2014 Chevy Volt Price Cut of $5,000 Was Mostly in Response to Online Search Habits

11 months ago by Eric Loveday 25

Chevy Volt

Chevy Volt

Remember that $5,000 Chevy Volt price cut for 2014?  Was it solely in response to other automakers, mainly Nissan, slashing prices on their electric offerings?

New Color Choices For 2014 Volt - Ashen Gray Metallic and Brownstone Metallic

New Color Choices For 2014 Volt – Ashen Gray Metallic and Brownstone Metallic

Yes…and no, says General Motors.

Of course, GM had to react to the discounts from rival automakers if the Volt were to remain competitive, but did General Motors have to slash the price by $5,000?

Yes…and for good reason.

According the General Motors vice-president, Chris Perry, the $5,000 cut was necessary given the online search habits of consumers:

“The market dynamics are changing, there are savings (we) have identified and then there are consumer habits at some of the shopping websites.  Their cutoff has always been $35,000 and below, and we were always above that.”

So, it had to be $5,000 to get below that $35,000 threshold.  GM didn’t just voluntarily pick $5,000 out of thin air.  It was a well thought figure that meant the Volt would be included in more searches for potential Internet “shoppers.”

Perry goes on to say that improved manufacturing efficiencies allowed GM to cut the Volt’s price down a bit, but he doesn’t say how much that contributed to the reduction, nor does Perry mention whether or not GM will profit off the Volt at its significantly lower price.

Source: Ward’s Auto

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25 responses to "2014 Chevy Volt Price Cut of $5,000 Was Mostly in Response to Online Search Habits"

  1. David Murray says:

    Interesting. I wonder if they also ever read some of the EV related forums to find out what people were saying.

    Still.. You can’t just arbitrarily cut the costs of a car. I mean you can’t take a Corvette and find the price at which it outsells all other cars (what, maybe $5,000) and decide to sell it at that price. You have to be able to make a profit. And that is the big question I would love to see answered. I know that GM isn’t loosing $75,000 per Volt as some stupid news outlets have suggested. But I’d really like to know what the margin is from manufacture to sale (excluding any development costs)

    1. Open-Mind says:

      There is no $5K step-change in selling price, since the discounts on 2013 Volts have gradually been getting huge. The discounts are up to $8K on some lots, so despite the 2014 model price drop, the 2013 models actually sell for less.

    2. Just_chris says:

      I suspect the reason that we never get to the bottom of profit made per car sold is because it is a constant moving feast if you sell 1 volt a month you’ll loose big at $35k but if you are selling 5000 volts a month through one dealer in one state right next door to your factory you’ll be making a killing on each sold and could probably drop the price by a further $10k.

      The trouble is GM can’t make 5000 units a month so they have to play the game where they match the demand to the production capacity which they do by altering the price. As GM (or Nissan for that matter) widens each of the bottle necks at their production facilities and in their supply chain we will see prices come down further regardless of internet searches, blog comments or wind direction.

  2. Ocean Railroader says:

    The bottom line what they don’t want to mention is that the price was over bloated to begin with granted most likely the battery costs did go down a large section. The price was still a little high to begin with. The good news is the price is coming down into reality.

  3. GM Volt Fan says:

    I am disappointed by this title, so this means GM has not actually lowred the manufacturing cost by $5,000? maybe not even close? I have to wonder if this vehicle continue to hemorrhage money, it is a matter of time before they shut it down. Another thing to consider is this vehicle has a market appeal at $27500, so GM has to lowered the manufacturing cost below that in the long term, after they reaching 200,000 sales.

    At this mean time, grab one if you can!

    1. David Murray says:

      Yep – That is my biggest concern with the Volt. Even if the sales really take off, what happens when 200,000 sales are made and the tax credit goes away for GM? I bet the sales will drop like a rock. And I suppose the good news is that our resale values will increase, but at that point we’d have to stick with our existing Volts because we wouldn’t be able to afford a new one. And those cheap leases… Will never happen without the tax credit.

