G.M.’s Electric Lemon
nytimes.com
nytimes.com
His main line of argument is the same criticism that's consistently leveled at Tesla: that it's too expensive to be a big seller. This is obvious. Batteries are still in their early days as the primary energy source in cars. Early technology is expensive (The original macintosh cost $5000, inflation adjusted). The obvious point of the Volt program was to develop technology and infrastructure for the future, not just to produce the first generation Volt. It's certainly fair to debate GM's efficiency in building electric vehicle capabilities, but the author of this article doesn't ever seriously acknowledge that GM has ambitions beyond just the first generation Volt.
A few smaller arguments I have:
For starters, G.M.’s vision turned into a car that costs $41,000 before relevant tax breaks
Bob Lutz said that the Volt would cost around $40,000 when he was on letterman a year ago, so the price shouldn't be a surprise to anyone who follows the industry. But as I already argued, we're in the early days of electric vehicles. Just like in the early days of personal computers, these cars will be bought by enthusiasts. As we've seen with every other new technology in history, price will come down over time.
And instead of the sleek coupe of 2007, it looks suspiciously similar to a Toyota Prius
It's a little difficult to take an automotive pundit seriously when he complains about a production model not looking like the concept. Frustrating as it may be, production models almost never look like the concept. This is nothing new. And the reason it looks like a Prius is physics. It turns out that there is an optimal shape for reducing aerodynamic drag, so cars that are built with fuel efficiency as a primary design goal will all be roughly the same shape. This also should not be a surprise to anyone who follows the auto industry.
It also requires premium gasoline
So what. It shouldn't use much of it anyway. For most owners this will not contribute significantly to the cost of running the vehicle.
seats only four people(the battery runs down the center of the car, preventing a rear bench)
I'm guessing most of the target market won't care about this. This is also the type of compromise that has to be made in early technology.
has less head and leg room than the $17,000 Chevrolet Cruze
So does a Lamborghini. People buying a Volt are not likely to be considering how much interior volume they get per dollar.
No wonder the Volt’s main competition, the Nissan Leaf, forgoes the additional combustion engine — and ends up costing $8,000 less as a result.
It also forgoes the ability to go on a road trip. Best case the leaf will have to recharge for 30 min every 80 miles. GM was trying to build something that could fully replace gas-only vehicles, Nissan wasn't.
So the future of General Motors (and the $50 billion taxpayer investment in it) now depends on a vehicle that costs $41,000 but offers the performance and interior space of a $15,000 economy car
The author should be embarrassed of making this statement. GM is a massive company who's business units range from car parts to medium-duty commercial trucks. The Volt is just one, albeit highly visible, program.
Yet G.M. seemingly has no plan for turning its low-volume “eco-flagship” into a mass-market icon like the Prius
A quote from Bob Lutz:
"The Volt technology is very exciting, but costs will have to come down before it can become generalized, and U.S. fuel prices will have to rise to world levels, meaning $5 or $6 per gallon,"
That seems to suggest that the plan is to develop the technology until prices can be brought down and fuel prices go up (a bit of a gamble, but it seems likely that fuel costs will increase eventually).
and some significant portion of the $14 billion loan G.M. got in 2008 for “retooling” its plants
By putting the word retooling in quotes he seems to be suggesting that GM wasn't retooling their plants. If that's his argument, he should state it directly and give a source.
There's no shortage of legitimate reasons to criticize GM, but calling the Volt a failure before it's even been released is nothing but pointless speculation.
It think it's great GM is doing it, taking some risks, approaching it from a slightly different angle than the other companies are. That's all good stuff. As someone who has bought and been burned by GM products in the past I can boil it down to 2 things:
1) Would you pay more for a Volt than a Prius? Just on quality experience, I'd pay a premium to go Toyota, personally. It's anecdotal but a GM is going to have to be incredibly compelling for me to go back.
