In an interview on Sept 10th, published by Reuters, taking place on the sidelines of the Frankfurt auto show, Bob Lutz, GMs vice-chairman discussed some cost issues related to the Volt.
He indicated the Volt may actually lose money for GM.
“This is a venture into the unknown,” Lutz said. “I think we are fully resigned to the fact that the first generation of the Volt may not make a lot of money for us. In fact it may lose money … We just don’t know yet.”
He reiterated the fact that even GM itself doesnt know how much the battery pack will cost them.
“We have a pretty good handle on what the vehicle portion is going to cost,” Lutz said. “What we don’t know is the cost of batteries.”
The report also notes “Lutz has said GM is exploring options that would allow consumers to lease the battery when buying the vehicle in order to bring down the sticker price.”
So, even from the top, aside from technical issues, it appears it’s the cost of the first generation li-ion pack that may delay release of the car.
This entry was posted on Wednesday, September 12th, 2007 at 7:38 am and is filed under Financial. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Sep 12th, 2007 (9:04 am)From all that Lutz has said in the past two days, I don’t think it’s warranted to speculate that GM may delay release of the VOLT due to battery costs. He has said in the past 1) that the first batteries WILL be higher priced 2) the VOLT is scheduled to launch 2010, a claim reiterated more strongly by GM’s Europe head, who said last week that the Opel version WILL launch late 2010, no ifs, ands or buts. Lutz also said in the past that GM knows and accepts the fact that the VOLT will lose money that first or first few years. I think that GM, if anything, is underestimating the demand
out there for cars like the VOLT and Flextreme. I foresee a very firm list price, perhaps over list. Just look at the interest in much higher priced EVs that are practically amateur efforts, with unknown companies behind them, and vehicles that are often not even viable alternatives to a gas auto. I also believe that perhaps Lutz is clinging too strongly to that 40 mile range feature. If the batteries ARE too pricey, even for GM, what about a battery pack size option with 20, 30 and 40 mile
packs, with ability for owner to add more batteries in the future as their price inevitably comes down? How about battery pack size as an alternative/aditional pricing option? If Lutz is hung up on the
80% statistic about 40 mile average commute, remind him that commutes come in all sizes and many don’t need a 40 mile range, and there is also the very real possibility (I call it a certainty) that
employers will provide outlets for their plug-in workers, which effectively doubles the commute range of their vehicles. If their situation changes, they can always add more bateries at that time. I think Lutz is thinking too narrowly. Is there a way to email suggestions to the VOLT team and/or Bob Lutz?
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Sep 12th, 2007 (9:15 am)What about GM-provided, low-interest 10 year financing (with a strong 10 year warranty) and a high cost that will earn GM back its money and then-some? In 2010, I’m almost certain that the cost-savings of electricity to gasoline will be so much that most Americans, if they have the right financing, will still be begging for a practical EV. On top of that, my guess is that a Volt will end up lasting 15 to 20 years easy with limited deterioration. Americans want this car, America needs this car, and so does every other nation in the world. Maybe price targets can be modified a little with alternative financing schemes beyond leasing developed. Those are my thoughts.
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Sep 12th, 2007 (9:26 am)I agree with Kent. 20 miles would handle my roundtrip commute. How much cheaper would that battery be than the 40 mile version?
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Sep 12th, 2007 (9:37 am)“20 miles would handle my roundtrip commute. How much cheaper would that battery be than the 40 mile version?”
Ummm… half the range = 50%. Actually, it would probably be a little more than 50% since you would get a weight savings by removing half of the batteries.
I like the 20 mile option idea. They don’t sell one storage size on the Ipod for similar reasons. We may all like to have the ability to store 100,000 songs but we’re not all willing to pay for it. I would like to drive 40 miles on electric, but if I can’t afford it I would happily buy the 20 mile range car.
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Sep 12th, 2007 (9:37 am)A lot of Volt owners are not going to be happy about leasing the battery, including me. I don’t like the idea of leasing but if they do, GM should not charge just one price by the month; that will drive up the cost too much for low mileage drivers. If GM goes down the lease battery path they should have a formula that is related to miles driven on battery alone at one price and driven with generator assist at a different price. And possibly related to the number of utility cycle recharges or energy used. The current lease charge formula should also be viewable by the driver on the console and readable by GM remotely, as do many electric utilities now. And obviously the lease price must be much less than a pure gas vehicle, otherwise they will kill the Volt before it has a chance to get off the ground. I understand GM may need a cash cow to sustain their business.
Folk, I think we are on the verge of GM being the next Exxon.
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Sep 12th, 2007 (12:15 pm)I think configurable ranges will be vital to making any plug-in a commercial success.
I only need about 10 miles for my trip to work and I have access to a plug. If the Volt battery costs $10K (certainly not unreasonable) that means I would be “wasting” $8K by buying the Volt. Even if the battery price is half of that I would be “wasting” $4K.
