Does the $9K loss figure "add up"?

[WetEV]

I'm guessing that most of us are comfortable paying more for the EV experience, but sadly, most aren't.

I mostly agree, but I would instead say "happily, most aren't."

It is because consumers demand cost efficiency that manufacturers are compelled to supply it. Auto makers will do their best to maximize profits, either by building us better, cheaper electric cars or by building us better, cheaper non-electric cars. It's a win-win!

Very long term, electric cars win. Or we don't.

 

[phil0909]

Very long term, electric cars win. Or we don't.

Your view is narrow-minded. In the very long term, flying nuclear-powered cars will soundly trounce electric cars. At which time SkyNet will become self-aware...

:twisted:

 

[WetEV]

Regardless what side of the "9K loss" debate you're on - I think we can all agree that the margin on this car is either non-existent or razor thin.

For the first cars, sure. Nature of the business.

GM has to move a LOT more than 1,000 Bolts per month for any chance of return on investment.

First Model T sold for $850. Price dropped as improving technology and increasing volume reduced costs. Profit per car rose at first, but then fell as technology improved, new methods introduced, selling prices fell and volumes rose. Minimum selling price was $260, about what the profit per car was at the peak.

Can GM reduce the Bolt's cost and actual selling price (not MSRP) enough to become a huge hit?

I don't know, and you don't as well. Depends on a lot of things that no one can know.

 

[WetEV]

Very long term, electric cars win. Or we don't.

Your view is narrow-minded. In the very long term, flying nuclear-powered cars will soundly trounce electric cars. At which time SkyNet will become self-aware...

:twisted:

:lol: You forgot fairy dust and unicorn kisses.

Nuclear reactors can't scale down to the size needed to power a car due to physics. But SkyNet

 

[oilerlord]

Can GM reduce the Bolt's cost and actual selling price (not MSRP) enough to become a huge hit?

I don't know, and you don't as well. Depends on a lot of things that no one can know.

I suppose it depends on your definition of "huge hit", and if or when that could happen.

Volume matters. Suppliers may have more to do with reducing input costs than GM does. Just a guess, but GM may have more leverage in squeezing better prices from parts vendors if they sold 10,000 Bolts per month than the 952 they sold last month - assuming of course, that most of the Bolt's parts are proprietary to the Bolt and not shared with other GM models.

Comparatively, Tesla may in a better position to receive vendor volume discounts if those 400,000+ Model 3 deposits turn into actual sales . Elon Musk did warn the market to expect "horribly negative margin" on the Model 3 but it's entirely possible he's only positioning to underpromise and overdeliver on future earnings releases.

 

[DucRider]

If the $9K number is valid, then they are losing >$11K on each Opel Ampera-e and >$13K on each Bolt EV sold in Canada.

Pricing in non-US markets suggests there is room for Chevy to adjust the price. Canadian version is about $33,200 (inc destination) at current exchange rates.

 

[oilerlord]

If the $9K number is valid, then they are losing >$11K on each Opel Ampera-e and >$13K on each Bolt EV sold in Canada.

Could be. I think as individuals, we're looking at the loss (if it is a loss) as a substantial amount ...but in terms of GM corporate; it really isn't. Perhaps if a $20,000 Bolt arrives, it could sell in significant numbers but it's more likely that it continue to be a low volume car (compared with gasoline models). The value the car brings to GM's corporate average fuel economy may offset any per unit Bolt loss and then some. I'm not bringing up compliance in this, only suggesting that there's a larger financial picture why the car exists.

 

[WetEV]

If the $9K number is valid,

The $9k number is valid, for some volume. We just don't know what volume that loss is at. That makes this $9000 loss a meaningless number.

Take the Model T again.

Ford Motor spent somewhere about $50,000 developing a car that was selling for around $900. Assume, just for now, that each cost $700 to make after the first few. Yea, I know the cost per was declining sharply at first. I want to keep this simple. And assume, just for now, that the development cost was actually exactly $46000

The first 5 Model T cars sold at a loss of exactly (900-700)-46000/5 = $9000

The cost per car falls with increasing volume. The development cost per car falls with increasing volume. A "loss per car" with no volume stated is meaningless.

The Model T sold for a loss of $9000 per car.

 

[oilerlord]

The $9k number is valid, for some volume. We just don't know what volume that loss is at. That makes this $9000 loss a meaningless number.

Take the Model T again.

