Today, I’m very pleased to announce that I have a new reason to dislike the Volt.
And it’s probably the best reason of all.
The Chevy Volt costs close to $90,000 to manufacture while it retails for $40,000 according to information gathered by Reuters.
King Canute, as you remember, tried to “rule the waves” by commanding the tides not to come in. Here is Wikipedia on Canute:
Henry of Huntingdon, the 12th-century chronicler, tells how Canute set his throne by the sea shore and commanded the tide to halt and not wet his feet and robes. Yet “continuing to rise as usual [the tide] dashed over his feet and legs without respect to his royal person…”
King Obama has the same obsession: “If we force General Motors – now Government Motors – to build it [the Volt], they will come.”
Well, not so much. First of all, each vehicle costs $89,000 to build, but it sells for about $40,000. That’s bad enough. But it gets worse. When a vehicle is leased, the lease terms have been made so attractive – in order to draw people into leasing one – that it costs the owner just $5,000 over a two year lease! That’s the only way the Volt makes any sales – by essentially giving them away! Ransom does the math:
10,666 Volts were sold in the first seven months of 2012. At an average loss of $49,000 per vehicle that’s a loss of $522,634,000.
A $523 million dollar loss on a car that won’t sell 20,000 units in 2012?
To put this in perspective, the company has probably shaved at least $4 billion off its market value by squandering money on the Volt. Right now the company is trading at about 8.31 times its earning.
Assuming GM didn’t produce the Volt at all and just held on to the cash savings, the $523 million in cash multiplied by the market value of 8.31 times earnings comes out to $4,343,088,540 in lost value for the shareholders.
Those shareholders are you and me.
It would be cheaper for the company to quietly ask potential Volt buyers if they would take a $40,000 check just to go away.
Of course GM is putting the best lipstick it can find for this pig:
We’re really seeing momentum continuing to build,” Michelle Malcho, a GM spokesman told the press a few weeks back according to the Detroit Free Press. “As people see their neighbors have one and as they start to understand the technology and are able to drive it, they put it into their consideration.”
You bet. That’s why Volts are flying out the door.