GM Says Volt Is Long-Term Investment

Earlier today, Reuters published a report going over the numbers of GM's (NYSE: GM  ) Chevy Volt, and positing that selling them is not good for the company's bottom line. "Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds, according to estimates provided to Reuters by industry analysts and manufacturing experts," stated the article.

With more than 100 comments and 5,000 Facebook recommendations on reuters.com, the story has piled on in a big way to Volt's already tarnished reputation.

GM fired back in a press release, taking particular issue with how Reuters calculated loss per unit. Reuters allocated product development costs across the number of Volts sold instead of across the number that will be sold across the lifetime of the program, wrote GM.

GM also pointed out that the Chevy Volt is part of a larger research initiative to bolster the corporation's electric vehicle technology, research that will ultimately benefit the company as a whole.

GM can't definitively know whether the Volt will or won't pay off in the long run, but the company is attempting to stress that Reuters can't, either.

Fool contributor Justin Loiseau owns none of these stocks. You can follow him on Twitter, @TMFJLoand on Motley Fool CAPS, @TMFJLo.

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  • Report this Comment On September 10, 2012, at 5:17 PM, Darwood11 wrote:

    "GM also pointed out that the Chevy Volt is part of a larger research initiative to bolster the corporation's electric vehicle technology..."

    I'd say that's reasonable. After all, GM has dozens of models to spread it gasoline technology development across, but only one electric vehicle.

    To be honest, when I read the Reuter's article, I hit the "flush" button. I found it interesting that so many who complain about "short sighted" corporations and managers, failed to grasp the longer term significance. True, it's far, far too early to say if GM's experiment is a good one. On the other hand, the company is extricating it from the government bail out and that "other" company that goes by the name "Tesla" got about $1/2 billion back in 2009 and I think it's safe to say, based solely on sales, that it remains unclear if the company will succeed.

    It's my opinion that the Reuters author of the GM Volt article would probably give "Mad Money" Cramer a gold star for investment advice.

    Disclaimer: I don't own stock in GM or Tesla Motors.

  • Report this Comment On September 10, 2012, at 6:46 PM, NOTvuffett wrote:

    Jesus, where to start... a car with a list price of $41k, a govt. subsidy of $7.5k and it is still losing this much on each unit sold? The equivalent model only gas powered costs half a much. How is this good for anybody?

    Oh, did I mention your batteries would probably be junk in 5 years? What about the fact that 95% of rare earth elements (necessary for the motors, etc. ) come from China? Do you know that mining and refining of rare earth elements releases toxins into the environment?

    Do you know that China is starting to regulate these metals as strategic materials?

    To me, it seems like the Europeans are on the right path. Small diesel engines are just fine for a daily driver. The last time I calculated the number, to maintain normal highway speed on level ground with a medium size car took about 15hp. This includes both mechanical losses and aerodynamic resistances.

  • Report this Comment On September 10, 2012, at 7:30 PM, NOTvuffett wrote:

    nobody will see this unless somebody says, 'hell yes', or 'hell no'. i don't care, i invite debate, but i hate that topics are pushed off so quickly on MF

  • Report this Comment On September 10, 2012, at 8:09 PM, devoish wrote:

    " a car with a list price of $41k, a govt. subsidy of $7.5k and it is still losing this much on each unit sold? The equivalent model only gas powered costs half a much. How is this good for anybody?

    Oh, did I mention your batteries would probably be junk in 5 years? What about the fact that 95% of rare earth elements (necessary for the motors, etc. ) come from China? Do you know that mining and refining of rare earth elements releases toxins into the environment?" Notvuffett

    Woww dudes, this car sucks man.

    Best wishes,

    Steven - Whose MIL made it from VT to Long Island on $5.00 in a Volt and then gave me a chance to test drive it.

  • Report this Comment On September 11, 2012, at 12:09 AM, steeeeve wrote:

    Disclaimer: I'm one of those Fools who bought a Volt. And it's the best car I've ever owned.

    So if we read all the commentary on American auto makers these days, we're to be angry that (a) they're falling technologically behind their overseas competition and (b) GM made a large investment in R&D to develop not just the Volt, but the technologies necessary to create the Volt as well as other hybrid and electric vehicles. Right.

    The fact that the "experts" referenced in that article were using such inappropriate methods to amortize the development costs of the Volt makes it clear that the article is all spin and no substance. Absolutely nobody would make that mistake honestly.

  • Report this Comment On September 11, 2012, at 4:03 AM, AvianFlu wrote:

    The Volt may be a horrible financial nightmare for the manufacturer, but it is difficult to get enthusiastic about it as a consumer either.

    I sincerely hope the batteries last longer than all my items around the house in which the batteries seem to fail way before expected...

  • Report this Comment On September 11, 2012, at 5:22 AM, devoish wrote:

    My MIL is very enthusiastic, and the car batteries in the prius have already lasted over ten years. I would say the facts finish the fear.

    She smiles and gets all giggly when she reads about XOM profits, rising fuel prices and supply disruptions.

    I'm not making it up dudes, she really likes the car.

    Best wishes,

    Steven

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