You might think that the good people over at General Motors would love to read a news story that begins with this sentence:
General Motors sold a record number of Chevrolet Volt sedans in August.
That’s really good news for the maker of the slow-selling $40,000 electric car, right?
Well, yes, it is, but there’s a huge problem with those increased sales numbers.
The news world and blogosphere erupted yesterday with reports claiming that GM loses $49,000 on every Volt sold. That means an increase in sales means an increase in losses, but only until sales increase enough to make up for the massive $1.2 billion GM poured into development of the car. That’ll take a long time, especially considering the car’s high price and coming competition from other automakers that want a piece of the small EV/hybrid pie.
Given the 21,500 Volts sold so far, development costs come out to about $56,000 for each car. Add the roughly $20,000-30,000 it costs to actually build the car, and it becomes obvious why the General doesn’t yet make money on it. The Huffington Post says GM will need to sell 120,000 Volts before development costs drop to $10,000 per vehicle.
In addition to the problem of such high development costs, Chevy dealers have had to lower the price or offer cheap leases to move Volts off the floor. In some cases, Volts were driving away on a $199/month 2-year lease. That’s more like the price of a Chevy Cruze. Ouch.
With prices of new Volts already dropping, what will happen to prices of used ones now and in two years, when those leased vehicles become lease returns?
A quick Google search for “used Chevy Volt” returned the CarGurus used listings in the top position. I followed the link and saw 104 used Volts for sale, priced between $26,000 and $46,000, with plenty in the $30,000 range and rated as a good deal. Should new vehicles keep selling at a decent clip, especially at a reduced price, future used Volts should be even easier to put in the garage.
Unless, of course, GM pulls the plug, so to speak, and these cars become collectible. If that happens, all bets are off about what will happen to used prices!
If $40,000 is too steep for a new Volt, would you consider a used one for $25,000?