I wonder what will change between now and 2025 to enable profitability on Bolts?
The report argues that the Bolt is already profitable on a contribution basis (sale price - cost of goods sold), meaning that GM make money on every Bolt they sell. What makes the Bolt unprofitable is the high per-unit share of R&D costs and depreciation due to low volumes - the Bolt isn't selling in sufficient quantities to recoup the cost of developing it and putting it into production. The Bolt can become profitable even if manufacturing costs stay the same, simply by selling more units.
Demand for the Bolt is substantially outstripping supply in Europe, because high fuel costs mean that pure EVs already have a lower TCO than ICE vehicles; It's likely that GM can achieve profitability simply by ramping up production, assuming that their battery suppliers can keep up with demand.
I would expect a completely new product category to have higher development costs, I'm not sure its reasonable to shoulder the first fruits of that R & D with all the costs. Especially as this may well literally be the future of the company.
So then the question becomes, is someone setting the Bolt up to fail? Trying to make it look bad against Tesla? Or what?
Frankly, it should be accounted for on the basis of the carrying cost of the r&d debt. If I open a bakery and buy a ton of expensive equipment, I will have huge accounting losses per cookie for years but I may very well still be cash flow positive. That’s all that matters.
GM can clearly make money from this vehicle if the tighten up their production. I'm sure engineers there know exactly what needs to be done to get there. It probably takes investment, but there will only be a return on the investment if many more Bolts are sold.
To sell more of these cars, they have to overcome public perception that they are some weird new technology. They have to make hybrid engines "feel" as solid as a Hemi. They have to make these cars known, understood, and "normal". Most people just want a car that fits in, they don't want to make a statement. This is why the blandest vehicles, e.g., Toyota Corollas are so popular.
Unfortunately, engineering rarely changes the way someone feels about a product, marketing does.
So to make the Bolt profitable, GM will need to make a significant investment in advertising and marketing to make it the new normal. They don't seem up to that.
Also, many places in the US already have government incentives or requirements for charging infrastructure.
I feel thats the main difference in philosophy between US and german car manufacturers. I guess theres is a place for both.
I'm not sure I agree. In Germany, marketing is still hugely important, it's just that they often focus on marketing engineering innovations. People don't select German cars because they have better engineering, they select them because they feel like they have better engineering. Marketing there still matters, but it's more tied up with the engineering.
Personal experience is also hugely relevant. If a friend gives you a ride in their electric car, many of the advantages become immediately apparent - the silence, the interior space, the remarkable acceleration and the general normality of an EV. A brief conversation with an owner will reveal that many of the fears about EV ownership are just myths.
Tesla have done an important job by making EVs cool, but equally important is simply getting used to the presence of EVs. That's not an overnight process, but it's already starting to happen, at least in Europe. The sight of cars with no tailpipe or someone plugging in to a rapid charger is no longer unusual. EVs are starting to seem less like a weird option for hippies and nerds and more like the inevitable future of motoring.
GM does not sell the Bolt in Europe at all. It was originally sold as the Opel Ampera, but GM sold their interest in Opel. So demand in Europe is higher than the non-existent supply.
The Bolts battery and power train come from LG and apparently they contracted for 30,000 units or less annually. This may not be a problem for GM as US Bolt sales have not been great, 23,279 units in 2017, dropping to 18,019 in 2018. I think they have also sold several hundred units in Korea.
Currently Autotrader.com shows several new Bolts near me (California Bay Area) being offered at discounts of more than $4,000 from MSRP. So it looks like demand is soft even with the full Federal tax credit and the California EV rebate. Unfortunately for the Bolt, GM will lose the full Federal tax credit on April 1 raising the price of the Bolt by $3,750.
Personally, I'm disappointed by GM's failure to promote the Bolt and by it's low sales. I love my Chevy Spark EV and I like my Honda Fit, but it seems an overpriced weirder looking Honda Fit with a Chevy badge is not the way forward even if it is electric. I wanted to like the Bolt, it's not a bad car, I really prefer small but tall hatches, and am committed to electric vehicles and like to live frugally. After five great years with the Spark EV I'm not even afraid to buy a GM car. In other words, I'm probably the ideal Bolt customer. Which should make GM very concerned by the fact that I recently bought a Model 3 instead and am selling the Honda.
Got a source for this claim?
I bought a new ICE vehicle six months ago, in round figures it cost me $13,800 (that's the on the road price of the base model, including a couple of minor extras and all applicable taxes).
The electric version of that exact same vehicle has a list price of $31,300. No, that isn't a typo. The salesman seemed faintly embarrassed when we enquired about the EV version.
The depreciation curve for ICE vehicles is fairly well understood. So is maintenance and the reliability of key components (we've had a previous ICE from this manufacturer that ran for over 9 years without any out of the ordinary components failing).
Before we purchased, a salesmen noted that EV technology is changing so rapidly that even if you do feel like handing over $30k for an EV, in 5 years time it may not be worth very much. Whether its batteries will take you very far is also less than clear.
