses, but the General's precarious cash flow situation, coupled with the high cost of development, is conspiring to the push Volt's retail price to around $40K at launch. In an effort to mitigate this particular issue, GM is lobbying Congress to bring tax breaks to Volt buyers, and company insiders say the breaks could be on the order of $7,000 per vehicle. GM is also working to insert the words "extended-range electric vehicles" in any legislation, to make sure any other vehicle with the Volt's capabilities can reap the same benefits.
Insiders at the General told Automotive News that the Volt program is still on pace for November 2010 production, and that company engineers are gaining confidence in the car's lithium-ion technology every day. If GM can follow through with its lofty technology promises (while getting Uncle Sam to pony up some pretty hefty tax incentives), the Volt should be the hit Bob Lutz dreams about at night.
[Source: Automotove News (subs req'd)]
Reader Comments (Page 1 of 4)
criticalninja 2:40PM (5/26/2008)
The biggest problem with this car is this: those who are most likely going to need it will be the same people most unlikely to afford one. I know I can't afford a $40K new car right now, even if I were to get a huge tax break at the end of the year...it was pushing it to be able to afford a $31K car.
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Daniel 5:50PM (5/26/2008)
At $40 k they better call it a "Cadillac Volt" not a Chevy.
PJ 8:14PM (5/26/2008)
Even at $40K, I think this car will be within the reach of the generally well-off early adopters who buy alt-fuel vehicles. IIRC, Prius buyers have an average income around the $100K mark. They're not cross-shopping with Corollas. They're certainly not buying them to pinch pennies, as media blowhards have long misunderstood.
The challenge for Chevy won't be convincing those early adopters to stretch for the MSRP; it'll be convincing them that the Volt is twice as eco-friendly, twice as technologically novel, and twice as socially redeeming as the second-gen Prius, and thus "worth" spending nearly twice as much cash on.
Considering the Prius' current brand equity, and what a liveable, well-conceived *car* it is beyond the hybrid tech, that's gonig to be quite a task.
Disgruntled Goat 1:07PM (5/27/2008)
If GM prices this at $40k then the Volt is already done. Outside of a marketing stunt it's game over. By the time you can actually buy one, which will be sometime in mid to late 2011, there will be a lot more competition from Honda and Toyota (among others) and I promise you those won't cost $40k.
And for the record, I know lots of people who make over $100k per year, would never spend $40k on a car, and cross-shop the Corolla because they want to be smart with their money. A $25k Prius? No problem. A $40 Volt? Man, if you're going to throw away that kind of cash on a car you're in pretty serious competition. Most people paying that much for a car are stretching to impress and when it comes down to telling your cube buddies that you're rolling in a BMW versus a Chevy Volt the BMW is going to win every time.
compy386 2:41PM (5/26/2008)
Explain to me why my tax dollars should subsidize things thing?
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Monkey 3:04PM (5/26/2008)
@compy386
Your tax dollars are already going to prop up huge oil companies and the Middle Eastern dictators that sell that oil. Would we be in the Middle East at all if we didn't need their oil? At least *these* tax dollars might allow us to reduce or eliminate the oil we buy from said dictators.
Dan 3:14PM (5/26/2008)
Exxon Mobile alone paid over 80 billion dollars in federal taxes in the past three years. That's a 41% marginal rate.
And that 80 billion dollars was before a single cent of that profit was paid out whereupon it's personal income and recipients are taxed again.
If that's a subsidy, they can keep it.
compy386 3:39PM (5/26/2008)
I love it when people with no economics education talk about economics. I doubt the big oil companies get that much in the way of subsidies but if they did the end money would go to the consumer. Demand for oil is inelastic. Therefore a tax or subsidy on oil is paid by or goes to the consumer.
