Is the Bolt a compliance car?

[oilerlord]

Wrong. Much time and money was spent on electric powertrain research prior to the decision to bring the Bolt into existence.

Wrong...how so?

Prior money and research that brought us the Volt and Spark EV was no doubt invaluable for engineers and designers to come up with the Bolt's initial proof of concept but the defining moment for the Bolt's existence (i.e. funding the project) likely happened in a GM boardroom with the highest levels of executive management around the table.

 

[SeanNelson]

They didn't just "allow" it to exist, they spent a considerable amount of time and money to bring it into existence. Much more time and money than for a typical "compliance car" like the Spark.

No, Sean. The GM corporate decision to allow the project to go ahead came before they spent time and money bringing it into existence.

You make it sound as though the development team did an end run on Corporate, but that's not true. The decision to go ahead would have come with a budget. And if the development team decided they needed a larger budget (or more time) to do a better job, they would have had to justify it. And management would have had to decide to approve it.

In other words, GM made a conscious decision to build a car that was better than they needed to simply "comply" with regulatory requirements. Yes, it's possible that wasn't their original plan, but at some point that became the goal. It didn't just "happen" by accident.

This is probably just a semantic argument, but to me the verb "allow" is too passive to adequately describe the commitment and determination needed to develop a superior EV. Especially considering that it took a major new partnership with LG, a new body design that provides interior room for its size that seems worthy of special mention by most reviewers, was done on a notably accelerated schedule, etc. etc. It didn't just "happen", it was actively and vigorously pursued.

 

[Fargoneandout]

Seems to me that the Bolt could be both a compliance car and, if it sells well enough, a profitable one. I like SeanNelson's line of reasoning here. GM could have mailed it in, just meeting their design and marketing goals and thereby achieving an EV only incrementally better than others in its price range and class but competitive enough to meet compliance objectives. But GM apparently did nothing of the sort, deciding to purposefully exceed their own expectations in terms of power, range, cost, interior room, and many other design and marketing targets, thereby achieving something with the potential to be transformational. The only possible reason GM would do this that I can fathom is to create something intended to be marketed far more broadly to a far wider customer pool than a compliance vehicle would dictate.

We cannot know for sure what the difference in terms of development and engineering costs was between the just-good-enough Bolt and what GM actually crafted, but that added development cost is the real risk Chevy took to bring the Bolt as it is to market. If they sell enough of them, bring the Orion plant back to a second and then a third shift, and can get batteries just as cheaply from LG as now, then the odds Chevy can turn a real profit seem far greater. And let us not forget that Tesla has hemorrhaged cash and continues to do so, pinning their own hopes on selling a Model 3 that will have to make money or be closer to doing so than the Model S and X, indicating that it may at least be theoretically possible for an EV to be both a compliance vehicle and a profit turner.

 

[GetOffYourGas]

GM could have mailed it in, just meeting their design and marketing goals and thereby achieving an EV only incrementally better than others in its price range and class but competitive enough to meet compliance objectives.

This is basically what the Spark was. It was a great little EV, with comparable range to the pack, but much better acceleration and QC performance. And it was already developed. GM could have simply turned up the assembly line and sold a bunch more of them to meet their quota. In the short term, it would have been much cheaper than creating a whole new EV on a dedicated platform.

 

[oilerlord]

You make it sound as though the development team did an end run on Corporate, but that's not true. The decision to go ahead would have come with a budget. And if the development team decided they needed a larger budget (or more time) to do a better job, they would have had to justify it. And management would have had to decide to approve it.

I wrote:

"The GM corporate decision to allow the project to go ahead came before they spent time and money bringing it into existence."

"The defining moment for the Bolt's existence (i.e. funding the project) likely happened in a GM boardroom with the highest levels of executive management around the table."

I'm really not sure how I could have made the point clearer than that.

This is probably just a semantic argument, but to me the verb "allow" is too passive to adequately describe the commitment and determination needed to develop a superior EV.

And there's the real crux of it. I used the word "allow". :roll:

CEO Mary Barra along with a handful of top executives made the decision to approve the Bolt project and/or allowed it to proceed. Yup, semantics.

 

[ScooterCT]

Going back to my original intent with this thread, which was "will I be able to buy a Bolt in early 2017 at my local CT Chevy dealer?"... Here is the latest from GM, quoted at the delivery of the first three Bolts in CA.

"Bolt EVs are currently in transit to California and Oregon markets and are arriving this month. A national rollout begins in 2017, and a number of Northeast and Mid-Atlantic States including New York, Massachusetts and Virginia will see first deliveries this winter. Bolt EVs will arrive to more dealerships in additional major metro markets throughout the first half of 2017. The Bolt EV will be available at Bolt EV-certified dealerships across the United States in mid-2017."

