Bob Lutz Responds To Reuters Article: Chevrolet Volt Is At “Variable Break-Even” Now (Video)

5 years ago by Inside EVs Staff 17

Who Doesn't Love A Catchy Title? Not CNBC

A controversial Reuters piece yesterday that suggested GM was losing as much as $49,000 for every Chevrolet Volt sold, and that selling a lot of cars “probably isn’t a good thing for the automaker’s bottom line,” has taken a lot of criticism from not only GM itself, but from many industry analysts.

Now add Bob Lutz to the list.  Lutz is widely credited as being the “father of the Volt,” seeing it through from a sketch on his desk, all the way into production.  Needless to say, he strongly disagrees with Reuters as well.

“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.”

Now On The Board Of VIA Motors, Bob Lutz Still Takes Time To Defend His "Baby"

Mr. Lutz goes on to explain that one can’t know the final cost until all the cars from the investment have been counted, and that the Chevrolet Volt is far from being done any time soon.

He also makes some interesting claims on some previously unknown variables on the Volt, like the cost of its 16 kWh lithium battery (now 16.5 kWh in the 2013 model).

“The Volt “variable cost” (labor and materials, without revealing any confidential GM information), looks very roughly like this: A Li-Ion battery today runs about $350 per KWh. The Volt’s is 16KWh, so that’s roughly $6000. Add $4,000 for the battery pack structure, the cooling, the high-voltage wiring, the motor and the power electronics. So, that’s the electric portion. Add about 20 hours of assembly labor which we’ll round to a very generous $1000. The dealer net price is, say, $37,000. We now have $26,000 left for the rest of the car, which, cost-wise, is about equal to a Chevy “Cruze” which sells for around $22,000 retail! “

If anyone should know the true cost of the Chevrolet Volt, it is Bob Lutz, and $26,000 left over to build the “Cruze” part of the car (the Volt and Cruze share the same Delta II architecture), means GM is indeed well into some decent automotive gross margins on the car.  The former GM VP says that even now, GM may be breaking even or eeking out a small profit once all the expenses associated with the car are factored in.

“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.”

Bob then finishes up his rebuttal with the kind of statement we have all grown to love:

“So, once again, the knee-jerk Volt bashers, devoid of any real knowledge, have had their usual joyous verbal catharsis, but the car doesn’t care: The volumes are building globally and it’s doing exactly what it was designed to do.” 

Read all of Mr. Lutz’s comments in his rebuttal at Forbes. com

Bob was also on Larry Kudlow last night, and expressed his opinion on the Volt’s fiscal position:

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17 responses to "Bob Lutz Responds To Reuters Article: Chevrolet Volt Is At “Variable Break-Even” Now (Video)"

  1. Jay Cole says:

    I love Bob, but you have to believe if GM wanted to keep any secrets about the Volt, this is not the guy you want as the information gatekeeper.

    Figures we have been interested in for years that we could never get out of Bob or GM ‘back in the day’ just come rolling off his tongue now:

    6K for pack (350 per kWh)
    4K for housing, inverter, motor and electronics

    1. Nelson says:

      If Bob is right about the $10K for the Volts EV side, the SparkEV should be priced well below $30K.

      NPNS!
      Volt#671

    2. GeorgeS says:

      That’s what I was going to say. Finally we get a breakdown. Always before we see $/kwh but never the breakdown of the TMS and electronics vs just the cells. Now if we can start whittling away at the 6K for the cells we could make some progress.

    3. ClarksonCote says:

      Haha, gotta love Maximum Bob

  2. GeorgeS says:

    Where’s that magic battery that doesn’t need a liquid cooling system??

    We could start whittling away at the 4K part also.

  3. GeorgeS says:

    Did you knoe that the battery TMS has 3 independent cooling loops with a separate heat exchanger for each loop??

