By Mark Brooks
Commercial Pilot and Flight Instructor
In August, the Chevy Volt racked up the highest sales since its launch, but you wouldn’t know it by some of the headlines in the press.
The Volt is perhaps the most award-winning, technologically advanced car ever developed and brought to market in North America. But the extent of its coverage in the U.S. press is out of all proportions to its originally intended role as GM’s answer to the Toyota Prius.
Somewhere along the way in, order to paint the current U.S. president’s alternative energy policies as a failure, it became fashionable for the president’s opponents to portray the new kid on the road, the Chevy volt, as a flop.
With the Volt continuing to build sales momentum month over month this has become an undeniable problem for those trying to bully the new kid into his place.
But since when have concrete facts like engineering and sales figures stopped a tabloid journalist? Enter the top-five Volt sales myths which are:
1) The Volt is a selling a fraction of what is required to make it a success.
2) The Pentagon and U.S. Government are buying most of the Volts
3) GM’s corporate buddies such General Electric are making the Volt look good with large fleet purchases.
4) The Volt is selling for $49,000 less than it costs to make and therefore its sales success is a bad thing that is costing GM money.
5) GM can only sell Volts with deep discounts.
Often cross citing each other and rarely providing real quotes or references, these myths are music to the ears of those trying to bully the Volt off our roads.
Each of these myths is also easily disproved with nothing more than a few Google searches. Here are these myths easily busted.
Myth 1: The Volt is a Sales flop, selling a fraction of what is required to make it a success.
Busted: The Volt is now selling three times the number needed to breakeven (see myth 4 for details). In fact in August the Volt was outselling 50 percent of all car models on the North American market and is now outselling every single hybrid model sold by BMW, Ford, Honda, and Volkswagen. The Volt is also well in front of the adoption curve of another “new kid” when they first arrived, the Toyota Prius.
But to some extent GM has to take some of the blame for downplaying its own success. Back in 2010 when it became clear the Volt was a solidly engineered contender bound to win multiple awards for its excellent qualities, a few GM executives got carried away and quoted sales goals equal to the production capacity of the updated Hamtramck assemble plant. This despite the well know adoption hurdles to the new technology. In 2012 GM reined in its cheerleading sales folks and in the words of Bob Lutz, GM’s former Vice Chairman, reminded them of that the Volt’s “ prime purpose was to introduce a new generation of technology.”
So let’s stack the Volt against cars in its own category – plug-in electric – the Volt is the runaway winner. In August, at 2,800 sold the Volt was on its way to tripling the Toyota Prius PHV’s 1,047 sales, which was followed by the Nissan Leaf’s 685 sales.
Next against the establish hybrids, as mentioned, the Volt is selling well. In fact the only ones it didn’t outsell were the Toyota Prius, Camry Hybrid, and the Hyundai Sonata Hybrid ( and its closing in on the Camry Hybrid fast).
But here is something really unexpected, the Volt is now outsell many conventional luxury sedans in its price range including both the BMW 7-Series and the Mercedes-Benz S Class, and even the mid-size Audi A6.
Myth 2: The Pentagon and U.S. Government is buying most of the Volts
Busted: The U.S. government has so far purchased only 130 Volts over the last year (source GM). This despite running a fleet of over 200,000 cars. Every attempt to purchase even a handful of Volts has been met by a firestorm of attention by local and national press that has created a barrier to sales.
Myth 3: General Electric and other corporations are making large fleet purchases.
Busted: Although in 2011 several large U.S. companies publicly announced that they would add a large number of Volts to their fleets, they have not yet done so. GE specifically announced that it would add as many as 12,000 Volts to its fleet over the next five years. So far GE has not followed through on this and has purchased only several hundred Volts. Because of the politics of the Volt sales in much of the U.S. press, GE and others are believed to be holding back so as not to be seen as taking sides in the November election. Fleet sales of all types only accounted for 100 to 200 Volts each month. Of the 2,800 volts sold in August in the U.S. only 100 went to fleets.
Myth 4: The Volt is selling for $49,000 less than it cost to make.
Busted, and busted again: This myth has been around for a while. The idea behind it is to present any Volts sales success as a bad thing that is costing GM big money.
This started back in December 2011 when a Fox news commentator “suggested” that the Volt cost $250,000 each to make. This creative accounting wrote off six years of the research and development costs ($1.2 billion in R&D) of the Voltec drivetrain into the number of Volts then sold. This August a Reuters article used this same weird math to recalculate the cost as $89,000 by using just U.S. Volt sales numbers to date.
This number will continue to decrease as the Volt sales volume builds and other, higher-margin GM cars, like the Cadillac ELR, piggy-back off of the Volt’s initial investment.
According to GM and its former head of the volt program, Bob Lutz , the Volt is actually on the cusp of break even at this sales pace. What this means is, excluding R&D costs GM is making money with each Volt sold, possible to the tune of $10,000 or more.
If you use industry standards, such as amortizing the Volts R&D over the next 10 years of its product cycle, the only way to conceivable come up with the Volt losing serious money is if the Volt and related product sales remained at or below 1,000 a month for all models (120,000 over the next decade). In short, assuming you ignore the irrational demands of a few pundits to write off the R&D over the first 18 months instead of the usual decade, each Volt sold is making GM money!
Myth 5: GM can only sell Volts with deep discounts.
False: End of year discounts on last year’s model is not normally headline news, unless of course you are talking about the Chevy Volt. In August, as the 2012 Volt was phasing out in favor of the 2013 model year, GM provided incentives, as it usually does with other models to clear out old stock. This included great lease deals, buyer incentives and dealer bonuses for making sales targets.
Before these offers the volt sales were growing steadily and the August numbers simply built on that success with typical end of year clearance events that still left GM room for profit (see previous myth 4).
Even though repeatedly disproved by multiple credible news organization and real journalist the Myths continue to thrive in the hands of what can only be called cyber bullies.
So what’s the new kid to do when confronted by cyber bullies? I think we all already know the answer.
Twice more before the election, when the Volt’s Septembers and October sales figures are released, these myths will once again resurface. Make sure to give the myth repeaters the intellectual respect all cyber bullies deserve.
Mark Brooks owns a 2012 Volt, #2012-00926. He teaches commercial pilots in Toronto, Canada.
This entry was posted on Tuesday, September 25th, 2012 at 5:55 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.