GM Still Taking Taxpayers for a Ride

Last September when Reuters calculated that General Motors (NYSE: GM  ) was losing almost $50,000 on every Chevy Volt it sold the carmaker was apoplectic with indignation at the "grossly wrong" numbers being thrown around. Sure they were losing money, every new technological advance does, but as they built more cars and then released Volt 2.0 they would become profitable.

Well, GM has certainly built more Volts over the last six months or so and they've even sold a few more, too, but then so has Tesla Motors (NASDAQ: TSLA  ) and Nissan (NASDAQOTH: NSANY  ) . In fact Tesla sold more of its all-electric Model S cars in the first quarter of the year than GM did with its Volt, and Nissan turned itself around enough so that its LEAF outsold the Volt in March.

We'll get the April sales numbers in a day or so to see if any traction has been made as spring has gotten under way, and if GM was able to recover from March sales plunging 35%. One thing hasn't changed month to month and that is that the Volt is still a money-losing proposition for GM and for the taxpayers who bailed it out.

In a presentation yesterday, CEO Dan Akerson admitted GM is still losing money on every Volt sold and will continue to do so for the foreseeable future. So what's the solution? Not to admit defeat, that's for sure, at least certainly not when the taxpayer is still nominally footing the bill for your company. Nope, what you do is double down and say you're going to make even more of your money-losing cars than you did before and you're going to make them even cheaper than they are now!

Akerson didn't say how much GM was losing on each Volt, but he did say that if it ever hoped to make a profit on them the carmaker would need to cut as much as $10,000 from the cost of production. That, however, won't be happening until the next-gen model is introduced, which won't be until 2015 or 2016 at the earliest.

The already heavily subsidized Volt starts at less than $40,000 before a $7,500 tax credit kicks in. Last year the Congressional Budget Office estimated that the government's efforts to foist electric vehicles on a public that doesn't really want them will cost taxpayers $7.5 billion through 2019, including grants of $2.4 billion to lithium-ion-battery makers (you know, like bankrupt A123 Systems and Ener1). So how GM will be able to take that much cost out of building the Volt without eliminating any of its features is anyone's guess.

Despite generous rebates, ridiculously low leasing offers, and using fleet sales to juice monthly sales numbers the Volt remains rather unpopular among the car-buying public. In the meantime, though, taxpayers can enjoy the ride GM is taking them on.

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Read/Post Comments (24) | Recommend This Article (11)

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  • Report this Comment On May 01, 2013, at 11:37 AM, drew3rd wrote:

    While the Volt is the Edsel for the new millenium, GM has bigger problems. They continue to hemmorhage money and will do so until they confront their labor and legacy costs. Unfortunately the tax payer will continue to lose money and probably waste even more as bought and paid for govt officials continue to dabble in European style govt run business.

  • Report this Comment On May 01, 2013, at 11:37 AM, poortaxpayer1 wrote:

    Who wants to be on the hook for this junk? not me and apparantly not anyone else. Suckers purchase this junk.

  • Report this Comment On May 01, 2013, at 11:39 AM, dwduke wrote:

    Dump the Volt. Take money that is owed the taxpayers out of the $65 billion dollar pension fund and pay back the taxpayers. Why should the taxayers pay for GM's mistakes?

  • Report this Comment On May 01, 2013, at 11:47 AM, SkepikI wrote:

    This article is a good start, but ignores the bigger problem with GM, the 200 or 300 million shares the US Treasury still owns and the by some accounts $50 or $70 a share it needs to get for them in order to pay back US! for the bailout. I've yet to see a good report on how that is going...likely because its a disaster. Losing tens of millions on the volt may be a jolt (ha) to the public. Losing over a hundred million on the bailout?... cardiac arrest.

  • Report this Comment On May 01, 2013, at 11:52 AM, markinroyahoo wrote:

    Ahh the more things change...what a waste of taxpayer money.

  • Report this Comment On May 01, 2013, at 11:56 AM, hunter3203 wrote:

    The author leaves out some very important information with regard to EVs. It is the government that is pushing the adoption of EVs. The already adopted CAFE standards and CA's EV mandate both require manufacturers to produce these vehicles both now and in the future. It's a waste of taxpayers money to subsidize the purchase of these vehicles, especially $100k Teslas. The people who want these vehicles will purchase them regardless of government incentives. The money would be better used for battery research. Bring down the cost and increase the capability of the battery and EVs will become viable for many consumers.

