GM Loses Around $49,000 for Each Volt Produced image

Although GM managed to reach record August sales for the Volt, this isn’t necessarily a good thing.

The Volt plug-in hybrid was introduced two years ago, but the automaker still losses $49,000 for each unit it manufactures. These losses as pushed even higher with the lease offers this summer, aimed at attracting more customers to the Chevy showrooms. Unfortunately competitive models are being developed by Honda, Ford and other automakers and GM is a long way from making profit from the Volt.

No matter how hard it tries, it is impossible for GM to reduce the manufacturing and components costs. The base price for the Volt is $39,995 as the vehicle is powered by expensive lithium-polymer batteries, an electric motor combined with a gasoline engine and features sophisticated electronics. All these keep potential buyers away from the showrooms.

Although the discount leases offered in August helped the automaker reach sales of 2,831 units and a total of 13,500 year-on-date sales, the number is way under the original target of 40,000 cars GM had set for 2012. The weak sales made the automaker take the decision to close the Detroit-Hamtramck assembly plant, where the Volts are produced, fro four weeks beginning September 17th.

“It’s true, we’re not making money yet” on the Volt, said Doug Parks, GM’s vice president of global product programs. 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.

Fixed Costs
* Development: $18,650
* Tooling: $37,350

Production Costs
* Standard Parts, Material and Labor: $12,000
* Unique Parts, Material and Labor: $12,000
TOTAL: $80,000

  • RRR

    This article is misleading as it is primarily referring to R & D costs. Toyota lost money for years before the Pruis line became profitable. Toyota knew that volume was the key and continued to produce and refine their technology and this is exactly what GM needs to do with the Volt. It's a good thing when a manufacturer makes a good product for all the right reasons even if it means sacrificing some short-term profits. Automotive technology has to advance and become more sophisticated that is a given and Toyota as well as GM should be supported for making this type of investment.

  • RRR

    BTW…the title should be GM "loses" not losses.