      1. Rick says:

        I’m not the least bit concerned about when the tax credit goes away. If the Volt and cars like it survive without tax credits, it’s because it found a way to compete in the free marketplace, and no longer because it is a “great deal” because somebody else is helping you pay for it.

        1. David Murray says:

          I have no problem with that philosophy. However, the issue is that if the Volt becomes hugely successful and suddenly jumps in price by $7,500 but the competitors cars are still enjoying the tax credit, then everything changes.. IN fact, the system essentially rewards companies who are lazy and bring their plug-in cars to market later on when batteries are cheaper. I sort of wish the tax credit was not laid out on a per manufacturer basis.. Just make it like 500,000 units period, regardless of who makes the car.

          1. Ocean Railroader says:

            The volt by the time it is making 200,000 cars will most likely have a lot of improvements by then and if that is going on battery costs will at least fall to make up for 40% to 50% of the lost tax break.

            The same thing happened with the Prius where there was a $2000 to $3000 tax break for the first generation Prius. What happened when the tax break ran out the car maker cut the price of the car down by $2000 to $3000 to make up for the lost tax break. And the car sales still kept going up without it.

          2. Rick says:

            “…the system essentially rewards companies who are lazy and bring their plug-in cars to market later on when batteries are cheaper.” The system rewards companies that are lazy? Or prudent?

            Across the board credits (rather than per manufacturer) make sense, if you believe the industry should get these kinds of subsidies at all. My preference is that no industry should get tax subsidies. It’s just another way that government uses the tax code for social engineering, which has a way of generating “unanticipated consequences”, and can be counterproductive in the long run.

          3. Josh says:

            Politics aside, I think the tax credit drops from $7500 to 50% of that after 200,000 and has some taper period. Can’t recall the details at the moment.

            The lazy companies will not have the engineering learning cycles even if they have the full benefit of the tax credit. I also think the companies that can say they are hitting the volumes that reduce the cost without credits, will gain some respect of consumers who philosophically oppose the credits. Remember that competing hybrids have struggled in copying the Prius success.

        2. David Stone says:

          Well, ice cars seem like a great deal because of relatively cheap fuel – because oil industry subsidies, military blood and ill-healt pay the difference.

          Take away those advantages too and I have no problem with the tax credit going away.

          1. Rick says:

            David, I don’t think the oil industry should be getting subsidies either.

    2. Just_chris says:

      OK one of a few things could happen at 200 000 sales of the Volt here is a list that I think is likely clearly there are other options:

      1. Sales of the volt will crash, GM kill the volt and release the amp, flash, lightening, light bulb or what ever the marketing guys want to call a 5 door plugin saloon that is absolutely not a volt but just happens to compete in the same market for about the same price or a little higher

      2. GM cut the price by $7,500 because it can and still makes money

      3. GM claim that US jobs are at risk and take a massive backhander from the government allowing them to drop the price in the US by about $7500 and make money for a year. After that they loose lots of money and go bankrupt but the executives who made the original price cut will have already dumped their shares and moved on.

  4. Rick says:

    This reminds me of the solar water heater salesman who tried to sell me one of those back in the ’80s, when there was a tax credit. At that time, even with the credit, it ended up not being a good deal from an economics perspective. “But, the tax credit is going away next year!” he warned. I told him I don’t buy something because it is the least unattractive it will ever be.

    Same thing with EVs. The technology fascinates me, and I can see myself in one at some point in the future, but the economics has to change for that day to arrive. I think it will happen, since the cost of gasoline will continue to rise, but we are not quite there yet.

  5. evnow says:

    Interesting – that gives a new meaning to why the price needs to be below these important markers like $30k or $35k.

  6. Chris O says:

    So $35K is the critical limit…explains why Tesla is floating it for it’s gen 3 vehicle. Maybe they really do need to try to have an entry level vehicle that stays below that threshold or their car won’t even show up on many people’s radar. OTOH:something truly remarkable might be included in people’s decision making even if it is a bit beyond the ideal budget

    Also there is still the little matter of incentives that might bring more expensive vehicles under the critical limit. The Volt always fitted the $35K budget for most people.

