Jul 10

GM Plans To Lose Money on Hybrid Electric Cars


GM plans to roll out two Two-mode hybrid vehicles this fall, the Chevrolet Tahoe and GMC Yukon.  This system uses software to determine when and how much electric power to the drivetrain both at high and low speeds, and is very expensive.  Analogous to Microsft losing money on its inital X-Box sales, GM will have to lose money on the sale of the vehicles in order to make them affordable to consumers, eventually gaining acceptance, and then expanding the sales volumes (economies of scale).

These 2-mode hybrids will be part of the next-generation fleet of cars, which will include lower end hybrid cars, early low-mileage plugins, and finally by 2010 the Volt.

This intention to lose money was a statement from Bob Lutz.  Also, an important point, GM is not calling the Volt a hybrid, but an “electric car with range assist”.

Will GM also have to lose money on initial Volt sales?

This revolutionary transformation of GM into a cutting-edge green car company is bold, aggressive, and financially risky and they must be applauded for taking these big steps to move the U.S. and the World to a better place.

This entry was posted on Tuesday, July 10th, 2007 at 10:37 am and is filed under Financial. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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