GM Still Taking Taxpayers for a Ride
May 1st 2013 9:49AM
Updated May 1st 2013 1:05PM
Last September when Reuters calculated that General Motors was losing almost $50,000 on every Chevy Volt it sold the carmaker was apoplectic with indignation at the "grossly wrong" numbers being thrown around. Sure they were losing money, every new technological advance does, but as they built more cars and then released Volt 2.0 they would become profitable.
Well, GM has certainly built more Volts over the last six months or so and they've even sold a few more, too, but then so has Tesla Motors and Nissan . In fact Tesla sold more of its all-electric Model S cars in the first quarter of the year than GM did with its Volt, and Nissan turned itself around enough so that its LEAF outsold the Volt in March.
We'll get the April sales numbers in a day or so to see if any traction has been made as spring has gotten under way, and if GM was able to recover from March sales plunging 35%. One thing hasn't changed month to month and that is that the Volt is still a money-losing proposition for GM and for the taxpayers who bailed it out.
In a presentation yesterday, CEO Dan Akerson admitted GM is still losing money on every Volt sold and will continue to do so for the foreseeable future. So what's the solution? Not to admit defeat, that's for sure, at least certainly not when the taxpayer is still nominally footing the bill for your company. Nope, what you do is double down and say you're going to make even more of your money-losing cars than you did before and you're going to make them even cheaper than they are now!
Akerson didn't say how much GM was losing on each Volt, but he did say that if it ever hoped to make a profit on them the carmaker would need to cut as much as $10,000 from the cost of production. That, however, won't be happening until the next-gen model is introduced, which won't be until 2015 or 2016 at the earliest.
The already heavily subsidized Volt starts at less than $40,000 before a $7,500 tax credit kicks in. Last year the Congressional Budget Office estimated that the government's efforts to foist electric vehicles on a public that doesn't really want them will cost taxpayers $7.5 billion through 2019, including grants of $2.4 billion to lithium-ion-battery makers (you know, like bankrupt A123 Systems and Ener1). So how GM will be able to take that much cost out of building the Volt without eliminating any of its features is anyone's guess.
Despite generous rebates, ridiculously low leasing offers, and using fleet sales to juice monthly sales numbers the Volt remains rather unpopular among the car-buying public. In the meantime, though, taxpayers can enjoy the ride GM is taking them on.
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The article GM Still Taking Taxpayers for a Ride originally appeared on Fool.com.Motley Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends General Motors and Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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