LOTS of wiggle room in that statement.

 

[SparkE]

Going back to my original intent with this thread, which was "will I be able to buy a Bolt in early 2017 at my local CT Chevy dealer?"... Here is the latest from GM, quoted at the delivery of the first three Bolts in CA.

"Bolt EVs are currently in transit to California and Oregon markets and are arriving this month. A national rollout begins in 2017, and a number of Northeast and Mid-Atlantic States including New York, Massachusetts and Virginia will see first deliveries this winter. Bolt EVs will arrive to more dealerships in additional major metro markets throughout the first half of 2017. The Bolt EV will be available at Bolt EV-certified dealerships across the United States in mid-2017."

LOTS of wiggle room in that statement.

Good - they are doing it right. Keep demand high as long as you can to get top dollar in each state, then ramp up production so that when the NEXT 200+ vehicle under $40K is available from a competitor, you can crow about how great your car is ("couldn't keep up with demand", "we now own the all-time annual sales record for EVs", etc.). They don't need to sell 60K cars the first year (and probably shouldn't). They should charge what the market will bear while meeting their other goals for the car.

 

[ScooterCT]

https://electrek.co/2016/12/20/chevy-bolt-ev-profit-subsidize-gas-guzzling-cars-tesla-model-3-jp-morgan/

Above is another analyst weighing in after spending a day with GM's CFO. I don't care about the loaded term "compliance car" - I don't have a dog in that fight. I'm just interested in whether or not the thing is going to be sold in volume to meet demand across all 50 states. Here is the GM CFO apparently saying "No".

On the other hand, it's a few short weeks till CES and the Detroit Auto Show. Word is that Carlos Ghosn will unveil the 200+ mile range successor the Leaf (he's giving the keynote at CES). Looking forward to more options, just in case I never see a Bolt at any area dealerships.

 

[oilerlord]

We need to stop scratching at this scab. It's getting infected. The car has barely started shipping; a year from now we'll have a better understanding of the Bolt's place in the universe.

 

[ScooterCT]

I like that metaphor. Good one.

 

[DucRider]

https://electrek.co/2016/12/20/chevy-bolt-ev-profit-subsidize-gas-guzzling-cars-tesla-model-3-jp-morgan/
I'm just interested in whether or not the thing is going to be sold in volume to meet demand across all 50 states. Here is the GM CFO apparently saying "No".

Huh?
Did I miss something?

Brinkman didn’t release any particular information shared by GM’s Chief Financial Officer

While that article did raise some valid points, and there is indeed concern that Tesla cannot (unlike other automakers with a diversified line) afford to sell the Model 3 at a loss, it drew conclusions based on previously reported "Facts" with dubious backgraound and taken slightly outof context.

The analyst’s comment supports recent reports that GM will be losing up to $9,000 per Bolt EV sold outside of ZEV states

The orignal Bloomberg story said if GM lost $8-9K per car it would make perfect business sense.

This is likely the source and root of the Bolt losing money rumor:

“I no longer have access to General Motors figures, but I would be surprised and shocked if the 200-mile electric Bolt is going to make money,” said Lutz at an Automotive News roundtable discussion held in August. “You look at the cost per kilowatt hour of batteries and the number of kilowatt hours they have got in there and then you look at the selling price. It’s just not going to work.
Since Lutz’s statement General Motors revealed in October it pays LG Chem, its collaborative partner developing the Bolt, just $145 per kilowatt-hour for battery cells. GM has said it will be profitable, and Lutz did qualify he is not privy to those details any more.

http://gm-volt.com/2015/12/15/electrified-vehicles-are-big-money-losers-says-bob-lutz/
If you read the whole article, it shows a weird slant and his tendency to play fast and loose with "facts" i.e "you can't touch a Chevy Tahoe for under about $65 [thousand]"

Steve Majoros, marketing director for Chevrolet cars and crossovers, responded as follows:

At Chevrolet, we put the customer at the center of everything we do. That means offering a variety of products and services to meet a variety of customer needs. Bolt EV is just one of many examples, and in this case, of solving the range and cost equation that has frustrated consumers for some time in the EV space—and doing it with a car that is not just a great electric car, but a great car loaded with innovations … all in a packaging/configuration that offers tremendous flexibility and versatility.

We feel confident that the Bolt EV will appeal to a number of customers interested in the electric-car space, and will do so for customers in all 50 states. As such, we can confidently say Bolt EV is not a exclusively “compliance play.”

Based on our success with Volt, and consumer and dealer receptivity, we know there is both demand and the ability of the nationwide Chevrolet dealer network to provide the sales and service experience that has made us the best full-line manufacturer in both according to JD Power.

