GM giving massive subsidies to try getting people to buy Volts

Remember the previous articles that GM was losing $49,000 per Volt that it sold?  Well, apparently that was an underestimate by about $10,000.  Remember that this car also gets a $7,500 tax credit from the government.  Of course, despite all these huge loses to GM and taxpayers, the Volt is essentially the same car as the gasoline powered Chevy Cruz and the 2013 Cruz starts (25/36 mpg) at about $17,130 ($18,225 with automatic), still than the Volt.  With a $10,000 discount and the $7,500 tax credit, the Volt still costs about $22,500.  

So, let's assume that the price of gas is $4.00 a gallon, that the difference in car prices between the Cruz and Volt is $4,000, that the Cruz gets 30 mpg (assuming half local and half highway driving), and that the Volt costs $.06 per mile (the middle point of the EPA estimates provided here).  The cost of the Cruz per gallon is thus about $.13 ($4/30) so the difference in cost per mile is $.073.  If the car is drive 12,000 miles each year, the savings would be $876 ($.073*12,000).  Even assuming no interest costs, it would take 4.6 years to pay off the $4,000 higher price for the Volt (the difference is actually more than that, especially if you add in the higher sales tax).  Without the $10,000 additional subsidy, it would take 16 years to pay off the higher price for the Volt.  Are you really planning on owning the car for 16 years?  This of course ignores the cost of replacing the batteries and the higher insurance costs for the Volt.

From Fox News:
General Motors rolled out the Chevrolet Volt two years ago with lofty sales goals and the promise of a new technology that someday would help end America's dependence on oil. 
So it seemed like a good thing in August when sales of the $40,000 car set a monthly record of 2,800. But a closer look shows that things aren't what they seem for the cutting-edge car. 
Sales rose mostly because of discounts of almost $10,000, or 25 percent of the Volt's sticker price, according to figures from TrueCar.com, an auto pricing website. Other pricing services gave similar numbers, and dealers confirmed that steeply discounted Volts are selling better than a few months ago. 
GM's discounts on the Volt are more than four times the industry's per-vehicle average, according to TrueCar estimates. Edmunds.com and J.D. Power and Associates say they're about three times the average. Discounts include low-interest financing, cash discounts to buyers, sales bonuses to dealers, and subsidized leases. 
Americans have been slow to embrace electric cars. But the Volt's August sales show they're willing to buy if prices are low enough. . . .
Sales of 2,800 in a month when some of those sales are to the government and to GE, which is trying to curry favor with the government, does not signal people are "embracing" the Volt.

These screen shots were taken today (9/24).  BTW, the Eco version gets 28/42 mpg and still only costs about $19,680.

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Blogger Martin G. Schalz said...

I think I'll wait until they start giving them away for free...

9/24/2012 1:12 PM  

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