Wednesday, April 02, 2008

Bob Lutz Says a Realistic Price fo the Chevy Volt is $48,000

By Chris Haak


Well, so much for the $30,000 price point bandied about when the Volt made its debut in Detroit in January 2007.

GM Vice Chairman Bob Lutz told MSNBC in a recent interview (see page 2) that development costs for the upcoming Chevrolet Volt range-extending electic vehicle have been higher htan initially anticipated, and that a "realistic price" for the car would be $48,000.

Now, Volt bashers/doubters on various Internet forums and blogs have thrown up their arms in disgust because to them, the price target has been completely blown up and the car's value proposition - as a car that will potentially eliminate the need to fill the gas tank during normal commuting duties for most buyers - becomes dubious. After all, you can buy a LOT of gasoline, even at $3.15 per gallon, for $18,000. Actually, assuming 40 miles per gallon that a $21,760 Prius can easily manage, $18,000 buys about 228,571 miles of driving. If the Volt were $48,000 with no tax incentives, a buyer could pay for 333,206 miles' worth of gasoline by purchasing a Prius instead.

However, Mr. Lutz also went on to say that a $40,000 price for the Volt may be possible if GM didn't earn a profit on it, and the price could potentially be pushed closer to $30,000 with government tax incentives. Since GM has already made the choice to sell its expensive two-mode hybrid system fitted into its largest trucks and SUVs at a loss to build volume and brand recognition, it seems extremely likely to me that GM will sell the first generation Volts at a loss just for the environmental and PR coup the car would be. On top of that, let's hope that if our own federal government was willing to give generous tax incentives to buyers of hybrid vehicles that still use gasoline (and in the case of some, still use a reasonably large amount of it), it would hopefully be willing to step up to the plate with incentives tailored to the Volt, which - if it performs as advertised - has the potential to significantly reduce oil consumption.

Once the Volt becomes more recognized in the marketplace and production volumes increse, GM should be able to take the time to engineer away some of the more expensive aspects of the car, such as its redundant systems for necessities like wipers, lowering the car's cost, weight, and complexity. I predict that the Volt - or its successors - will fall below $30,000 within the next several years and will be an even better car than the first Volts will be.

So, to all of the Volt supporters and detractors out there, don't put too much weight into the $48,000 figure, because I would be extremely surprised if GM had the nerve to put that large of a price tag on that car, regardless of how much sophisticated technology makes it work. (Of course, inevitably, dealers will be adding "market adjustments" to the price of the initial Volts to take some extra money from early adopters). But I expect the price to be $35,000 or less after tax incentives. We Americans like to buy our vehicles "by the pound," and a sub-midsize Chevy will not be a sales success at $48,000.

1 comment:

Old Dood said...

NO comments on this one?
Are people that 'Shell Shocked' over this?

I sincerly hope that $48K is not the price of this little car.

Who is going to buy it other then well to do people?

You are correct, the Prius is still the 'Better Buy' if this is true about the Volt.
Especially if Toyota produces the Prius with longer ranged batteries and better overall mileage like they have been claiming.