
The Chevy Volt concept was first unveiled in January 2007 to much fanfare and great national enthusiasm. Soon after, the typically outspoken GM vice chairman Bob Lutz told the world he expected the Volt to be sold for under $30,000. This further stoked the enthusiasm.
Later, he had to take those words back. In a newly published interview, he explains why.
It turns out he figured GM could use off-the-shelf components for everything but the battery.
“When I said I hope to sell it in the 20s, I just thought, well, if a conventional car of that size with a conventional four-cylinder engine, we can sell it for $15,000 or $16,000, then let’s notionally add $8,000 for the battery and we’re at $25,000,” said Lutz. “That’s the way my brain worked on that one.”
It was determined during development that the Volt would need many specialized and custom components including an expensive drivetrain, microprocessor controllers, and electrified AC compressor and brakes. Parts like these were not easy to find or cheap in the supplier market.
“You have to go to suppliers that you think have the experience, the capability and the manufacturing scale to do this,” said GM VP Jon Lauckner, co-creator of the Volt. “In many cases, it’s less than the number of fingers on your hand, with some fingers to spare.”
Another major cost factor for the car is guaranteeing the brand new high-tech battery pack for 10 years, 150,000 miles that is required by CARB. Lutz noted that if warranty costs don’t reach projected values, “the car is OK almost from day one.”
The author if this report claims to know the Volt’s battery pack will be $8000, and that the car will retail for $40,000, with GM selling them to dealers at a loss, in the mid to upper 30s. The average transaction price including tax and destination charges with thus be about $43,000.
It was also mentioned that the $1 billion development cost for the car almost killed the program as that is the same cost to develop three conventional cars. It was the tremendous public pressure, which I daresay this site had a lot to do with, that kept the program alive.
Experts expect the battery pack cost to be cut in half in 5 to 10 years at that point allowing the car to sell for under $30,000. For those future versions, Lutz expects GM to keep the same 40 mile range, using the reductions in battery price instead to lower the vehicle’s cost to consumers.
“I think it’s all going to head in the direction of a smaller, lighter battery at much lower cost delivering the same range,” said Lutz.
Though costs could also be reduced by spreading Voltec into multiple vehicles, like the Orlando we just mentioned, or the Cadillac Converj, these cars remain in limbo. Lutz said he expects GM to move slowly on these, stating “vehicle price is going to be a big issue for a long time to come.”
Source (AdAge)