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GM 'will lose money' on the new Chevrolet Volt

Thu, 18 Sep 2008

By Ben Whitworth

Motor Industry

18 September 2008 14:39

Despite hanging its future on the make-or-break Chevrolet Volt plug-in hybrid car, GM has confirmed that it doesn’t expect to make a profit from it – at least not on the first-generation model. The Chevy Volt was unveiled this week amid much hoopla at GM's centenary.

'I don’t know that I’ve ever seen a situation where we make money, particularly when you load all the costs in,' Fritz Henderson, GM’s chief operating officer, told Automotive News Europe, referring to the company’s first-generation technologies. 'So I don't necessarily think this [the Volt] is going to be the exception.'

Hang on – I thought the Volt was GM’s automotive messiah, the car that would bring back GM from the brink? It is, which makes the Volt’s short-term profitability even more of a liability for the beleaguered car maker. Henderson’s comments came as GM celebrated its centenary, with the production version of the Volt taking centre stage. His profit-warning comments were backed up by GM product boss Bob Lutz, who drove the Volt on stage to a rapturous reception.

'We've made very, very conservative assumptions on battery warranty,' said Lutz, 'and that huge lump of battery warranty in the cost calculation helps diminish the profitability.'

Don't forget, Toyota lost money on its first versions of the Prius; now of course, Toyota has gone on to sell more than a million hybrids and makes good money from its petrol-electric expertise.

So if the batteries live up to their hype, the Volt could make some money? Yes, in a word. Despite the high costs of the project, Lutz hasn't ruled out the possibility of the new Volt turning a profit. If the Volt’s battery reliability and shelf life prove better than anticipated, GM would be able to liberate what Lutz called 'some of that scary warranty provision' to offset some of the development costs and give the Volt a chance at profitability.

GM is already testing the Volt’s componentry in ten donor cars and in 2009 it will build 100 production-ready Volts – riding on GM’s new front-drive Delta platform that will also underpin the new Chevrolet Cruze – and the new 2009 Vauxhall/Opel Astra.

Click 'Next' to read more about the technology behind the Volt

By Ben Whitworth