  • Report this Comment On May 01, 2013, at 12:01 PM, btc909 wrote:

    I'm sure GM looses far more money overall on the Impala & Malibu. The Avalanche was a loser, any other truck made is profitable. Cruze is making money. Small & Mid SUV's are doing well. Full size SUV's need a serious reboot. GM needs to dump the Volt & get it off of the Delta / Cruze platform and start over. If GM isn't able to get the Volt drive train costs down over time get rid of it altogether.

  • Report this Comment On May 01, 2013, at 12:03 PM, hockeyguy17 wrote:

    This makes no sense to me from a product development standpoint. The cost of new products are very large just to get in production. These costs are accounted for in regular P & L statements. The cost of new technology is quite is different. Largely this type of breakthrough cost is very hard to define. Out of our NASA program comes great new systems. If we want more out of private industry the government must support in some way. There are going to be winners and failures on the way. GO GREEN-MSU

  • Report this Comment On May 01, 2013, at 12:08 PM, reallychilly wrote:

    Hey, I don't get it. I just read a few days ago that GM is second in worldwide auto sales only to Toyota (and slightly ahead of VW). With all those sales, you'd think management would have found a way to turn a profit. Yet, I'll bet the big guys in the organization still received six figure yearly bonuses.

  • Report this Comment On May 01, 2013, at 12:13 PM, autoenthusiast wrote:

    joemelrose, facts are facts. the volt is a flop even with the $7500 taxpayer funded tax credit.

    And it's MSNBC and liberals like you that hates America you dolt. Stop getting your "news" from so called "news" outlets such as MSNBC/CNN (all lies)

  • Report this Comment On May 01, 2013, at 12:24 PM, TonyBQE wrote:

    All-electric cars would flourish if, and ONLY if roads' infrastructure be available. Otherwise, that concept would remain as a curiosity gadget.

  • Report this Comment On May 01, 2013, at 12:33 PM, AcuraT wrote:

    The article is critical of GM, but if you look at Tesla, it is going bankrupt. If you look at Nissan and its Leaf, it is not profitable. Yet this article DEMANDS that the Volt be profitable. This is more of a crictcism of the Obama administration and their policies, not necessarily GM trying to meet that requirement. In fact, looking at all the maunfacturers, only one makes money that I know of on electric hybrids - Toyota. I don't believe Ford or Honda makes any money either. They all should stop making hybrids by this logic.

  • Report this Comment On May 01, 2013, at 12:35 PM, jfelano wrote:

    What this Anti-GM idiot (probably works for Ford which is 100 billion in debt by the way) failed to tell you, is that GM has already paid back $29 billion of the $50 billion they borrowed from the Gov.

    Now the Gov needs to force GM to buy the remaining shares at the $53 per share price they bought them at and not the $27.50 they are worth today in order to NOT lose money. Seems like a no brainer to me.

  • Report this Comment On May 01, 2013, at 12:37 PM, jfelano wrote:

    The Volt is still by far the best hybrid out there, even though it's an aging platform.

    Where Chevy went wrong was trying to make it a luxury car too, which is why it's so expensive. Volt 2.0 needs to be more mainstream and lighter to be successful.

  • Report this Comment On May 01, 2013, at 12:42 PM, autoenthusiast wrote:

    jfelano, dollar for dollar the Prius is the best hybrid out there. It uses less electricity per mile than the Volt when running on electric power alone and less gas and electricity per mile when running on electricity and gas (yes contrary to popular belief the Volt can drive the wheels with the gas engine)

    All at a base price that is barely half of the Volt's base price.

  • Report this Comment On May 01, 2013, at 12:59 PM, CluckChicken wrote:

    What is so strange about the whole Volt thing is that people that do not write about the actual car only ever have bad things to say about it (like this article) but those that actually write about the car usually have good things to say about it.

    If you are still upset about GM owing the government money why don't you calculate in the amount of taxes all those GM workers have paid since the bail out. It isn't like all of those workers would have magically found a job elsewhere.

    BTW, just looking at the Income Statement GM show as NI to Shareholders of 4.9B for year end 2012 and a positive cash flow of 2.4B.

  • Report this Comment On May 01, 2013, at 1:36 PM, DaveWeb77 wrote:

    These claims against GM and the Volt were well answered when they were first made. The argument is without merit.

    I'm no George Bush fan, but i believe his administration's investment in the Volt was a very sound decision and has led to GM being the leader in this technology rather than us having to import it (Long Beach just ordered 10 electric buses,... from china)

  • Report this Comment On May 01, 2013, at 1:39 PM, DaveWeb77 wrote:

    AcuraT>>" if you look at Tesla, it is going bankrupt">>

    http://buzz.money.cnn.com/2013/04/30/investors-tesla-stock/

    Apparently not! Tesla is already profitable and will be paying back loans early.