Providing the range could be made modular, one problem I could foresee is buyers getting antsy at the thought of paying $250 (assuming a 10K battery and 40 mile range) for each additional mile. When you think about it (which they might not) the chance of using certain “miles” of battery could be so small and so infrequent and the savings of when the “mile” is used so small that as a value proposition it becomes ridiculous to consider.
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Sep 12th, 2007 (12:19 pm)Whoops… I was having some kilometer/mile conversion issues. I would be wasting 3/4 of the Volt’s 40 mile battery so that would be 7.5K, not 8.
Also of interest… since I get “free” power at work, there might be some interesting advantages to timing the recharge to coincide with being at work instead of at home.
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Sep 12th, 2007 (12:44 pm)Remember that the 1st Prius lost Toyota a considerable amount of money. The real issue here is how much the battery will cost in 2012.
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Sep 12th, 2007 (1:15 pm)Kent, and others, the problem with smaller battery packs for reduced range are such:
Fewer cells will result in less voltage. Less power. Less power makes car not go good.
Different packs all have to be engineered, which adds to R&D costs.
I’ve said it before, and I’ll say it again – don’t let the perfect be the enemy of the good!
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Sep 12th, 2007 (3:19 pm)Small packs could be made with the same voltage. Cell size would vary not number of cells.
I think some of you are misunderstanding what is going on. Different battery sizes WILL come eventually, and the loosing money part has nothing to do with GM underestimating demand.
Yall keep talking about making demand go up by offering more battery options etc. Makeing one battery size is cheaper than making two battery sizes. And since they know they will be sold out why increase the cost of the battery by making two sizes.
GM might lose money because they are going to sell the car for a maximium dollar price of X (maybe 30K). If the battery and car cost 29 then they make money but if the cost of the car and the battery cost 40K then they will loose 10K! They aren’t allowing the cost of the car to rise above that predetermined cost. They realize that over time battery price and size options and production VOLUME will increase and bring down their cost and THEN allow them to make a profit or a bigger profit.
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Sep 12th, 2007 (4:34 pm)I think independence of oil is the KEY to the volt
The whole word HYBIRD seems like a Combo technology.
Electric Car seems superior in the way that it uses no transmission and no engine. This equates to a longer life and a car that could last forever as long as the electric motors last.
My feeling is they SHOULD offer the Volt as an option without the range extender. No gass engine at all.
This option would be for real ECO people who want no gas at all,
would directly compete with the teslea.
Last but not least with no engine the weight would be less and you could have an option for an upgraded battery.
2 vehicle systems would define the volt as a special car.
The Prius could never do this and never will.
The volt is pure electric and by having a No gas at all option would really define the car even more.
The owners in large city’s might never use the gas engine at all and would ad to the weight and more service.
Were if you lived in the country the gas range extender engine would be a must.
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Sep 12th, 2007 (5:34 pm)Don’t let the perfect be the enemy of the good!
The Volt is GOOD. Leave it be. Let it get out. Then worry about everything else.
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Sep 12th, 2007 (7:09 pm)What most people are forgetting is that the cost of oil is going to be vastly greater in 2010 than it is now. Today, for example, oil hit $80/barrel for the first time in HISTORY. [http://news.bbc.co.uk/1/hi/business/6991567.stm]
Oil hit this record without…
- A terrorist attack
- A natural disaster (e.g. hurricane)
- A massive bombing campaign against Iran
We are standing on thin ice as we speak. Come 2010, the cost of the Volt will be a non-issue in my opinion. We will happily spend $30,000 on the car and feel lucky.
Also, don’t forget about tax breaks. I believe the current tax breaks for PHEVs is between $4000-$6000 per vehicle purchased. Do you think this amount might be larger come 2010? I do.
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Sep 12th, 2007 (7:16 pm)All those things will come when we have many car companies offering many products and competition sets in and all the niches are filled. The volt doesn’t do all those things because right now they can’t. Give it time. The first Volt hasn’t been sold yet. In 2009 we will all be reading about all the different serial hybrids that are about to come out and how each companies proposed cars will be better than the others for a whole host of reasons, such as battery size etc etc etc.
First comes the Volt then [b]after that[/b] comes options and niche markets. All those options add cost to the designing and planning stages. GM wants to beat Toyota, Honda etc. and building one car is faster than building numerous models and it will keep cost down some too.
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Sep 12th, 2007 (7:22 pm)Matt986 – Yes, I agree. In order to get the initial car reliable, designers need to focus on testing a very limited number of builds. Battery and range enxtender options will come later.
Let’s put it this way, if the first cars come with many options, and some of these options have problems, the whole line may get a bad name. Then where would we be?
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Sep 12th, 2007 (8:18 pm)Obviously, if Lutz, the klutz, would consider lead acid or NiMH batteries, then the “unknown” costs of battery technology would be obviated.
