cts | Volt a Day | A Losing Proposition December 04, 2010

Ah, where the rubber meets the road.

GM loses money on every Volt they build. That's a little painful to read, especially when every time I talk to someone about the car they say, "Forty thousand is expensive..." Which it is, but not when you are trying to remove yourself from the oil equation. So it doesn't feel expensive to me. On top of that, the government is going to pay for a bunch on the first Volts sold, so it will feel really close to the right price for this sort of car.

The problem for GM is the battery pack. That's a lot of technology, and technology is still expensive. It's been dropping 6-8% per year, which is good news. And I would bet (and it certainly seems like GM is betting) that the price of the pack and the amount it stores will have changed drastically in five years. So this is a development platform of sorts.

I remember reading that Toyota lost $2,700 on every Prius that they sold of the original model. At the time it seemed like a real gamble, although obviously the Prius has paid off for them in spades.

So GM might be doing more than a public relations play here. This might be about green, rather than just being green. Time invested in technology like the Volt could put them ahead of competitors in a big way as the cost of the technology falls.

Now it makes sense that they were limiting production because if you're losing money on every car you're certainly not trying to sell them to people.