2) Would you pay $40k for anything from GM that's not a corvette, Cadillac or like an industrial truck?
What's the overall goal of the Volt? Are they looking to have 5million of them on the road and it'll be the next Taurus or Accord or something? Is it supposed to be a platform for future development? Is it a one off? Is it hitting that mark? What's so compelling for it to cost more than a prius?
So while it is pretty damn expensive, it's not necessarily worse than having one ICE car for long trips & one EV for commuting, especially considering that you'll only need to buy gas for trips over 40 miles. It's not going to hit too many people's sweet spot but there's some real potential.
But does it have to pay for itself? Nobody buys a car that is above the cheapest model expecting it to pay for itself. A sunroof or bigger engine will never pay for itself, and is usually bought to get some other benefit (sometimes mostly in the mind of the buyer). The same can happen with early PHEVs and EVs.
By the time all the early adopters who buy them for the technology or environmental benefits have one, the technology should have improved and price lowered enough so that the cars will be attractive to a larger group.
Bingo. So, what is Volt's corresponding benefit, how much does it cost, and how many people are willing to pay that much for that benefit?
> By the time all the early adopters who buy them for the technology or environmental benefits have one, the technology should have improved
"should"?
If Volt doesn't recover its development costs, how is GM going to pay for improving the technology?
(My dad did a "car co-op" with his best friend in medical school in Pittsburgh. It was an Edsel!)
Nor did the government or G.M. decide to sell the Volt at a loss, which, paradoxically, might have been the best hope for making it profitable.
Glad this dude isn't running my business.The Volt definitely has faults, but it's a brand-spanking-new technology - what do people expect?
But, unlike the Leaf, Tesla and other pure electrics, it is capable of driving long distances because of the gas engine.
It's the first electric car without "range anxiety".
This is a powerful formula, and if the car is halfway reasonable GM is going to be selling a lot of them.
Others have said this part but it bears repeating: a car with a battery system and a gasoline-burning electrical generator is a very different beast from a hybrid or a pure electric. It's no surprise that it's more expensive, nor does the price seem unreasonable, considering that a) it can cover most people's daily commute with zero gasoline and b) it can then be filled up and driven across the country.
I'm expecting an Amp sooner rather than later...
The Volt will likely fail because of its massive price and less than optimal features. Why would you buy one over a Prius anyway? At least with the Prius you'd be getting a quality car made by a quality company. I have no idea why people are buying cars made by G.M. these days between the poor quality history and getting bailed out I have no interest in doing business with them.
I do not understand why everyone is getting hyped up about this. What is the purpose of the electric car? The low/no emissions or the high MPG? If you ask people you will find out that almost all of them will say the MPG since that is the reason that has a monetary impact.
I recall when I was in England I had a Renault Clio Diesel with 1.5 liter engine. That car would give me 66 mpg on the highway and around 50-55 mpg in the city. That was back in 2003 and it cost brand new 9,000 GBP (less than $15,000). That car was small, comfortable and fun to drive. It did what it was supposed to and more.
Why do we see then a $41,000 price tag on a vehicle that cannot give us 66 mpg and that will be subsidized by the government (i.e. we will all pay for every car sold whether we like it or not).
Great!
The trim and finish must be much better on the Volt considering how expensive batteries are and how relatively cheap gasoline engines are. Or am I missing something here?
>Given that G.M. destroyed their first electric car of this decade why would anyone trust them to build a new one
Because they had the experience of building an electric car, knowing it wasn't viable, and going back to the drawing board until the technology was refined?
>I've never heard of a company purposefully destroying capital in the way G.M. did.
That's because your analysis of it is hipster, populist garbage. Sorry to be impolite about it, but the whole "who killed the electric car" movement is populated by people proud of their ignorance.
>The Volt will likely fail because of its massive price
Since when did $41K (really $33.5) get classed as a "massive price"? That is an absolutely typical mid-level sedan price, and apparently the volt is fairly well equipped.