Ford Motor spent somewhere about $50,000 developing a car that was selling for around $900. Assume, just for now, that each cost $700 to make after the first few. Yea, I know the cost per was declining sharply at first. I want to keep this simple. And assume, just for now, that the development cost was actually exactly $46000

The first 5 Model T cars sold at a loss of exactly (900-700)-46000/5 = $9000

While you're having fun comparing the Bolt with the Model T, let's recognize that Ford sold 16.5 million Model T's over it's 19 years of production. In contrast to the Bolt, the Model T actually WAS a game changer. To this day, it stands as the 8th highest volume car sold of all time. The flaw in your comparison is the Bolt is, and will continue to be a small production car, and may never recover it's investment. The Bolt was released in a market that already had electric cars that few want to buy, which reflects it's microscopic sales volume. GM may never recover it's investment in the Bolt.

Days after it's initial release, Ford sold 15,000 Model T's - back in 1908! It would be more accurate to compare the Bolt with the Ford Edsel - where only 118,000 were built, and Ford lost the equivalent of $2.9B in today's dollars.

The Model T comparison is also way to simple because it doesn't reflect today's environment of regulations, crash testing, and other R&D costs that go from design to delivery of new model cars. To my earlier point, perhaps GM never intended to earn a profit on the Bolt, but just accepted it as a tax on doing business to allow their other more profitable divisions to flourish.

 

[DucRider]

I have seen absolutely nothing to back any claim that GM is losing money on the Bolt.
GM has stated it will be profitable.

An unnamed source has thrown a loss figure out that has become "fact" - largely due to the press it received and how often it has been repeated.
Looking at actual numbers (see my first post) - there is no factual basis for a $9K per car loss figure.
The only way to calculate that number is P&L. Rolling R&D and tooling costs in requires assumptions on volume and other factors that someone "familiar with the matter" would have to be speculating on (removing it from the fact realm by very definition).

Musk has stated the gross margin on the 3 will be 25%. I suspect GM is doing similar to that on the Bolt (they have much great volume leverage with their suppliers, etc).

 

[WetEV]

the Bolt is, and will continue to be a small production car, and may never recover it's investment.

You know this because of _____________________________?

Do fill in the blank.

Days after it's initial release, Ford sold 15,000 Model T's

Actually that is took orders for, not sold.

Orders are not sales, and orders don't predict the future. Nissan Leaf had 20,000 orders before one was delivered.
Tesla's Model 3 orders before there was a single Model 3 is somewhere around 400,000.


I don't know what the future holds for the Bolt. There are far too many unknowns.

 

[oilerlord]

You know this because _________________________?

___less than 1% of the general public are buying BEV's.____

Wishing that more people will buy EV's isn't going to make it happen, and without a significant catalyst, the status quo isn't going to change anytime soon. The Trump administration doesn't consist of tree-huggers, and should this new administration change the rules - which GM and others are lobbying to do, even fewer EV's will be sold. EV's exist in a market bubble consisting of compliance and tax incentives. Remove one or both of those, and with the possible exception of Telsa, you can pretty much kiss EV's goodbye.

I don't know what the future holds for the Bolt, but contrary to your ridiculous comparison with the Model T, I'm pretty comfortable that GM won't sell anywhere close to 16.5 million Bolts.

 

[WetEV]

___less than 1% of the general public are buying BEV's.____

Less than 1% of the general public were buying automobiles in 1909.

without a significant catalyst, the status quo isn't going to change anytime soon.

The status quo is changing now. Technology is changing. Battery prices are dropping.


Trump can't bring back the buggy whip business.

 

[SparkE]

I find the huge amounts of imaginary smoke being blown so very humorous.

 

[phil0909]

I find the huge amounts of imaginary smoke being blown so very humorous.

Agree. I still think the Model T comparison is instructive, mainly in showing how far EVs have yet to go. To achieve a breakthrough comparable to Mr. Ford's, the Bolt would have to sell for maybe $10,000, rather than $37,500 base. (Note that Ford did not need big government tax credits in order to accomplish his revolution). The Model 3 - as promised - looks like a nicer car, but would still need to sell for maybe $20k to qualify as revolutionary. Pick your own numbers, mine are just rough guesses, but clearly Ford's advancement of cost efficiency a century ago was far greater than anything EVs are able to achieve. Yet.

BTW, Telsa has actually taken zero orders for the Model 3. What they have taken is close to 400,000 fully refundable deposits.