    “The Chevy Volt is equipped with four fully independent cooling systems or “loops”. The power electronics cooling system loop is dedicated to cooling the battery charger and the power inverter module. The battery cooling system cools (or in some cases heats) the 360V high voltage battery. The engine cooling system and heater loop is specific to cooling the gasoline engine and when required, provides heat for the passenger compartment. The electric drive unit cooling system is designed to cool the two motor generator units and electronics within the 4ET50E drive unit transaxle, and provides lubrication for the various gears, bearings, and bushings.”

    http://gm-volt.com/2010/12/09/the-chevrolet-volt-coolingheating-systems-explained/

    Totally trick!

    1. vdiv says:

      Yeah, it is totally cool and totally scary. The electric car ended up as the liquid car.

      The timing of this smear piece is not random. As much as we hate involving politics, after the convention Obama has pulled a 5 point lead over Romney. Romney’s campaign is desperate for more effective angles of attack and they think the Volt and bailing out GM are it as the ultimate demonstration of the fed. gov’t gone wild.

      The Sonic EV, the ELR and the Buick/higher-end versions of the Volt could not come out too soon.

  4. backstroke says:

    Don’t you just love the media? No! Oh boy glad I’m outside the States and lots of this nonsense passes me by. Damn shame the average person in the street hasn’t got a clue and gets feed this drivel as fact. What’s that saying again, Only in America.

  5. Schmeltz says:

    I’m just thankful there is someone as astute as Bob Lutz to defend this car from the wolves. I thought his rebuttal in Forbes was intelligent and to the point as always.

  6. Shawn Marshall says:

    I agree with Bob too. AGW is a crock of poo.

    1. Shawn… The scientists disagree and the Arctic ice cap isn’t listening.

  7. Jackson says:

    (post also made on GM-Volt, if you guys allow that, Statik):

    Whatever your affiliation within US politics, you can’t link London-based Reuters with the “Fox News/Right Wing” paradigm. You have to pose a more general question of “Who is so exercised over the Volt,” then follow the motivation to it’s source. An argument can be made for oil interests in conjunction with the Right, though I think this is overblown. I believe the larger component is the tit-for-tat back and forth of US politics: Long before the Volt, the Left said we should burn as little fuel as possible for environmental reasons, the Right retorted with SUVs mainly to ‘stick out their tongues’ at them. What possible connection could any of this have to Brits who have a completely different political system, and pay much more for petrol than we do for gasoline?

    In the case for both Europe and the UK, there is nothing local which can touch the foreign Volt for fuel reduction, and a general tendency to ‘turn up the nose’ at an American success story. Perhaps following the motivation takes one to the doors of European auto manufacturers, or represents pandering to a populist point of view for political reasons. On both sides of the pond, resistance is explained by political expediency or vested interests. History suggests that neither has any long term staying power.

    … and speaking of vested interest:

    http://thomsonreuters.com/content/press_room/science/657646

    1. Jay Cole says:

      We got no rules here my friend, (=

      Totally open forum. We don’t try to keep people in or information out. Cross-post away.

      1. Jackson says:

        Okay, Jay;

        But what about an “edit” feature like Dennis put on the original Volt site? For some reason, I see corrections to be made only when I see my comment posted. You might see less cross-posting. 🙂

        By the way, do you support bolding tags, underline tabs, or anything else you’re willing to fess up to? What happens if I use a “blockquote” tag?

        Jackson

        1. Jay Cole says:

          Boy wouldn’t those things be nice? I’m not 100% sure what is enabled and what isn’t to tell you the truth, feel free to experiment, lol.

          I know we can get the ‘edit’ feature to work if we also enable log ins…but that sucks to do, limits conversation, etc.

          To tell you the truth not many people have asked/mentioned it, so we have been focusing on a lot of other things still…like figuring out who is covering what and when, and the do’s and don’ts of what we actually cover.

          Guess I should start poking around the interwebs for some better functionality to plug into the comments secton. I’ll have a ‘boo’ at it later on today or tomorrow for you. (no promises though, heeh)

  8. Chris says:

    I am glad the Pentagon is buying Volts.
    Every barrel of oil not burned in ground transportation can be used for fighters and bombers, whatnot…
    This is otherwise known as a thing called “combat readiness.”
    Right, Bob?

    I wish my fellow conservatives would let this Volt-bashing fever break…