This morning, Reuters published a devastating article on the astronomical price of Government General Motors insistence on propping up a dud. Two years after the Chevy Volt was introduced, dismal sales are doing nothing to offset the high costs of production. GM may be able to unload at least one more Volt this November, but that’s unlikely to make too much of a dent. According to Reuters, GM has invested an estimated $1.2 billion into production and is losing as much as $49,000 on each Volt. The investment clearly isn’t paying off:

The lack of interest in the car has prevented GM from coming close to its early, optimistic sales projections. Discounted leases as low as $199 a month helped propel Volt sales in August to 2,831, pushing year-to-date sales to 13,500, well below the 40,000 cars that GM originally had hoped to sell in 2012.

A Chevrolet dealership that is part of an auto dealer group in Toms River, New Jersey, has sold only one Volt in the last year, said its president Adam Kraushaar. The dealership sells 90 to 100 Chevrolets a month.

The weak sales are forcing GM to idle the Detroit-Hamtramck assembly plant that makes the Chevrolet Volt for four weeks from September 17, according to plant suppliers and union sources. It is the second time GM has had to call a Volt production halt this year.

So, the costs of GM’s investment are more than just financial; jobs are being affected as well.

The Volt, which has been on sale for nearly two years, carries an official sticker price of $39,995. Through August, GM has sold a total of 21,500 Volts. That’s well short of the figure GM hoped to sell. It originally estimated that by this year, it could be selling as many as 60,000 Volts annually worldwide (a version of the Volt is also sold as the Opel Ampera).

But the sticker price doesn’t begin to cover the original investment for Volt, which GM puts at $1 billion, and which some analysts say is probably closer to $1.2 billion. Nor does it reflect production costs for the Volt, which has expensive technology including lithium-polymer batteries, and sophisticated electronics, plus an electric motor as well as its gasoline engine, Reuters says.

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

The economic ramifications of GM’s poor decision-making are huge, yet GM’s response to the Reuters report clearly demonstrate that GM is in denial:

Our core research into battery cells, battery packs, controls, electric motors, regenerative braking and other technologies has applications across multiple current and future products, which will help spread costs over a much higher volume, thereby reducing manufacturing and purchasing costs.  This will eventually lead to profitability for the Volt and future electrified vehicles.

Every investment in technology that GM makes is designed to have a payoff for our customers, to meet future regulatory requirements and add to the bottom line.  The Volt is no different, even if it takes longer to become profitable.

No word on just how long taxpayers are supposed to wait.

Citizens are rightly disgusted — and not surprised:

One Twitterer found himself experiencing a bit of déja vu:


  • J.N. Ashby

    If their car is costing me money already, I’d like a “free” one, please.

  • Love of Country

    Nothing to see here, folks …. please move along …

    • allenbarr

      you are so right.

  • Booker T.

    Aren’t these the cars that burst in flames?

    • Tom Bejma

      Only if you crash a test sled into 2 of them and then do not discharge the battery for 3 weeks…

  • tjp77

    Another big win for Obama — scholar, Nobel laureate and the greatest president who ever lived!

    Develop a car nobody wants, which costs $90k to manufacture, but sell it for less than half that amount AND subsidize the whole thing with tax money.

    Sounds like a totally solid business model to me. What could possibly go wrong? Who says you need business experience to be president?

  • Senator Blutarsky

    I take a back seat to nobody in criticizing GM
    for its outrageous bailout, its poor management, its rapacious unions,
    and its money-sucking boondoggle called the Volt.

    But GM is NOT “losing
    as much as $49,000 on each Volt it builds.” Reuters just doesn’t
    understand the distinction between sunk costs and marginal costs.

    The article does contain very damning information, particularly regarding very cheap leases that imply GM is using overly-optimistic residual value assumptions to move units in an election year, while pushing the true costs out to 2014.

    And beyond that there
    are plenty of reasons to worry that the Volt project (and GM more
    generally) will continue to squander taxpayer dollars, Reuters faulty
    analysis just isn’t one of them:

    • Mickey Byrd

      You sir, are full of Blutarsky. Have a beer and let those fingers rest for a while.

      • Senator Blutarsky

        Quite the well-reasoned rebuttal.

  • donttreadonme53

    “It’s true, we’re not making money yet” on the Volt.
    Saw article not too long ago that the DOD and Military are being forced to buy the Volt.
    Maybe they can eventually get cash for those Govt clunkers?

    • TomJB

      I don’t know about that.. I’m on a major Army installation and have yet to see a Volt with GOV plates – only seen 1 ever actually. Maybe DOD in the DC area only? Or maybe military/DOD installations within 40 miles of a Volt assembly plant 😉

  • TomJB

    Any wall street fatcats in here? Should Obama win in November, someone needs to put together a mutual fund or EFT that does nothing but short companies in which this administration “invests”. All I want is a small token number of shares as a finder’s fee for the idea.

  • James Neal

    Sounds like it’s time to call in Bain Capital to fix both Volt, and GM, and also the Federal Government….

  • killdozerd11R

    Why is this so surprising to you…The government took over the mustang ranch and lost money…These people could screw up a wet dream

  • spot_the_dog

    No piece on the Obama Volt is complete without this excellent ad parody by @BenHowe –
    [edit: sorry – I see you do have it up there; my system wasn’t showing it earlier]

  • Garth Haycock

    Yet another example of the incompetence of the federal government.

  • Sheldon Cooper

    My, my, my C-R-O-N-Y.

  • ZoriahShepard

    So…is it pointless to wonder if they’ll ever pull the plug (pun intended)?

  • BeeKaaay

    Let’s see.

    They flush Saturn (popular and dependable cars)
    They flush the Prizm (popular and dependable car)

    But the volt, unpopular and undependable, they keep on.

    This. Is. Government. Motors.

  • Jack Offelday

    Sounds like Government Motors is using BJ Clinton arithmetic

  • John Hanover

    I have never been nor will I ever be sold on electric electric/hybrid technology. It is a joke and based on Rueters ( a non-political entity ) pointing out the sobering fact that we the taxpayers have been ripped off just make me even more resolved to never buy anything like that EVER. I used to like Chevy, they put out some decent cars but after Obama carjacked them like he did ( congressional hearing soon I hope ), never again. I will buy import or Ford. The new version should be called Re-Volt.

  • Guest

    A hardware store is selling 30 caliber ammo boxes for $14.00. Didn’t I already pay for those ammo boxes?

  • Greg

    Just goes to show that the US government should have invested in Hummers which get 3 miles per gallon. The subsidy would allow each taxpayer can pick up a gas guzzling Hummer for just $8000.00 – A nation of hummers would help the highly subsidized US oil industry – go big oil!

  • Active

    Why does GM think it can come so late into a market and start making a profit in the first 2 years? And whats the point? If I can buy a car for half the price that gets good gas mileage, through the life of that car there will be no monetary benefit in buying a volt, so why else would I buy one? What were they thinking, they claim they are losing 40k on each car sold at 40k, so cost is 80k which means they should sell for 100k-120k to make a profit. At that price you could almost buy a fully electric tesla, or 5 priuses.