I wish all of these things weren't so, I'd happily own an EV, but not at current prices.
In Norway, a new electric car car is obviously better on a TCO basis, due to much cheaper fuel, no VAT or other taxes on purchase, free passage through toll roads, cheaper ferries and free parking. Most of those are political incentives, so I can't speak for countries that have no such incentives.
"Much of their money" - got a source for that?
At least where we are, there is a competitive market in servicing of ICE vehicles, and I won't be getting the new vehicle serviced at this dealership, I'll be going to a third party shop much closer (and cheaper). The vehicle warranty isn't affected.
> obviously better on a TCO basis, due to much cheaper fuel, no VAT or other taxes on purchase, free passage through toll roads, cheaper ferries and free parking
Thought experiment: what % of EV ownership will your country have to reach before those incentives disappear? There is this annoying issue of governments needing to raise tax revenue one way or another ...
Subsidies are a stopgap measure, not a permanent fixture. Economies of scale are hugely significant in the motor industry, presenting EVs with a catch 22 - they're too expensive because not enough people are buying them, and not enough people are buying them because they're too expensive.
Volumes are increasing and prices are falling rapidly, which should allow for the phase-out of incentives within the next few years. Government investment in public charging infrastructure is probably necessary until at least 2035.
Where in Europe do you live?
The key factor is fuel costs in Europe - even with oil at around $60 a barrel at the moment, you'll pay $6 to $8 a gallon because of high fuel taxes. Off-peak electricity costs as little as 8¢/kWh on some tariffs, with most EVs doing three to four miles per kWh. Incentives like purchase grants, subsidised charging equipment and reduced registration fees further tip the balance in favour of EVs. Lower maintenance costs are a factor, as is the possibility of lower-than-predicted depreciation due to higher-than-predicted durability of EV battery packs.
We're still some years away from TCO parity in the US, because motor fuel is still incredibly cheap and electricity is often relatively expensive.
https://www.sciencedirect.com/science/article/pii/S030626191...
Am I reading page 43 right? The cost of the battery in the Volt is currently $12,300? That's almost exactly 90% of the selling price of my new ICE vehicle!
Q: What's the projected lifespan of the battery pack in a Volt?
Yup, and it's why falling battery costs are such a big deal for the EV industry. It's worth thinking about the battery as a pre-payment for fuel; it's very expensive up front, but it substantially reduces your cost per mile for the life of the car.
Q: What's the projected lifespan of the battery pack in a Volt?
The Bolt's battery pack has an 8 year/100,000 mile warranty, with a maximum capacity loss of 40% during that period. Data from Nissan Leaf owners suggests a capacity loss of about 20% over five years, while Tesla Model S owners have reported much lower capacity loss - sometimes as little as 10% after 150,000 miles. Pack longevity has been increasing due to better cell chemistry and improved thermal management, but only time will tell how well the Bolt's batteries age.
Nissan offer a refurbishment program for the Leaf, which will restore the pack to its original rated capacity for $2,850; I would expect most manufacturers to follow suit. Battery pack refurbishment is also available from a number of third-party providers. Given the excellent durability of the rest of the powertrain due to the very small number of moving parts, EVs may prove to be surprisingly durable - with a battery refurbishment after 10 years, an EV may give 20 years of good service. The Nissan Leaf has fairly high depreciation due to the poor initial range of earlier models, but Teslas seem to be holding their value fairly well.
If one were to attempt to market an ICE vehicle that lost "up to 40% engine performance" over 8 years/100k miles, one would struggle.
> EVs may prove to be surprisingly durable
There are many cheap, modern ICE vehicles that are already surprisingly durable - I have the service receipts for the 9 year old VW Polo (bought new, and which we traded in in 2015) as a data point.
Again, I wish EVs were already competitive, but aren't they still stuck as a lifestyle choice for those with "spare money"?
As much as really really want that to be true, it just isn't for most people.
An electric car is ~£30k, but most people pay much less for petrol cars because there is a great second hand market. I'd say typical is ~£5k.
Most people do something like 150k miles on a car. Assuming 40 mpg (8.8 miles per litre) which is fairly typical for motorway driving. The price of petrol has been around 120p/L for several years. That puts the total cost of the petrol car at: about £25k. Still less than the purchase price of an electric car.
Maybe it will change when electric cars with a good range have been around for 20 years so there is a decent second hand market, but at the moment it just isn't true. Sorry.
For comparison, VW wanted to build their own gigafactory and LG Chem is holding them hostage, threatening to not sell them the batteries they need for their EV inititiaves. Funny enough, VW is buying Tesla PowerPacks for their Electrify America charging stations for peak demand shaving (the Electrify America brand is distinct from VW, as VW is not permitted to VW brand the charging stations as part of their dieselgate settlement).
Not a Musk fan, but him and JB Straubel knocked it out of the park with their foresight and strategy (build all the batteries we can, sell them in sexy cars).
The high amperage 18650 cells from LG and Panasonic mean that more are now able to be used in UAV applications, which previously could only use lipo batteries which top out at 177Wh/kg.