Bob Lutz: Chevy Volt On Verge of Profitability

A recent flurry of Volt bashing has arisen in the conservative media, likely, due to some desperate need to show that President Obama is a failure as Mitt Romney continues to trail in the polls. However, these destructive attacks target a source of American innovation and achievement as well as directly inhibit efforts for increasing energy independence at a time of rising fuel prices and climate instability.

So the question arises, do these sources really want to fight this battle?

The primary line of attack seems to have crystallized around a radical notion that each Volt is losing 40,000, 50,000, or even 60,000+ per vehicle sold. The fuzzy math includes investment in the production figures and makes a number of bad assumptions on the costs for vehicle systems. In the end, the numbers presented in the articles just don’t add up. And Bob Lutz agrees.

Lutz is both a conservative and a former executive at General Motors. So Lutz knows his business. And he apparently doesn’t wish to be drawn into the wrong side of a media war waged for political gain. In a recent interview Lutz noted:

“The statement that GM “loses” over $40K per Volt is preposterous. What the “analyst” in whom poor Ben Klayman placed his faith has done is to divide the total development cost and plant investment by the number of Volts produced thus  far. That’s like saying that a real estate company that puts up a $10 million building and has rental income of one million the first year is “losing” 9 million dollars, or several hundred thousand per renter.”

In the statement, Lutz refers to a recent article in Reuters which estimated the Volt lost 49,000 dollars per sale. Over past months, Reuters has been notorious for spewing this kind of bad information from everything related to alternative energy and climate change. They vacillate between responsible journalism and outrageous claims like the one posted above.

Lutz countered by noting that the Volt is likely very close to profitability already:

“Thus, the “Volt”, by my estimate, is either close to “variable break-even” or may be on the cusp of a positive gross margin. Deduct the per-unit allocation for all fixed cost, depreciation and amortization and it is, surely, still “under water”….but not by much, and less and less so as the volume builds and other, higher-margin GM cars, like the Cadillac ELR, piggy-back off of the Volt’s initial investment.”

Lutz’s comments come on the heels of two consecutive months of record Volt sales. A series of records some ‘journalists’ seem desperate to downgrade. I suppose the prospect of an American electric vehicle revolution is just too much of a good thing for some to stomach? In any case, despite these salient admissions by Lutz, the mad, ill founded, and half-crazed attacks on the Volt continue unabated. One would think that conservative-linked sources would have learned that attacking American innovation and the prowess of American workers was bad political policy. We’ll have to see how things bear out in the coming months and days. But, with each passing week, the purveyors of this form of ‘slanted beyond the tilt’ messaging are becoming more and more of a laughingstock.

Links:

http://insideevs.com/bob-lutz-responds-to-reuters-article-chevrolet-volt-is-at-variable-break-even-now-video/#comment-29792

http://mediamatters.org/blog/2012/09/13/volt-bashing-trumps-national-security-in-the-co/189876

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