GM is NOT losing Money on the Volt

[xsited1]

I have a lot of resistance to the volt which lowers my amperage.

 

[Politico]

Not losing money? You go on believing that.

 

[martybegan]

Read the article! They specifically address the Reuters article. Again Reuters takes into account the $1.5 bil R&D cost! If you take the production, labor and material cost to the revenue made on each car equates to a net profit on each car!

When it comes to development, the way you do it is you figure out the net profit on each vehicle, then determine how many vehicles you have to hit to reach "break even" This pays back the investment in R&D on the product. After that each vehicle sold is truly "profitable"


The same model is used for video games. You need to sell X number of units to pay for making the game, and after x units is reached each game is pure profit.

Video games are developed technology with a twist! The electric car is not.

But the "payoff principle" remains the same. You dont start making a return on investment until the development costs are paid for.

 

[martinjlm]

Certainly! An absolutely great car --- IF you don't mind driving a car where the electrical system and or battery blows up and sets the car afire.

And your evidence that this has ever happened outside of crash tests specifically design to puncture the battery would be.....?????

 

[Stephanie]

what the hell is this obsession, over a car?

gm should be ashamed for taking taxpayers monies, PERIOD

 

[martinjlm]

http://www.usmessageboard.com/energ...-that-they-were-losing-money-on-the-volt.html

Losing money and losing $49,000 per vehicle are two wildly different things. It has been proven several times that the Reuters article is inaccurate.

It would not surprise many to find that GM is fronting some losses on a per vehicle basis. This is common for brand new vehicle architectures. Since most new vehicles are designed around a 5-12 year life cycle, it is not unusual for losses to occur in the first year or two when volumes are low and cost of materials are high.

As the vehicles catch on, volumes increase, material costs come down, and profit is generated. This worked for Toyota Prius, Ford Escape Hybrid, Honda Civic Hybrid, and many others that I could name.

 

[martinjlm]

General Motors has sold approximately 21,500 Volts since the gasoline-electric hybrid was introduced in December 2010, and development costs of the high-tech car are estimated at between $1 billion and $1.2 billion by Reuters’ calculations.

Is that counting the $3Bill in Fed and State Development grants, loans, guarantees that GM recieved to develop an EV?

....

I know this to be very inaccurate. I need to stop there in order to not get in trouble with GM for disclosing confidential information. But if you have proof of $3 billion in grants, loans, and guarantees for EV development, lay it out.

 

[martinjlm]

If you don't count the costs in making our product, we'd show a huge profit

Cost for making a product and costs for developing a product are two different things. The error Reuts made was assuming they could be added together, then divided by the number of vehicles produced to date.

Manufacturing costs include material, labor, and marketing costs associated with the product and can be figured on a per vehicle basis. Development costs, which for cars can run in the billions of dollars, are spread out over the lifetime of the vehicle program as well as any similar vehicles using the same technology.

 

[martinjlm]

Drug companies are making tens of billions daily (if you don't include R&D)

Except that, once again, the R&D costs are spread out over the lifetime of the product.

 

[martinjlm]

.......
But the "payoff principle" remains the same. You dont start making a return on investment until the development costs are paid for.

I think that depends on the accounting practices and whether R&D costs are consolidate at a business unit level or a corporate level. I do not know which GM uses, Burt if the R&D is leveled up at a corporate level, then the Volt itself will be measured by operating cost, total revenue from Volts sold, and resulting operating profit or loss. This would exclude R&D because it would be managed at a corporate level. There would still be internal accounting to understand the company's position on how the R&D investment was spent. In other words, was Volt a better investment than the Cadillac CUE system or a new engine program. Each would have required substantial R&D, and like any good company, they would want to know where they got the most bang for the buck.

 

[martybegan]

.......
But the "payoff principle" remains the same. You dont start making a return on investment until the development costs are paid for.

I think that depends on the accounting practices and whether R&D costs are consolidate at a business unit level or a corporate level. I do not know which GM uses, Burt if the R&D is leveled up at a corporate level, then the Volt itself will be measured by operating cost, total revenue from Volts sold, and resulting operating profit or loss. This would exclude R&D because it would be managed at a corporate level. There would still be internal accounting to understand the company's position on how the R&D investment was spent. In other words, was Volt a better investment than the Cadillac CUE system or a new engine program. Each would have required substantial R&D, and like any good company, they would want to know where they got the most bang for the buck.

But to see true profitablity you would still have to include a % of the cost of the car as paying off the R&D "investment" in the vehicle.
So if you wanted to prorate it, a portion of the "profit" would be considered payment on a loan, the loan being the principle cost of the R&D.

 

[martinjlm]

.......
But the "payoff principle" remains the same. You dont start making a return on investment until the development costs are paid for.

I think that depends on the accounting practices and whether R&D costs are consolidate at a business unit level or a corporate level. I do not know which GM uses, Burt if the R&D is leveled up at a corporate level, then the Volt itself will be measured by operating cost, total revenue from Volts sold, and resulting operating profit or loss. This would exclude R&D because it would be managed at a corporate level. There would still be internal accounting to understand the company's position on how the R&D investment was spent. In other words, was Volt a better investment than the Cadillac CUE system or a new engine program. Each would have required substantial R&D, and like any good company, they would want to know where they got the most bang for the buck.

