Recently we heard a statement from Dee Allen of GM about the Volt costing around $35,000. Since it’s of tremendous interest and importance, I decided to look into this in more detail. I managed to catch up with Mr. Allen who it turns out is GMs spokesperson on global product and brands, and pretty much Bob Lutz’ communication guy. We had the following discussion:
How is the $35,000 number generated, since the car isn’t built yet how do you know what it will cost?
We put together estimates, the vehicle itself and then estimates for the different kind of equipment it will carry and the engine. You go through and do a cost analysis. We’ve been working on that and one of the things, and I’m just repeating what Bob said, I’m not the expert on this, is, we were down in Dallas speaking to some of the reporters, and that’s where he said instead of around $30,000, its around $35,000 and the reason is that when we got started on this we didn’t anticipate so many of the vehicle systems that are currently in existence that we’re using on vehicles were building today are fairly high energy users. The examples are things like windshield wipers and 8-speaker sound systems and so on. We don’t usually think of them as big energy users particularly because we’ve got so much energy being generated by the gasoline engine. You don’t end up studying how much electrical draw there is normally on each of those things as your driving down the road. Now all of a sudden were tackling a vehicle that as you know were targeting for 40 or more miles on a charge. Thats when you realize that is your driving that vehicle when its raining or cold outside and your using a heater and your using the windshield wipers you using up motive energy.
So one of the things that the team has been doing is working on low energy usage systems that we would use on the Volt so that you don’t draw energy and reduce your driving radius.
When you did the initial computer modelling before announcing the concept wasn’t that idea of using lower power components considered?
As far as I know from what Bob was saying, some of those things were not considered. To some extent you take these things for granted. As people are used to high power stereo systems and A/C and it takes energy. What Bob was saying is he was absolutely amazed how much power the stereo uses. Most of us think of A/C as being a major energy user, but people don’t think that using the radio may impact their mileage. When you’re counting on the battery, then you all of a sudden realize that any load you put on it will reduce it.
Are you saying the new components will have to replace the ones that are typically used, since you cant use off the shelf components, and will that increase the cost?
Well yes you have engineering costs going into doing that and tooling costs and so on. Your essentially doing some new componentry that obviously has some design engineering and manufacturing cost associated with it. And one of the things that Bob explained was that there are things we could do, for example if we come up with a low wattage windshield wiper system, lets say, if we spend a lot of time on it there probably things we could do to take cost out of that system, as we’re designing it there are always improvements you can find. But when you are working against a tight deadline like we are, for us this is like a “moon-shot”and we set a goal for the team and were going to try like the devil to make that goal and so when you’ve got that kind of a time constraint on it we are going to go for a solution rather than perhaps the most cost effective solution.
Are you saying you will have to engineer design and manufacturing these components (i.e. windshield wipers) in house?
Or outsourcing them.
Is there a problem with finding suppliers or their ability to ramp up production?
Even if were not talking about the Volt and were talking about any product, there are two ways to go about that. GM can do the designing or we can go to a supplier and say this is what we need and these are the parameters and ask them to do the design work. Either way there is design work involved and of course the engineering of the design, what we call design engineering, and of course testing, etc. Using the windshield wiper as an example, you have to go through rigorous testing as this is essentially a safety device. So now you have to do testing and simulate usage over a long period of time and it has to be able to hold up to snow and ice.
Has GM actually started the process of designing these new systems?
Absolutely. This program is unique in the annals (of automotive history), but the way were going about this is were designing a unique powerplant, a unique vehicle, and unique components to go into the vehicle, and were doing it all simultaneously. It didn’t take long to realize that wed needed to use low power systems.
When we showed the concept to people, the design work was done without a whole lot of testing. When we made the call and put it in the wind tunnel, Bob likes to describe it as “a brick”. Aero work isn’t usually done on a concept that you’d show at an auto show.
With this type of vehicle that is going to use electric power, every part of the vehicle that draws off the power or anything aerodynamic can lead to a loss of range.
Don’t you have components from the EV-1 like the windshield wipers and stereo that you can use for the Volt?
In some cases yes, and I’ll tell you the things that we learned from the EV-1 as I’m sure Frank (Weber) has said, it gives us tremendous advantage because we do have experience. I don’t know about the (actual EV-1) parts, we didn’t exactly mass-produce EV-1s either. That was also a little while ago, and in many cases for example the windshield wipers have to be fitted to the type, size, and shape of the vehicle.
When Bob Lutz discussed the pricing update, did he say closer to $40,000 or exactly $35,000, what were his exact words?
What Bob said was that our original goal was targeted around the $30,000 mark and now as we’ve gotten into it more deeply and with the development work we’ve been doing, I wish it wasn’t so, but its probably going to be more like $35,000. The explanation was what you and I have already talked about.
Does the $35,000 price refer to actually owning the battery pack or not include leasing the battery?
I could say if I knew, but I don’t know. Maybe thats a question for Bob when we’re together in New York (Volt Nation).
Do you know if the issue of leasing the battery is still on the table?
I honestly don’t know. One of the things we’ve said consistently is that we are going to be a transparent as possible about this, I mean were no going to give daily reports of course, but were going to be transparent about it and were going to let people know how the development is going, and if we run into a hiccup were going to let them know, and if we get successes were going to let them know. Were working with the battery manufacturers right now and were testing battery packs. The batteries have not been an issue at all.
I still see things in the media that the battery will still be an issue because of computers that caught on fire and all that kind of stuff. As Bob says, saying lithium-ion is like saying beer. There are a lot of kind of lihtium-ions like there are a lot of kinds of beer. The lithium ion were using has been great.
Do you know how many packs are GMs possession right now?
I don’t know. I know we’ve had deliveries from both teams. I haven’t talked to Bob about this in the last two weeks, so I really don’t know where we stand.
Do you know if there is an actual pack in a mule yet?
I don’t know. I do know that Bob has said hes going to be driving a mule this Spring. But I don’t know where we stand with that right now.
This entry was posted on Friday, February 29th, 2008 at 6:00 am and is filed under Financial, GM Q and A. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.