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According to a report, GM is losing a lot of money on t... According to a report, GM is losing a lot of money on the Volt (Credit: GM).
General Motors is losing as much $49,000 each time it sells a Chevrolet Volt extended range electric vehicle, according to analysis done by Reuters news service. The chief reason is the high start-up costs of the car and the so-far disappointing response from consumers.

The report comes after Chevy had a record month of sales for the innovative Volt, which travels up to 35 miles on a single electric charge before a gas-powered motor kicks in to power the car until the car can be recharged.

There is no question that General Motors has had difficulty selling the economic benefits of the Volt to the public. And the car has been a political punching bag for Republicans who are against the 2008-09 tax-payer financed rescue of GM, as well as tax credits to subsidize consumer purchase of alternate energy vehicles like the Volt.

GM in August ran an incentive program for Chevy dealers resulting in lease deals on the Volt of less than $200 per month with about $1,000 down. Dealers report they quickly flushed out their dealer inventory at that price. The prevailing lease deal now, though, has popped back up to $299 per month.

GM spent $1.2 billion to develop the Volt. The automaker sold 13,500 through August, putting it on a sales track that would be well below its stated goal of 40,000 Volts a year. GM also plans to roll out additional vehicles with the same technology, including a Cadillac. The key to making the investment break even for GM is to spread the costs of the technology inside the Volt over greater sales volume.

GM disputes Reuters' calculations about losses on the Volt. "Reuters' 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," said a GM spokesperson. "The Reuters' numbers become more wrong with each Volt sold," the spokesperson added. Though GM won't specify how much it loses on each Volt, it does not dispute that it is losing money on each one for now.

"It's true, we're not making money yet" on the Volt, said Doug Parks, GM's vice president of global product programs and the former Volt development chief, in an interview with Reuters. The car "eventually will make money. As the volume comes up and we get into the Gen 2 car, we're going to turn (the losses) around," Parks said.

What is the Volt exactly?

It is an extended-range electric vehicle. That means it is powered by a lithium-polymer battery. The car will go approximately 35 miles on a charge of the battery. After that, a gasoline motor kicks in to power the battery and propel the car until the battery can be recharged. There is no possibility of being stranded if the battery runs out of juice as long as their is gasoline in the car. And unlike some of the punky electric vehicles of the past, the Volt has exceptional acceleration and performance.

What's working against the success of the Volt?

-The car has a steep starting MSRP of $39,995, though that is before a $7,500 federal tax credit, and additional state tax credits such as one in Colorado worth up to $6,000.

-Consumers are wary of new technology. The Volt has attracted "early adopter" green car buyers. But any car that needs to be plugged in faces a steep learning curve with U.S. consumers.

-Chevy has spent millions of dollars to advertise the Volt, but it went more than a year of sending out pretty vague and muddled messages about how the car works, and what its benefits are. Lately, it has been advertising using real Volt Owners, which has been a clearer message. But it takes time for the clearer story to seep into the car buying public.

-The Volt has been politicized by Republicans. That has helped its awareness, but hurt the car's story.

-There has been almost a cottage industry of bashing the Chevy Volt and government investment in getting consumers to consider driving electric vehicles and extended range electric vehicles. It's a tough marketing hurdle to overcome.

Is there hope for the Volt's success?

-It's hard to say. AOL Autos has a very favorable view of the Volt. The technology in the car, and performance easily makes it a competitor to $30,000+ vehicles such as the Audi A4, Nissan Maxima and Lincoln MKZ.

-While the Obama White House recently finalized a fuel economy rule that will require all new cars sold by 2025 to achieve an average of 54.5 mpg (read here for details), we also believe that there needs to be an auto-industry and government partnership effort to promote and educate the public about electric and extended-range electric vehicles.

-As GM restyles the Volt and adds models and body-styles utilizing the plug-in technology to its other brands, and rivals like Ford and Toyota launch extended-range electric vehicles, familiarity and acceptance of these cars could take better hold with consumers.