I work for the auto companies so I could care less whether or not they get subsidized. Ultimately though I want what's best for America and it's not subsidizing low volume cars. And if this is a high volume car, then we'll be paying billions to subsidize auto companies...
tankd0g 3:43PM (5/26/2008)
Because two wrongs make a right.
nataku83 3:52PM (5/26/2008)
For more information on subsidies, please see:
http://www.eia.doe.gov/oiaf/servicerpt/subsidy2/pdf/execsum.pdf
As you can see, we do subsidize petroleum companies, just not as much as renewable resource development.
why not the LS2LS7? 4:07PM (5/26/2008)
http://finance.yahoo.com/q/is?s=XOM&annual
By my count there, Exxon-Mobil made $493,758,000,000 gross profit over 3 years and paid $81,068,000,000 in taxes for a marginal tax rate of 16.4%.
Additionally, we do subsidize the oil companies, with direct subsides for oil exploration. Why we need to pay them to get oil from the ground at $100/barrel, I have no idea.
Dan 4:58PM (5/26/2008)
Sure, if you ignore operating expenses. As long as we're cherry picking numbers maybe I can ignore my mortgage and quit my job too.
Yes business lobbies buy preferential treatment. Yes the Texas Energy Center is disgusting.
But an entity paying close to 30 billion dollars a year in taxes with one hand and getting back 300 million in direct subsidies with the other isn't costing me the taxpayer a penny.
why not the LS2LS7? 6:06PM (5/26/2008)
Dan:
You're slipping.
First you say they get no subsidies. Now you say it's "only $300M".
This says that direct subsidies (not counting defense or petroleum reserve), it was about $2B in 1995 (Tax Breaks for Domestic Oil Exploration and Production & Support for Oil-related Exports and Foreign Production). Perhaps it's a bit lower now, but I kind of doubt it.
http://archive.greenpeace.org/climate/oil/fdsub.html
As to why I calculated the taxes the way I did, I did it because I was comparing to the taxes I pay. I pay taxes on my income (not even gross profit!).
The oil companies make a LOT of profit on a commodity. Do you think growers of wheat make the same percentage of profit that oil companies do?
Brent 10:44AM (5/27/2008)
There is no reason why the government should subsidize any vehicle. If they can't sell it for a profit they desire, don't make it!
Detfan 2:41PM (5/26/2008)
GM's CEO recently stated that the Volt would cost $30,000, so this article has some explaining to do. Tax breaks would be great, but who in GM is saying $40,000 when the CEO says $30,000? hmmmmm.
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SkiD666 7:55PM (5/26/2008)
At one point the COST of the Volt was estimated at $47,000. I assume $47,000 - $7,000 = $40,000.
The PRICE of the Volt is supposed to be around $30,000 (I assume $37,000 - $7000)
Gardiner Westbound 2:45PM (5/26/2008)
GM's greatest achievement may be getting taxpayers to subsidize its product.
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Samurai Jack 2:47PM (5/26/2008)
No, no, no. If GM can't make this car affordable without tax concessions then the technology is not ready for mass consumption. While the government might be inclined to support new fuel saving and environmental technologies this amounts to a huge tax break for those wealthy enough to afford the Volt. This sort of monkeying with the tax code (not just for this purpose but seemingly for everything) is the worst type of hidden pandering and subsidy there is. Either sell the car on its own merits at the price it costs to build it or don't sell it at all.
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PosessionX 3:11PM (5/26/2008)
The only way to make new technology more affordable is to start at a high price. Over time, as more cars sell, mass production will increase, which will result in the price of the car to decrease. This scenario can be applied to the introduction of plasma and LCD TV's. At first the TV prices were ridiculous but as more and more people bought them, the price reduced so that the average consumer could afford them. As a result, the only way for an electric vehicle to become affordable for everyone is to introduce the vehicle at the cheapest price possible. This is what GM is trying to do by asking for help from the government due to their current financial situation. If the general population thinks that the tax break on the car is unfair, then how is our society supposed to change their mindsets to become more environmentally conscious and less dependent on oil?
MoonRover 3:25PM (5/26/2008)
Oh shut up already, the japanese government has been subsidizing their automobile industries development for decades, it's about time the American manufacturers got a break. The Government should have pumped some of the billions they have spent on this useless war into hard hit American industries, it is shameful how this goverment has treated is own. I say give them $10,000.