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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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  • 490 Comments
      socraticknight
      • 2 Years Ago
      once again, something the prez invested in, especially with tax payer's money, is going under as well. that green vision isn't going well as all, eh libs? HONK! the prez will never understand and has to be kicked out of the White House right after the 2012 elections, before he wastes $6 trillion more tax dollars. tisk tisk tisk
      TERRY
      • 2 Years Ago
      Well they should offer them for sale in all major markets and stay the course, it will catch on. we will soon be hearing again the 30-40 BILLION dollar quarter of profits the oil companies make EVERY 3 months. and that money LEAVES the U.S. we must find other ways other than gasoline. This isnt a cure all but it will help.
      knute9
      • 2 Years Ago
      The result of Government Motors. President Obama you can take a bow.
      stevesun100
      • 2 Years Ago
      When is the American people going to realize that the government do NOT have the ability to run anything, i.e. medicare, medicaid, social security, green energy companies, etc...
      recoater
      • 2 Years Ago
      To bad they did not work out their money problems on there own now the Libs are in charge and thats a hard rode to drive on see because libs dont want to spend their on money they want to spend the taxpayers and boy did they now all you libs get out there and buy a vote its your obama mobile.
      bootsnchaps60
      • 2 Years Ago
      Other models like the Opel and Holden Ampera? Much more interesting front, not the bland Chevy front.
      jselwhpl
      • 2 Years Ago
      i've been in the auto industry for 23 years . heard of carburators achieving "60 mpg" yet when rebuilding carbs of now older cars changing mixture adjustments, or changing jets much off "existing" settings, engines do not run well. I've had cars getting better fuel mileage decades ago than today.told this has something to do with tailpipe emissions,you do have to burn "more" fuel to clean up certain "polluting gasses". with higher government fuel standards electric is coming FAST. if electric is how it will be SOMEONE has to get charge stations out available in public , HELLO, ELECTRIC SUPPLIER, do you want a cut in the future? I know 2 Volt owners both tell me over 1500miles before fuel fill (@8.1 gallon tank).drove one, love it. unable to get financing or I would buy one.
      richard
      • 2 Years Ago
      Despite the purchase price, sales of the Volt are improving. And as the price of gas goes higher, there will be more people looking at the advantages of owning one. Conservatives despise the fact that Volts don`t use much gas, therefore cutting into oil company profits.But at some point, thesesame conservatives are going to have to face the fact that it isn`t 1952 anymore, and that we need to cut back on fossil fuels. There is advanced tecnology out there now, with General Motors leading the way, it`s time for conservatives to take pride in American know-how, and quit trying to destroy it.
      John
      • 2 Years Ago
      Well this doesn't take a rocket scientist to figure out when electricity bills will double in 2015 under Obama's war on coal and oil.
      fuddhouz
      • 2 Years Ago
      If only the government had subsidized the Edsel!
      donnah2622
      • 2 Years Ago
      Last year, GM and its partners sold 2.55 million cars and trucks in China. GM plans to boost its production capacity there to 5 million cars a year by 2016. "We fundamentally believe in the strength of the Chinese market," Akerson said. We bail out the auto industry with our tax money and they ship our factories and jobs to China. If I can't find an American made car I'll buy anything else but GM, Cadillac, etc. These companies are ruining the American lifestyle and country. We should be manufacturing them here and exporting them to China to make the trade deficit fair. I'm learning to live without a lot of things these days. Try it America.
      tmlbtb
      • 2 Years Ago
      The Volt is the encapsulation of all that is wrong with management in America. Who ever in GM came up with the idea to produce a car that cost twice as much as it's competitior, the Prius? It isn't the unions, it isn't the engineers, it's poor management. Kodak got beat up in their own game, HP has been ripping off the public with their overpriced ink cartridges for years and now that chicken is coming home to roost.
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