GM ‘will lose money’ on the new Chevrolet Volt | CAR Magazine

GM ‘will lose money’ on the new Chevrolet Volt

Published: 18 September 2008 Updated: 26 January 2015

Despite hanging its future on the make-or-break Chevrolet Volt plug-in hybrid car, GM has confirmed that it doesn’t expect to make a profit from it – at least not on the first-generation model. The Chevy Volt was unveiled this week amid much hoopla at GM’s centenary.

‘I don’t know that I’ve ever seen a situation where we make money, particularly when you load all the costs in,’ Fritz Henderson, GM’s chief operating officer, told Automotive News Europe, referring to the company’s first-generation technologies. ‘So I don’t necessarily think this [the Volt] is going to be the exception.’

Hang on – I thought the Volt was GM’s automotive messiah, the car that would bring back GM from the brink?

It is, which makes the Volt’s short-term profitability even more of a liability for the beleaguered car maker. Henderson’s comments came as GM celebrated its centenary, with the production version of the Volt taking centre stage. His profit-warning comments were backed up by GM product boss Bob Lutz, who drove the Volt on stage to a rapturous reception.

‘We’ve made very, very conservative assumptions on battery warranty,’ said Lutz, ‘and that huge lump of battery warranty in the cost calculation helps diminish the profitability.’

Don’t forget, Toyota lost money on its first versions of the Prius; now of course, Toyota has gone on to sell more than a million hybrids and makes good money from its petrol-electric expertise.

So if the batteries live up to their hype, the Volt could make some money?

Yes, in a word. Despite the high costs of the project, Lutz hasn’t ruled out the possibility of the new Volt turning a profit. If the Volt’s battery reliability and shelf life prove better than anticipated, GM would be able to liberate what Lutz called ‘some of that scary warranty provision’ to offset some of the development costs and give the Volt a chance at profitability.

GM is already testing the Volt’s componentry in ten donor cars and in 2009 it will build 100 production-ready Volts – riding on GM’s new front-drive Delta platform that will also underpin the new Chevrolet Cruze – and the new 2009 Vauxhall/Opel Astra.

Click ‘Next’ to read more about the technology behind the Volt

Tell me about arrival dates and markets for the Volt

The Volt goes on sale in America in 2010, followed by China in early 2011, and then in Europe by late 2011. At the moment it’s uncertain if the Volt will be marketed as a Chevrolet or if it will be sold wearing an Opel/Vauxhall badge.

Either way, expect it to cost around £20,000. By then, GM is hoping to have introduced the E-Flex technology to numerous other new and existing models across the world – and that’s when its profit margin should swell. And that couldn’t happen sooner: GM lost a massive £8.7bn in the second quarter of 2008.

Remind me about all the excitement around this E-Flex technology?

Although it houses a combustion engine, the Volt is the first mass-produced passenger car that is not powered by a traditional petrol or diesel engine, claims GM. Instead, the engine is used only to charge up the battery.

The electric engine that’s rated at 148bhp and packs a hefty 273 lb ft punch drives the front wheels. And the Volt is no eco-special slouch. Top speed is 100mph and 60mph comes up in 8.5 seconds.

And what’s the range of the Chevrolet Volt?

The Volt’s battery pack contains 220 lithium-ion cells and is good for 40 miles of zero-emissions driving without recharging – enough, GM claims, to meet the majority of journeys made by drivers. Recharged at a European-spec 240 volts, the GM will take three hours to juice up, but a much longer eight hours on 110 volts – America’s standard output.  GM claims that charged daily, the Volt will be use less electricity than a domestic refrigerator and freezer.

Travelling beyond 40miles will activate the small 1.4-litre ethanol/petrol engine that’s mounted in the nose. But this charges the battery rather than drives the wheels, extending the Volt’s range to over 200 miles.

Does the Chevrolet Voltl herald the technology to save GM, or a case of a little arriving way too late?

By Ben Whitworth

Contributing editor, sartorial over-achiever, HANS device shirt collars