The Chevy Volt, a product rushed to the marketplace because G.M.’s owners in the Obama administration wanted it out is a bust…its sales are awful.
The numbers are in, and GM can proudly say that they are the market
leader in an insignificant field with a paltry 1,140 Volts sold in
January. The best selling passenger car on the road, the Toyota Camry,
sold 31,897 during the month, giving an indication of how illogical GM’s
misguided focus has been. GM’s lame reasoning for the post-election
lows (actually, the lowest since February of 2012) for Volt sales is
that consumers pulled sales from January by purchasing in December of
2012 when GM sold a whopping 2,633 Volts.
And now General Motors is doing its best to “give away the car’ or close to it. They have announced a $4,000 rebate (or $3,000 and a four year, zero interest loan from government-owned Ally Financial) on the slow-selling Chevy Volt.
The company had a choice regarding how to deal with an excess supply of Volts that is growing faster than demand. GM could have, once again, temporarily halted production until inventory (currently at about a 6 month supply) came down to reasonable levels. It instead chooses to lose more millions of dollars by spending on incentives designed to manufacture demand that otherwise is practically nonexistent.
According to the original estimates the Volt was to be at a rate of 10,000 per month by now however sales have plateaued at approximately 1,500 per month. That’s roughly one Volt every two months for each Chevy dealership.
The dire sales situation for the Volt points to just how inefficient the plug-in technology is. Consider that the car already gets a $7,500 federal tax credit which goes to the wealthy purchasers. Add another couple of thousand dollars for typical state subsidies. Now another $4,000 incentive from GM and we have a giveaway of close to $14,000 to sell each Volt! Worst of all, GM refuses to admit that the car is anything but a roaring success!
Estimates given to Reuters by industry analysts and manufacturing experts back in September 2012 demonstrated that General Motors loses
$49,000 on each Chevy Volt it manufactures. Those numbers may be on the conservative side because there are leasing
deals offered this summer where customers are paying a little over $5K
for a two year lease on the Volt which costs as much as $89K to build.
Adding insult to injury, much of the taxpayer-supplied subsidies for the Volt will go towards leases (also supplied by government-owned Ally Financial) that put drivers on the road for as short a period as two years. I have previously calculated that taxpayers are paying about $10 per each gallon of gas saved in these scenarios. The non-partisan Congressional Budget Office has reported that overall plug-in electric car subsidies are estimated to cost taxpayers about $7.5 billion over the next few years for little or no benefit.
$14,000 of incentives on a Chevy Volt and GM still does not seem to be able to sell more than about one tenth the amount of Toyota Camrys that sell in a month. GM and its shareholders lose money, as do taxpayers. Maybe it is time for GM to stop the farce and cut losses for those that are footing the bill to push a green agenda that centers on plug-in electric cars that can not succeed without massive subsidization.
Chevy Volt is just another classic example of what happens when the government picks winners and losers in the marketplace, not only are they generally wrong, but they end up costing the taxpayers money.
Its time for the folks at GM to ignore the federal government and to stop throwing good money after bad and end the Volts painful existence.