[classicman]

Some more info on the Volt

GM Says Chevrolet Volt Won't 'Pay the Rent'

General Motors is pouring money into the Chevrolet Volt but concedes it won't make money on the range-extended electric vehicle anytime soon.

Newly installed CEO Fritz Henderson argues that pioneering projects like the Volt typically lose money until the technology catches on. It is simply the cost of doing business.

"On some products, the costs, particularly in advanced technologies, are high," he said in a lengthy interview with Automotive News (free subscription required). "The Volt is a case study. And that means it doesn't necessarily pay the rent. It actually consumes rent when it's launched."

In other words, General Motors is going to lose its shirt until the Volt establishes itself in the marketplace. Former vice chairman Bob Lutz said as much a year ago. But it is a price that must be paid, and GM should be commended for remaining committed to the Volt.

The Obama Administration doesn't understand that.

"You don't get to skip Gen 1," Henderson said. "You've got to do Gen 1 and 2 to get to Gen 3. And what we want to do is make sure we launch the car well, that we get the maximum learning from it, that it's successful in the market so that when we get to Gen 2, we've got the most cost out of it we can."

President Obama's auto task force doesn't see it that way. It says the Volt is too little, too late and too expensive to save the beleaguered automaker, and it recently chastised GM for pumping so much money into the Volt instead of developing more fuel-efficient gasoline cars.

That's short-sighted. GM is developing more fuel-efficient vehicles. It offers 18 models that deliver 30 mpg or more. That's more than any other automaker. It also offers eight hybrid models. This isn't an either-or equation — GM needs to develop more fuel efficient cars alongside the Volt, and it's stupid to expect the Volt to be a money-maker out of the gate.

"It is unreasonable to expect the Volt and any similar new technology to be immediately profitable when other technologies that started with a price premium, such as the Toyota Prius, became wild successes," said Chelsea Sexton, an advisory board member of Plug-In America. "Even the first DVD player cost many times more than it does today."

The feds aren't convinced. General Motors has sought $10.3 billion in Department of Energy loans to develop new fuel-efficient vehicles, including the Volt. But GM says it won't get the money until the Obama administration is satisfied the company is financially viable.