  7. Priusmaniac says:

    Well, on the other hand one has to take into consideration all the hidden helps the Rockefeller lamps standard petrol cars receive.
    One, and that is an open item known to most, the oil supply routes security military cost is totally assumed by the tax payers not by the car drivers that put the petrol in their cars.
    Second, a bit more hidden, is the ultra low prices that standard car producers pay for plastics that go into the building of their cars. I wouldn’t be surprised to see a 30 % and more difference between what Tesla pays and what Jaguar pays.
    Third, almost completely hidden, the low cost loans that many car manufacturers receive in the form of almost junk bonds that wouldn’t find a buyer on the market if it wasn’t for the indirect intervention of oil companies.
    Forth, the huge sums for research that the petrol cars have received from the military in the form of out in the sky prices for all kind of petrol powered vehicles from the Jeep to the Humvee. All money that paid out their feint research a tenfold.
    Fifth, indeed the huge production runs they have at present allow them to get lower cost but only for that reason, because if you look at the number of parts in a standard car and the complexity, then the price should be much higher.
    Fifth, petrol car producers on purpose engineer their prices so as to be just a notch bellow the price at which an EV would become interesting. This is not the EV too expensive, but petrol car price placed bellow its normal price to just avoid you buying an EV.
    Last but not least petrol cars managed to also grab incentives and tax rebated, mainly on diesels and other greenwashed vehicles.
    In the end, when all that is summed up, EV are not so expensive and true prices, all the above included, would reveal much less difference between the two, perhaps even a lower EV price if the environment costs like oil spills were taking into the equation.

  8. Ryan says:

    I’d still like to see a full electric version of the Volt. Or the option to get any vehicle GM makes as full electric.

    Price the electrics cheaper than the gas models? Make the electrics outperform the gas models?

    Crank out an electric Vette that is the fastest car in the world? Sure; it might cost upwards of Lamborghini prices; but if it’s faster..

  9. Loboc says:

    It’s a little far out there to believe that GM lowered the price because of Internet searches. I search the Internet all the time and don’t drop records because they are slightly outside my search criteria.

    Besides, there is no equivalent car for Volt to be compared to in any comparison site. Volt is still unique in the market. A Prius or prius-like Ford or pure EV do not compete with Volt in my mind.

  10. Vatcha says:

    I’m interested and a bit puzzled by the effect this is going to have on the Volt secondary market. Searching cars.com and autotrader there are still used Volts listed in the $35K to $40K range. Assuming you have the income to take advantage of the tax credit, why would you pay anything more than $24K – $28K for a used Volt? And if you don’t have the income to take advantage of the tax credit it doesn’t seem like a used Volt at those prices would even be up for consideration …

  11. Bruce says:

    What pisses me off about this is I just leased on in January and now they decide to drop the price and on lease by $100/month.

    Is GM making any reparations for this? Its literally gouging the market and making us customers really, really mad.

    1. Rick says:

      Price Gouging is defined as “pricing above the market price when no alternative retailer is available” Bruce, you had lots of other alternatives, so I hardly think this is price gouging. Although I certainly understand why you are really, really mad.

  12. Martin T says:

    No surprise, as the production years accumulate costs should be coming down.
    I’m probably one the few that would the price to stay the same and put all the money
    in increasing the ev range.

    However I do realise the importance of price drops and getting the real EV experience out to as many people as possible.

    It’s all good, we should all be thankful it wasn’t a euro brand as would have paid a hell of lot more for the badge!

  13. Rick says:

    Funny, the headline says that the price cut “Was Mostly in Response to Online Search Habits”, and then proceeds to quote the GM VP, “The market dynamics are changing, there are savings (we) have identified and then there are consumer habits at some of the shopping websites.

    I would read that as the 3rd most important reason, not the most important one. Furthermore, I wouldn’t even think that the 3rd one matters if the first two are not happening.