  • Report this Comment On May 01, 2013, at 1:51 PM, salesmangler wrote:

    As a sales manager for a very large Chevrolet dealership I can say for sure that our Volt owners have the highest customer satisfaction rating including Corvette owners...I would like the fool to educate us on how much profit Tesla makes by selling energy tax credits to Ford and GM and how in general these tax credits affect stock analysis.

  • Report this Comment On May 01, 2013, at 2:32 PM, conmaggot wrote:

    The volt reminds me of my first PC in 1985. It cost $1,500 and didn't have a hard drive . . . they were too expensive. However, if you could afford one you had the choice of 5 megs or 10 megs.

    The graphics were composite color.

    The operating system was DOS.

    RAM (short term) memory was about 16 kilobits. Maybe 32 kilobits if you wanted to splurge.

    And some individual, I don't recall his name, said the entire world market for a personal PC for your home would be around 15 machines.

    Now, I've got a 64 gigabit USD stick that holds the same hard storage as 6.4 billion 10 meg hard drives. It's in my pocket and weighs grams.

    My computer at home has terabits of hard drive space. It has unbelievable graphics. And it has 8 gigabits of RAM, which is 250,000 times the memory of my first PC.

    I don't think I spent more than $450 for most of it. I did spend more on the video card, but it was on the order of $300.

    The PCs we buy now are the result of engineering improvements over the span of time from 1985 to present. None of them were magic leaps of great improvement. All were almost unnoticeable, but steady incremental improvements.

    Often people miss the point of the Volt.

    The Volt is not the end of the journey. It's the beginning.

  • Report this Comment On May 01, 2013, at 2:58 PM, conmaggot wrote:

    As a point of full disclosure, I should check my spelling before I post comments anywhere.

    USD should be USB

    Terabits should be terabytes.

    Same for megabytes and kilobytes.

    My first PC had 8 kilobytes of RAM (not 32) and mine at home has 1,000,000 times the memory.

    However, the point I was making should be clear.

    Sorry for my poor post. I'll proofread myself better in the future.

  • Report this Comment On May 01, 2013, at 4:20 PM, gszannyyahoo wrote:

    See no mention on how GM taking taxpayers dollars or should I say how Obama gave away our hard earned money so GM could take it and build plants in China. Not to mention the fact the he stole between 35 to 70 % of Delphi Salaried Retirees Pension while he also used tax payers money to keep UAW penions whole.Anything to win a election

  • Report this Comment On May 01, 2013, at 5:27 PM, bbkty wrote:

    I'm just shocked by this electrifying news.

  • Report this Comment On May 02, 2013, at 7:38 AM, conmaggot wrote:

    Wow, I really should review my comments better. 64 gigabytes of data capacity is what I'm carrying on my USB stick. I've got another 32 gigabytes in my phone. I've got a couple of 16 gigabytes USB sticks and a 32 gigabyte stick also in my pocket.

    I don't need all that storage space. I try to keep redundant backups in case of failure of one stick.

    However, I'm not carrying 6.4 billion 10 meg hard drives of storage. The 64 gig is about 6,400 10 meg hard drives.

    Again, I'm sorry. I was working on making my point. I certainly didn't express it very well.

    But, aside from computers, look at phones, or cars, or bicycles. None of what's available was bestowed upon the world as a fully functioning device. Each of them is far more useful today than it was when it was introduced. And, what we have today would have been considered impossible by the designers of the original phone, car, or bicycle.

    I like the Volt. It's unfair of me to compare it to my first PC. The Volt is a well engineered device put together by competent people. It's a better first attempt than my first PC.

    The Volt has shortcomings.

    Then again, horses were better than the first cars. What we drive now has been receiving incremental improvements for over 100 years.

    Originally phones were useful, as long as you were close enough to one that a runner could find you when somebody called . . . and you could call anyone, if they were close enough to the other end that a runner could find them.

    I bought a used Schwinn Le Tour from a guy who rebuilt bikes for $75. I rode it for 25 years. Two years ago I decided to treat myself to a new bike.

    My new bicycle has front fork suspension that can be locked out when I don't want suspension.

    It has a hydroformed aluminum frame.

    It has hydraulic disc brakes. (yes, hydraulic disc brakes)

    It's fun to ride.

    The world kept working on bicycles while I stuck with my Schwinn.

    Now, imagine what the world will do if we stick to what we have now and ignore the Volt.

    The real question is: will we reap the benefit of the economic activity that's generated as the answers to the Volt's shortcomings are found? Or will the rest of the world reap them while our economy stagnates?

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