But to see true profitablity you would still have to include a % of the cost of the car as paying off the R&D "investment" in the vehicle.
So if you wanted to prorate it, a portion of the "profit" would be considered payment on a loan, the loan being the principle cost of the R&D.

True, but when corporate R&D is all in one pot, that is an internal calculation. Just like the cost of an engine block casting is an internal cost of material to the engine plant that produces the engine, and then the cost of the engine would be an internal cost to the assembly plant that assembles the vehicle. The portion of the R&D which the vehicle program pays back internally will never be known publicly. It's like you claiming on your taxes how much you pay your kid to cut your lawn or claiming how much it costs to feed or clothe your kid as a business expense.

 

[theDoctorisIn]

The most disingenuous thing about this is the claim that GM is "losing money" on each Volt they sell.

They're gaining money on each Volt they sell. R&D is, for the most part, a one-time cost. Each time GM sells a Volt, it'll make the total "cost" of each Volt lower. Eventually, the ratio will even itself out.

That's how the free market works.

 

[flacaltenn]

Seems to be a bunch of confusion here..

Marketing and Sales determine the market price of goods. And in that calculation they INCLUDE the amortization of R&D costs. But it ALSO INCLUDES advertising, dealer costs, transport, marketing/sales overhead etc.. Unwritten "sanity check" rules exist on ANY PRODUCT.. For small consumer goods, the MSRPrice should be AT LEAST 2.5 times the "manufactured cost" of the item to cover this overhead.
I suspect for autos it's TYPICALLY more like 1.5 or so..

But all that is based on NORMAL EXPECTED volume, and NORMAL development costs. The Volt is ANYTHING but NORMAL with respect to those variables. And with sales that don't even come NEAR normal volume for a new "from scratch" design --- you're looking at a guaranteed loss overall.

 

[Politico]

Seems to be a bunch of confusion here..

Oh there's no confusion. The volt is an epic fail and the lefties know it. But they have to keep the green agenda going so they just twist the numbers.

 

[martinjlm]

Seems to be a bunch of confusion here..

Oh there's no confusion. The volt is an epic fail and the lefties know it. But they have to keep the green agenda going so they just twist the numbers.

What makes it an epic fail? Sales continue to increase month after month, to the point where Chevrolet sells more Volts than Corvettes. Or do you consider the Corvette an epic failure to? Wish you'd have said something earlier so that GM could have cancelled the Corvette before putting 60 years into it.

• Jan.: 603 sold
• Feb.: 1,023 sold
• Mar.: 2,289 sold
• Apr.: 1,462 sold
• May : 1,680 sold
• June: 1,760 sold
• July: 1,849 sold
• Aug.: 2,831 sold

These numbers are directly from Ward's Automotive, who tracks vehicle sales and registration data for the entire industry. Is this where the lefties are getting in and fudging the numbers?

September numbers not in yet, but expected to be at or better than August numbers

And these numbers do not include Chevrolet Volts and Opel Amperas sold in Europe. Ampera had a 7,000 unit preorder before the first ones were ever shipped. Yeah, guess that has "fail" written all over it.

Maybe it's an epic fail because nobody likes it. Let's see.....the hardware shelf has Motor Trend Car of The Year, North American Car of the Year in 2011, Green Car of the Year at the New York Car Show, an International Engine Of The Year Award at this year's Engine Expo in Stuttgart, Germany, plus a bunch of other awards that I would have to look up to list, and that would take waaaay too long. But that's just automotive journalists and analysts. What about the real world?...people who pay money for them.

Well according to JD Power and Consumer Reports, Volt has the highest customer satisfaction of any vehicle on the road in the US.

http://reviews.cnet.com/8301-13746_7-57334967-48/chevy-volt-scores-highest-satisfaction-rating-in-consumer-reports-survey/. Consumer Reports

http://www.csmonitor.com/Business/In-Gear/2012/0727/Chevy-Volt-wins-drivers-hearts-gets-top-marks-in-satisfaction. JD Power
.

Hmmmm. Failing to see the epic fail here.

 

[martybegan]

The most disingenuous thing about this is the claim that GM is "losing money" on each Volt they sell.

They're gaining money on each Volt they sell. R&D is, for the most part, a one-time cost. Each time GM sells a Volt, it'll make the total "cost" of each Volt lower. Eventually, the ratio will even itself out.

That's how the free market works.

Only if they sell enough of them

 

[Politico]

Wow you really just made a comparison between Volt and Corvette sales.

 

[martinjlm]

Wow you really just made a comparison between Volt and Corvette sales.

Was waiting for your detail on how Volt is an epic fail, despite

A) Strong critical acclaim
B) Strong customer satisfaction scores
C) Month to month sales increases

 

[theDoctorisIn]

The most disingenuous thing about this is the claim that GM is "losing money" on each Volt they sell.

They're gaining money on each Volt they sell. R&D is, for the most part, a one-time cost. Each time GM sells a Volt, it'll make the total "cost" of each Volt lower. Eventually, the ratio will even itself out.

That's how the free market works.

Only if they sell enough of them

Each month, the sales figures have gone up, with them projected to continue doing so.