“Since last year rumors have perpetuated a notion that GM and supply partner LG Chem have production capacity of only 20,000-30,000 Bolt EVs per year, but this is not true, said Kevin Kelly, manager, Electrification and Fuel Cell Technology Communications.”

“There is nothing constraining us from doing that,” said Kelly when asked how Chevrolet might handle a potential deluge of 50,000 orders that would far surpass conservative analyst projections for the Bolt’s first year of sales.”

Does the Bolt garner ZEV credits and boost the fleet average for CAFE standards? Of course. Would it exist if there were no CAFE or CARB requirements? Probably not - but then again that is also true of hybrids and small cars with high mpg ratings (ICE Spark, etc.). And it's doubtful that Tesla (as a company) would be around today if not for the ability to sell ZEV credits.

Production is not artificially limited (to garner the minimum number of ZEV credits GM needs). They are projecting a 1st year demand greater than ANY other EV has achieved in a year - and being criticized for it.
It will be sold in all 50 States.

What, exactly, would define the Bolt as a compliance car?

 

[Breezy]

If compliance means selling an EV with a range of over 200 miles at less than $40k, then everyone else is non-compliant.

 

[Fargoneandout]

If compliance means selling an EV with a range of over 200 miles at less than $40k, then everyone else is non-compliant.

Well played.

 

[Anonymous]

it's doubtful that Tesla (as a company) would be around today if not for the ability to sell ZEV credits

Hardly. They started the company selling a few thousand high end cars when ZEV was hardly a big deal, and by 2012 had a full factory built out and massive battery supply from Panasonic. Tesla was the real deal before they made any money on ZEV credits.

Do credits add a few hundred million $ to their bottom line, sure, but they mean nothing in the grand scheme of the investment Tesla has made so far.

 

[Fargoneandout]

(1) GM has committed to selling the Bolt nationwide in a consistent manner in a variety of public forums that constitute the perception that this will enhance shareholder value (there's a June Fortune article with some nice quotes from CEO Mary Barra as well as any number of other statements)
(2) GM is using the Bolt to develop autonomous driving vehicles.
(3) Many experts believe that battery costs will continue to fall, improving margins for the Bolt or the potential for margins
(4) Production capacity at the Orion plant could be tribbled by adding two more shifts and at 100 a day on a single shift, yearly capacity would be a little north of 25,000. GM has tremendous leverage and flexibility to increase production. No statements have been made recently by anyone in a position of authority at GM stating that production is limited. Target production numbers have been released, but these statements are typically for large companies a way to peg shareholder expectations.

Nothing about this says 'compliance' if, by 'compliance', we speak to purposefully limiting sales, at a loss, in only those states mandating ZEV vehicles as a percentage of fleet sales.

 

[boltage]

Seems like the answer to the "is the Bolt a compliance car?" question could be something like this:

* If market demand is low, GM will produce just enough of them for compliance, effectively making it a compliance car.
* If market demand is high, GM will produce lots of them, making it more than just a compliance car.

Note that in the former case, GM is more likely to lose money on the model due to the fixed R&D costs being amortized over fewer sales, but in the latter case, GM is more likely to make money as margins from the greater sales cover the fixed R&D costs. That is assuming that, other than the fixed R&D costs, making the car is profitable (which is likely -- if the battery costs $8,700 based on the claimed $145 per kWh, they just need to get the rest of the car's production and distribution cost down to the mid-$20,000s range).

 

[LeftieBiker]

Production capacity at the Orion plant could be tribbled

Uh Oh! Lock up your grain!

 

[oilerlord]

Production capacity at the Orion plant could be tribbled

Uh Oh! Lock up your grain!

That isn't any ordinary "grain", it's quadrotriticale.

 

[SeanNelson]

Production capacity at the Orion plant could be tribbled

Uh Oh! Lock up your grain!

That isn't any ordinary "grain", it's quadrotriticale.

Inwented in Russia!

 

[ScooterCT]

Boltage phrased it well in the post above to capture the intent of my original question in this thread. He observed: "If market demand is high, GM will produce lots of them, making it more than just a compliance car." The crux of my question is whether or not this statement is true.

My real question (and nobody but GM and the coming year can answer it) is: "If market demand is high, WILL GM produce lots of them"". Notice I moved the position of "will" to make it a question.

I'm neither a Bolt fanboy nor a Bolt hater, so I'll just watch with immense interest to see what the answer is as the year progresses. I see encouraging signs that they plan to build as many as demand merits. But none of us will know for sure until late in the year. Let's see what the numbers are. Same with Tesla. Or to quote Adam 12, "Just the facts. ma'am".