Is the Bolt a compliance car?

[boltage]

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".

The Bolt probably makes a good amount of profit over its production costs -- the claimed $9,000 loss per vehicle is probably based on including the fixed R&D costs spread over a conservative estimate of sales. Since the factory does have extra capacity, adjusting production to market demand should be doable unless there is a shortage of important parts from suppliers.

Of course, as you wrote, sales reporting later in the year will tell whether that is the case. Some scenarios:

A. High sales. In this case, it is obviously more than a compliance car, and GM is willing to produce as many as will sell.
B. Compliance level sales, low sales prices (incentives). In this case, market demand is low, and GM is using incentives to get sales to compliance level, regardless of what its intent was in the first place.
C. Compliance level sales, high sales prices (no incentives). In this case, GM is unwilling or unable to produce more than compliance level, even though there is market demand.

 

[oilerlord]

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"".

For that answer, we need context. How many Bolts produced / sold in 2017 = "lots of them"? Is the market demand for the Bolt (or any EV for that matter) considered "high", and if not, what is? Would 30,000 Bolts sold in the US this year constitute "a lot" or a sales success given that GM sold over 3,000,000 cars in 2016? What are the market conditions and /or catalysts required for the Bolt to sell 100,000, 250,000, or 500,000 units in a year? Perhaps $5 gasoline is a catalyst, or another when a 200 mile EV can be bought for $25,000 / $15,000 post incentives. Perhaps another catalyst would be upping the federal / state incentive on home solar to 50% with the purchase of any new EV. Just spitballing. If anyone else has any ideas on what it's going to take for EV's to get meaningful market penetration, let's discuss them.

I think GM already knows that the Bolt will be a boutique, low volume car that appeals to the <1% of buyers that will choose an EV this year. Within that very small market, the Bolt may be a big fish in a very small pond. Perhaps that's enough for GM.

 

[ScooterCT]

Also, after I reflected on the question, I realized it was an idiotic question to start with. I asked a question nobody in this forum could possibly answer. None of us know how many Bolts GM intends to build this year, and they've given conflicting guidance that changed over time. I'm not even sure GM knows how many they're going to build.

It'll be a fun summer, seeing how the Bolt, the 2018 Leaf, the 2018 Soul EV, and the Model 3 compete with each other as they come online. It's a fun time to be an EV fan.

 

[LeftieBiker]

It'll be a fun summer, seeing how the Bolt, the 2018 LEAF, the 2018 Soul EV, and the Model 3 compete with each other as they come online. It's a fun time to be an EV fan.

It will probably be more like "an interesting December."

 

[ScooterCT]

>> It will probably be more like "an interesting December."

I wish I could fast forward to 2020...

 

[oilerlord]

Resurrecting this thread. June sales numbers are in. FY 2017, ~7600 Bolts were sold in the US:

Carrying over from a June sales thread:

GM is leaving money on the table by not producing enough vehicles to meet demand in at least some markets. I don't know how widespread that problem is in the US, but it's certainly a huge factor in foreign sales.

It's not a production problem. On the contrary, GM is limiting their losses by restricting the number of Bolts they ship outside of CARB markets while inventory on dealer lots in CARB states continues to rise. Make no mistake, GM is producing just "enough" EV's - to keep truck and SUV sales flowing. The credits are everything. People that really believe that the Bolt isn't a compliance car are fooling themselves.

People who think the Bolt is a "compliance car" have zero understanding of the term or meaning of "compliance car".

As to the rest of your post - 100% speculation unless you can provide citations.

"Compliance" is such an ugly word around here, but it's the biggest reason we get to drive the cars we care so much about. Some of us want so desperately to believe that GM is being the good corporate citizen, producing a BEV (perhaps even at a price/unit loss) that only the few will buy. Reality check: It's only about the credits. It's always been about the credits.