I want this vehicle now, not in 3 years. Ergo, the first manufacturer who will build such a vehicle gets my hard earned money, and this waffling on GM’s part indicates they will NOT be the one.
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Sep 12th, 2007 (9:18 pm)jabroni – For the same electrical storage, NiMH batteries are about twice as big and twice as heavy as Li/Ion. Lead acid is even worse.
Besides, even if there were no issues with the batteries, you still wouldn’t get a car much before 2010. Remember that a serial hybrid is a totally new design. They need to go through a few design iterations and then a whole bunch of testing before it gets good and reliable. Let’s give them a couple of years to get it right. We don’t want any lemons.
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Sep 12th, 2007 (11:33 pm)I understand that one battery option is more cost effective for GM. But GM should also understand that I (and many others) will likely end up buying the plug-in prius instead as it will be much less expensive.
As far as bringing the cost of the battery down via volume, you can do that by selling a lot of cells in fewer cars or fewer cells in more cars. There is NO doubt in my mind that GM will sell more cells if the Volt has a smaller battery.
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Sep 13th, 2007 (12:04 am)The key to reducing the cost of the battery is reducing the oversizing down from 100%. If they could pull off the 8kwh charging with just 12kwh of batteries, you have cut the oversize to 50% and cut the battery cost by 25%.
To do this it would need to charge up to 90% then discharge down to 23% or so. Perhaps they will find that the batteries can take the abuse. Here are some people talking about them on amazon. These guys are quick charging these and draining them all day long building houses. http://www.amazon.com/DeWalt-DC300K-Heavy-Duty-Lithium-Ion-Cordless/dp/B000F1KPFO
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Sep 13th, 2007 (12:10 am)Kent was asking about ways to contact Bob Lutz or provide feedback to him or GM. Apparently Mr Lutz has his own blog:
http://fastlane.gmblogs.com/
It appears that Mr Lutz both reads the blog and contributes to it. It may be worth checking out.
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Sep 13th, 2007 (12:37 am)Correction to my earlier post. My link was to a GM blog, not a Mr Lutz blog.
http://fastlane.gmblogs.com/
But he does contribute.
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Sep 13th, 2007 (7:01 am)Dave G:
First of all, just let me state for the record that I want the Volt more than any other car I have owned! In fact, if they were available next year, I would buy TWO.
NiMH batteries are proven and reliable as evidenced by the hundreds of Toyota RAV4’s still on the road. It would take about 300 pounds of NiMH batteries to give the Volt a 40 mile range and I am sure this size of a battery pack would not be an obstacle. Also, remember that the EV1 went over 100 miles a charge on a lead acid pack, so GM knows that the battery technology is sufficient at THIS time. I am unsure why they won’t begin the process using either of these two chemistries.
Finally, this car is NOT a new design. Did you know that GM had a EV1 serial hybrid back in the 90’s that was just like the Volt? You can see it on the web. It was quite the automobile. So really, all GM would have to do is dig up the specs on the EV1 serial hybrid and apply to the Volt.
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Sep 13th, 2007 (8:54 am)jabroni – Besides size and weight, I believe NiMH batteries have other issues:
1) As I understand it, Chevron now owns the patents for NiMH, and they won’t allow it to be used in any car that doesn’t use gasoline as the main fuel source.
2) I believe NiMH has more issues with self-discharge. For example, if you park it for a month someplace where you can’t plug in, I believe the Li/Ion batteries will hold the charge much better.
As for other serial hybrids – yes, the concept has been around for a while, and I do remember that some of the EV1s had a range extender (in the trunk as I recall).
Yes, if the Volt were here now I would be very tempted to go out and buy one. But this is not about me. We need the masses to buy into this. If GM rushes the car out early, then there will most likely be problems. Once people hear about the problems, they’re likely to dismiss the whole concept. So getting the car out earlier may actually delay mass-appeal, which would prolong the problems associated with gas powered cars.
If anyone on the design team is reading these posts – please do everything possible to get this car right the first time. A big win early in the game would do wonders for PHEVs, and GM in particular.
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Sep 13th, 2007 (4:00 pm)E-flex and other plug-in range-extending EV and hybrid designs are going to come from all automakers. We\’ll also soon enough to see what we\’ll consider completely unacceptable gas prices with no solutions to bring them down other than switch to electric cars and biofuels. The currently released E-flex models will be built soon enough, and I\’m guessing that they\’ll be using the A123 Systems batteries. A123 Systems, by the way, are the ones who make the DeWalt powertool batteries. GM is on target with all of this. The Volt is the direct descendant of the EV1 with the range-extender, but a better version of it. The only thing delaying the release is competition between the two battery makers and standard production lag. My money is on the A123 System/Continental AG contract, as well as the 2010 release date. The Volt and it\’s E-flex family are coming, sooner rather than later!
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