>At least with the Prius you'd be getting a quality car made by a quality company.
The number of problems with the Prius have been legendary. Toyota's quality lead over GM has shrunk to almost a rounding error, yet we'll forever hear the "angry at GM guy" railing his 1980s argument.
It's got nothing to do with profitability, viability, maturity of technology, etc. I mean, GM built, marketed, and invested millions into some of the MOST unviable cars out there you can find. At one point, almost every single car they sold was at a loss - they were paying people to drive them off the lots. You can't get more "unviable" than that.
And I don't think the argument is "who killed the electric car" - the real story is "who killed GM" - the entire company is an exercise in producing a black hole for money, not in manufacturing or car making.
So had the rest of the industry moved to electric vehicles, eating GM's lunch? Surely they must have given that GM was in bed with big oil and was turning a blind eye to this great technology.
Of course they didn't. Honda and Toyota did some minor initiatives in marginally hybrid vehicles (which they sold at a loss primarily for image, while at the same time ramping up their own mega-SUV land yacht efforts). Everyone else just ignored it.
Worse the entire industry didn't even know what "future" was the best future. Hydrogen fuel? Electric? Flex fuels?
Was some sort of ultra-capacitor going to come and change the entire industry?
The improvements in battery technology over just the past couple of years have been incredible. Everything relies upon battery technology, and the entire worldwide automotive industry is essentially working together on this. GM in no way had it mastered over a decade ago.
>At one point, almost every single car they sold was at a loss - they were paying people to drive them off the lots.
Any year that any company has a loss you could claim that they "lost money on every single unit sold", but of course that would be facile. GM's trouble centered on a long accumulated pile of debt while they did a worldwide expansion, coupled with massive liabilities to the union in the US.
Since the economic crisis happened. I'm not even on my way to saving for my first car, and I'm already looking for cars under $10,000.
Most families that are not well off usually look for cars in the $20-30 grand range. So 41K is a lot - in today's terms.
I'm not sure if the economic crisis has anything to do with that. I haven't seen any major slashing of prices. Quite the opposite, in fact: Incentives and deals have disappeared, and the net cost has increased.
>Most families that are not well off usually look for cars in the $20-30 grand range. So 41K is a lot - in today's terms.
I don't think it's intending to compete with standard family vehicles. This is a very low quantity run, targeted at the sort of (young professionals) people who would likely have bought a VW TDI or something, where the price range isn't all that different.
I don't understand what you mean here? They destroyed the engines? Why would you destroy your capital? It's their right I guess but that seems irrational.
>>Toyota's quality lead over GM has shrunk to almost a rounding error, yet we'll forever hear the "angry at GM guy" railing his 1980s argument.
Rounding error? Every car that my parents have owned from GM in the last 30 thirty years has cost them fortunes to maintain. My Corolla costs me virtually nothing to maintain after 10 years on the road and living on the streets of Boston.
From my experience the quality of a Ford beats that of a Japanese car in the show room. Maitenance is probably a wash. I have 0 experience with GM so I don't know, but I've owned a Ford for the last 10 years with >150k miles on it and have had very few issues. I also own a Subaru and it has had more issues and the quality is noticeably lower. My finance owns a Corolla from the same year as my Subaru with the same miles and it has had fewer issues, but still more than the Ford and the Ford is way older. I have some issues with it right now actually. Plus the Toyota totally sucks. 0 fun, crappy interior, tiny, horrific in the snow. We're never buying a Toyota ever again.
They were trial products, and represented a significant liability to the corporation for no benefit. The automobile industry is pretty much the most litigious industry going, so eliminating what wasn't commercially viable was a very, very fiscally prudent move.
The last thing GM would have wanted is a couple hundred of its test fleet to get in the hands of the public.
There was a known cost to destroying the failed product line and an unknown cost to support it going forward (not just liability but parts and service). They went down the fiscally sound path.