Here's a citation from Elon Musk:

"So just for example gives GM roughly – from my count, $7,000 to $10,000 advantage over Tesla for their Chevy Bolt.
That’s why you shouldn’t ask like why, well, GM appears to be losing $10,000 a car on the Bolt. No, they’re not. They are making it up on CARB credits. But they get the full retail value of the CARB credit, whereas we get the wholesale value when we’re lucky. But the CARB credits are only effective at a production rate of about 20,000 to 30,000 vehicles a year. So that’s why you’ll see, mark my words, it’s not going to be any higher than that for the Chevy Bolt. "

http://insideevs.com/elon-musk-talks-carb-zev-credits/

June sales numbers are in. In 2017, ~7600 Bolts were sold in the US:

Elon Musk may also be speculating, but it doesn't mean he's wrong. Bolt sales numbers (thus far) support his statements.

 

[dandrewk]

"Reality check" - You apparently still don't know the meaning of "compliance car". Hint, it has nothing to do with CARB credits. Do some more research re: ZEV mandates.

... or are you claiming that any car that "underperforms" (according to an outspoken competitor) must be a compliance car?

BTW, "compliance" is not an ugly word. There are thousands of happy buyers driving a Spark EV or Rav4 EV who are thrilled with their compliance cars.

As to whether or not the Bolt is currently underperforming - there are NO metrics that support this. Unless you work for GM and have privy to corporate goals and results, it's all 100% speculation. Regardless, that's not the thread topic.

 

[oilerlord]

There are thousands of happy buyers driving a Spark EV or Rav4 EV who are thrilled with their compliance cars.

I'm one of them.

 

[devbolt]

GM only needs to sell 400 Bolts in 2017 to satisfy their ZEV mandate for California. Given that California represents ~40% of the market for CARB states, that means that GM has to sell (or lease) all of 1000 cars to satisfy their ZEV credit mandate in all of the CARB states. I think we can agree that they pretty much blew past that number back in January.

The ZEV mandate for 2018 and beyond does change, especially how the credits are calculated, and the number needed, but even with the new requirements in place, GM will only need to sell 1400 Bolts in 2018 to satisfy those requirements.

This ignores the fact that GM has a sufficient stockpile of credits such that they don't actually need to sell any Bolts this year or next year to satisfy the mandate.

 

[ScooterCT]

OMG! It lives! The compliance car thread has risen from the dead to torment us all! Somebody grab a stake and hammer!

Can we all maybe agree the Bolt lives somewhere in a gray zone between the Fiat 500 EV (of which the Fiat CEO says, please don't buy this car because I lose $14,000 every time you do) and the Tesla Model 3, which Elon plans to build as rapidly as possible (and make money)?

 

[SeanNelson]

Can we all maybe agree the Bolt lives somewhere in a gray zone between the Fiat 500 EV (of which the Fiat CEO says, please don't buy this car because I lose $14,000 every time you do) and the Tesla Model 3, which Elon plans to build as rapidly as possible (and make money)?

I'd certainly agree to that. I just don't understand why GM isn't trying to meet demand in all its markets.

 

[devbolt]

Can we all maybe agree the Bolt lives somewhere in a gray zone between the Fiat 500 EV (of which the Fiat CEO says, please don't buy this car because I lose $14,000 every time you do) and the Tesla Model 3, which Elon plans to build as rapidly as possible (and make money)?

I'd certainly agree to that. I just don't understand why GM isn't trying to meet demand in all its markets.

Because they're still rolling it out nationwide? That and the amount of pre-existing forecasting they did 6-months ago has to be completely redone, and that's not something easily or quickly done? The fact that they were able to pull in the nationwide rollout by a month is probably a small miracle for such a huge company.

 

[SeanNelson]

Can we all maybe agree the Bolt lives somewhere in a gray zone between the Fiat 500 EV (of which the Fiat CEO says, please don't buy this car because I lose $14,000 every time you do) and the Tesla Model 3, which Elon plans to build as rapidly as possible (and make money)?

I'd certainly agree to that. I just don't understand why GM isn't trying to meet demand in all its markets.