 

[oilerlord]

Less than 1% of the general public were buying automobiles in 1909.

By the end of the Model T 1909-1927 production run, the US population was 119 million. By 1930, one out of every five US households owned an automobile. The GM EV-1 was released in 1996. 21 years later, less than 1% of the population choose to buy an EV. Electric cars have been around for a long time. They aren't revolutionary.

Trump can't bring back the buggy whip business.

There's no telling what the Great Pumpkin has up his sleeve. How much does the Bolt lose if / when tax incentives on EV's disappear? Lower battery prices are only a small part of the solution to get more BEV's on the road. Let's assume that a 60kWh pack costs $150/kWh ($9,000). Do you think that if the Bolt's battery pack was $4500, that the general public would suddenly be buying Bolts by the tens of thousands?

A 200 mile EV at $40K was supposed to be a game changer. It wasn't. Last time I checked, folks aren't camping outside of GM dealerships to buy Bolts.

 

[WetEV]

I still think the Model T comparison is instructive, mainly in showing how far EVs have yet to go.

Thank you. Looking at history is sometimes instructive.

To achieve a breakthrough comparable to Mr. Ford's, the Bolt would have to sell for maybe $10,000, rather than $37,500 base.

A comparable gasoline car would sell for somewhere around $20,000. Why would an electric need to sell for half of a gasoline car to be a breakthrough?

At the same price, size and trim level, the electric will be cheaper to drive, more reliable, need less maintenance, quieter, stink less, make less of a mess on the garage floor, more convenient for commuting, faster 0-60, and probably more.

The gasoline car will be more convenient for long distance trips. Anything else?

Not everyone is the same, internal combustion cars might last a long time for some uses in some places. But I'd guess that the half market point would be at a slighter higher price for the electric, due to the electric's advantages over an ICE.


Realistically, no car sold today will get that kind of market dominance, with any features, at any price. The Model T lost to Chevrolet because Chevrolet kept updating their cars, fixing problems and adding features. Automakers have learned to do this very well. If the Bolt starts to get traction, it will get copied and improved on. GM has no monopoly on batteries, electronics or any other technology that goes into the Bolt.

Same with Tesla. Tesla will face a challenge from Audi, Porsche and other old line sports car companies.

 

[WetEV]

Less than 1% of the general public were buying automobiles in 1909.

By the end of the Model T 1909-1927 production run, the US population was 119 million. By 1930, one out of every five US households owned an automobile. The GM EV-1 was released in 1996. 21 years later, less than 1% of the population choose to buy an EV. Electric cars have been around for a long time. They aren't revolutionary.

Oh, and nothing about the Francois Isaac de Rivaz internal combustion powered automobile? That was in 1807. I'm really disappointed you didn't mention the Detroit Electric. Ford had 9 models before the Model T. Why didn't they take off? No simple answers exist to complex issues. Or rather, there are plenty of simple answers that don't really answer the questions.

Technology hasn't been constant. The balance between electric and internal combustion power technology isn't static, it has changed and will change in the future as technology changes.

Let us go back to the original question.

the Bolt is, and will continue to be a small production car, and may never recover it's investment.

You know this because of _____________________________?

Do fill in the blank.

Trump can't bring back the buggy whip business.

How much does the Bolt lose if / when tax incentives on EV's disappear?

This depends on something you and I both don't know and can only guess at. The actual cost per copy of the Bolt, not only today but in the future. If the Bolt's margin is high when the tax incentives disappear, then GM can cut the price and maintain sales and still get a profit.

 

[SparkE]

This depends on something you and I both don't know and can only guess at.

Yes - that is a rather succinct summary of the entire thread. And yet it continues. Ah, the internet ... :mrgreen:

 

[phil0909]

A comparable gasoline car would sell for somewhere around $20,000. Why would an electric need to sell for half of a gasoline car to be a breakthrough?

Are you sure? The Ford Fiesta is a nice little hatchback. I like my Bolt, but I have to admit the Fiesta is generally comparable except for the ICE. Fiesta base price is $14,835 for 2017.

The Tin Lizzie sold for less than half the price of comparable competitors in its day. Getting the Bolt's base price down to $20k would be an impressive achievement, but not revolutionary. Model T was a real breakthrough - because it absolutely destroyed the competition on price, and thus revolutionized the market and the industry. That's why we still talk about it a century later. Who will remember the Bolt in the year 2117?