The Chevy Volt's $89,000 production cost: A waste of money?

Reuters reports that GM is losing $49,000 for every Volt it builds, renewing criticism that the eco-friendly hybrid will never be profitable

Chevy Volt
(Image credit: Bill Pugliano/Getty Images)

"General Motors sold a record number of Chevrolet Volt sedans in August," say Bernie Woodall, Paul Lienert, and Ben Klayman at Reuters. "But that probably isn't a good thing for the automaker's bottom line." Even though the environmentally friendly Volt's base price is about $40,000, says Reuters, production costs per vehicle run a stratospheric $89,000 — given the car's pricey lithium-polymer batteries, hybrid gas-electric engine, and next-age electronics. That means GM is losing $49,000 for each Volt it sells. Worse: GM has been offering two-year leases for a mere $5,000 to get customers hooked, which is eating deeply into its profits. GM officials call the Reuters report "grossly wrong... [and] more wrong with each Volt sold," since increased sales over the course of years will bring down the cost-per-vehicle. However, GM, which the government still partly owns, admits that the Volt isn't making any money yet. Is Chevy's eco-car a waste of money?

Yes. The Volt will never be profitable: The Volt's high production costs "prove that the innovative plug-in hybrid is impractical and will probably never be more than a niche product," says Jonathan Berr at MSN Money. Even if GM could bring down its production costs, at $40,000 it is still "asking people to pay BMW or Mercedes prices for a Chevy." And "as long as gas remains relatively cheap — below $5 a gallon — most consumers will take a pass on hybrids," which "will surely be collector's items in the coming decades."

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up