Because they're still rolling it out nationwide? That and the amount of pre-existing forecasting they did 6-months ago has to be completely redone, and that's not something easily or quickly done? The fact that they were able to pull in the nationwide rollout by a month is probably a small miracle for such a huge company.

I'd be pretty surprised if GM couldn't react reasonably quickly to changes in market demand. It's a pretty key strategic ability in order to avoid costly overproduction or choking off sales.

 

[oilerlord]

A year ago, InsideEVs quoted GM:

“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.”

So, rumor had it that GM could "only" produce 20,000 - 30,000 Bolts in it's first year but GM's Kevin Kelly quickly set the record straight stating that there is nothing stopping them from building 50,000 Bolts in the first year. Production isn't a problem.

With that in mind, does the amount of pre-existing forecasting they did 6-months ago have to be completely redone?

Again, with only ~7600 Bolts have been sold in the first six months of 2017, and approximately another 6000 sitting in inventory (according to carsdotcom), it could be argued that GM had initial FY2017 sales projections of 25,000 - 30,000 cars. For that reason, and because GM has already shipped Bolts to the highest volume EV states, I don't think GM's pre-existing forecasting needs to be changed in the slightest.

 

[SeanNelson]

...Again, with only ~7600 Bolts have been sold in the first six months of 2017, and approximately another 6000 sitting in inventory (according to carsdotcom)...

I just want to point out again that this so-called "inventory" includes cars not yet delivered and already spoken for by people who have pre-ordered, so it's very questionable to use it as an indication of overproduction.

 

[oilerlord]

Keep in mind, I was only referencing one online site - cars.com, so it's entirely possible there could be inventory that is not yet advertised and/or listed on other sites. Fact is, we don't know the exact number as no one here as access to GM's inventory management system, but we do know unsold inventory exists. Members on this site that have visited Chevy dealerships in various CARB states have noted there certainly isn't any shortage of Bolts available for immediate sale.

GIven the number of cars (actually) sold, and the reasonable assumption that the majority of cars listed for sale are actually available for sale, the point is GM probably doesn't need to alter current production to meet demand.

 

[SeanNelson]

Fact is, we don't know the exact number as no one here as access to GM's inventory management system, but we do know unsold inventory exists.

And we also know that in some areas there are people who have ordered months ago and haven't even had a build date issued yet. It's a very imbalanced "feast or famine" situation, which speaks poorly of GM's production management IMHO. The point is that none of the numbers we can see really tell us what's going on or why.

 

[boltage]

I'd be pretty surprised if GM couldn't react reasonably quickly to changes in market demand. It's a pretty key strategic ability in order to avoid costly overproduction or choking off sales.

Car companies have been surprised by oil price changes causing the product mix that they had planned for over the past several years to be mismatched to what buyers want to buy.

However, that is a harder problem than merely noticing that regional variations in buyer demand are different from what was initially forecasted. Among the places where the Bolt has already been rolled out, would it be that difficult to reallocate new production from surplus areas to shortage areas?

 

[SeanNelson]

I'd be pretty surprised if GM couldn't react reasonably quickly to changes in market demand. It's a pretty key strategic ability in order to avoid costly overproduction or choking off sales.

Car companies have been surprised by oil price changes causing the product mix that they had planned for over the past several years to be mismatched to what buyers want to buy.

However, that is a harder problem than merely noticing that regional variations in buyer demand are different from what was initially forecasted. Among the places where the Bolt has already been rolled out, would it be that difficult to reallocate new production from surplus areas to shortage areas?

I'm starting to wonder exactly how the distribution scheme actually works. For example, these "allocations" we hear about - are they obligations or opportunities for the dealers. Even if they're mere "opportunities", if the dealers then go ahead and place orders, are those now contracts that the dealers must abide by? So if the dealers fill their allocations with orders, then perhaps GM doesn't have the flexibility to say "we're not going to fill those because there's more demand elsewhere".

It is a puzzlement.