Reuters contributing

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    • 1 Second Ago
      welcome butch
      • 2 Years Ago
      • 2 Years Ago
      I believe there are three major issues killing the sale of the Volt: 1) Starting at $40,000 people aren't willing to spend that amount to purchase a vehicle that will take SO long to recoup their investment via fuel savings. 2) GM should have held out on manufacturing this vehicle until the electric range it was above 35 miles(one way for many commuters to work). They either have to purchase a portable charger(which tacks even more onto the sell), or spend time at an available public charger(which aren't so readily available). A 50-70 mile range would probably sell more. 3) A recall on a new vehicle with new technology will definitely put the brakes(ba, dump, dum) on the purchase of a vehicle. That it was a serious, life threatening recall surely doesn't help. Don't think it's a major sale killer but the Volt isn't considered a good looking vehicle by many either. However, with the availability of so many new hybrids(sonata, camry, accord, optima) that look nice this will affect sales.
      welcome butch
      • 2 Years Ago
      • 2 Years Ago
      A few years ago I went to a jobs fair and turned away. They assessed me as being very indecisive. I consider my self knowledgeable, and thoughtful. I have supervised many personnel in my past, and evern oversaw a 286 million dollar budget. So I also assessed them, and my take was simple these people want a leader who will make a decision and support it until the company goes out of business. My point brings me to GM. These guys are going to make it work even when all the nembuers tells them otherwise, this is how you end up right back in Obama's Office asking for more of the people's money. Geez, it isn't working, kill it and start over. It doesn't mean you fire the execs who chose this path, it does mean you won't spend one more red cent on stuff that is not working. Bring back the Trans Am, and get rid of this Volt. or you make the Volt but do it in smaller numbers. What do people with some much education have to be smacked in the face with a dose of realism, look around you do you see Volts in huge numbers on the streets, or DO YOU SEE MUSCLE CARS and SUV...
      • 2 Years Ago
      • 2 Years Ago
      We got our Volt at the end of July and it is far and away the most amazing car we've ever owned....this against our older Mercedes and Volvos. The folks on the commercials aren't kidding. It was a month before we had to put gas in the car and when we did, it was half the cost of any other fill. Just got our first DWP bill since the purchase and the small increase is more than offset by the money we aren't spending on gasoline anymore. It's gorgous on the inside, the computer tech is reasonably easy to learn. After a couple of weeks of owning it I wished I could justify trading in my current Mercedes for one. I think the folks at GM have done a tremendous service to car owners. The sticker price is a bit of a shock, but when I factored in what I was already spending on gas and maintenance it made sense. I agree that when other models implement this technology and the public learns more about the advantages, sales will increase. As soon as I can get another vehicle like it, I will.
      • 2 Years Ago
      Only Government subsidies is saving the Volt. As taxpayers continue to fund GM, it still owes taxpayers 30 billion yet the Obama says GM is a great "success".
      Jeff Drummonds
      • 2 Years Ago
      Free market's have always been the best predictor of success in any venture, large or small. The very second the money or even the thought that the money from US Gvmt was to flow into GM to help them through this, conventional wisdom and American resolve slowly but surely retreated from the minds and hearts of those GM officials making decisions. It certainly appears that engineers and developers of the "Volt" were probably told many times through this project to "don't worry about that, just make the car". Only in subsidized environments does this happen. On the other hand, if GM was raising capital in 'free markets', before large investors or funds would consider making those investments, questions like "what's our competition in hybrid/electric market, mpg savings, retail price etc." would have all come up, and of course would have needed to be tackled (regardless of eminent lay offs or bankruptcy). Here is the ugly part! Private capital would demand productive results or pull out of the deal if it went bad, and losses would be netted out against other investments etc. Free markets only agenda is to earn profitable results by making high and low risk investments. Gvmt money on the other hand is "tainted, cancerous ingredient that rots the heart and soul of the fight inside the fighter". We all see the ugly side of this now very clearly. Is it a political deal? "bin laden dead and GM alive". "We saved the American auto business!" GM being alive IS good news, and bin laden dead IS good news. If GM survives in the future ON IT'S OWN, and I hope it does, it will be from other divisions of the company with innovative products and engineering that hopefully will not be infected by the 'bail out' infection. If GM does not make it, one has to wonder how long US Gvmt will "feed the agenda" with taxpayer money? In free markets, smart investors (and yes, sometimes greedy investors) make the decisions based on chance of financial returns/success. With US Gvmt, the decision to keep feeding GM (feed the beast) will be more about retaining votes? DYSFUNCTION-"impaired or abnormal functioning".
      • 2 Years Ago
      you know the volt is probable a fine car however i feel the price is a bit much. another case of your (gm) priceing fault was the ssr pick-up, what a beautiful truck, then gm got stupid and put hydralic fold down topon truck and priced it too high for the middle class buyers. the volt is another case. GM could bail themselves out by bringing back the SSR pick-up with out the stupit hydralic top and put the price where the middle class can buy one. lose the hyd top give the truck 4 wheel drive, now they have a vehicle that will sell.
      • 2 Years Ago
      And the donkey party says GM and the auto industry is saved!!!!!!!!!!!!!!!!!LLLOOOLLLL!!!
      Mike Fort
      • 2 Years Ago
      not going to get america going by taking the middle class, and giving huge tax breaks to filthy rich millionaires. certainly not going to save the economy by packing up american jobs and sending them all overseas. and they wonder why unemployment is low???? lol. no jobs here dummy !!!!! and low wages to boot here in america, companies now don't like unions, there taking more to profits over people, so they're all getting greedy, so not only worker's losing rights with no unions, also losing pay, then the workers can't afford to buy anything to keep the economy moving/growing because the way everything is being run flat out sucks. we've been sold out by republicans to other countries. america now sucks.
      Hello Mrs. Henry
      • 2 Years Ago
      I would have bought one in a heart beat if it was a more reasonable price.
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