Op-Ed] GM cuts Volt price, but questions linger

Op-Ed] GM cuts Volt price, but questions linger

[Op-Ed] GM cuts Volt price, but questions linger
It's a saying as old as the car business itself: Price sells cars.

[Op-Ed] GM cuts Volt price, but questions linger

As it turns out, that's still the case when the cars are powered by coal - I mean, magic hopes and emission-free dreams.

After Nissan jump-started sales of the Leaf with a $6,400 price cutearlier this year, GM's decided to follow suitwith the Chevrolet Volt, which will now base for $34,995 plus destination. There's a $7,500 federal tax credit to bring the price to well below 30 grand. That's the price range where most family sedans are sold, so, thanks to the American taxpayer, the Volt is suddenly a considerably more attractive proposition.

The problem, of course, is that many people believe that the Volt is subsidized twice by the American taxpayer: Once with the straight-ahead $7,500 incentive, and again by the fact that General Motors has been accused of losing as much as $49,000 per Volt at the old price.

Not that the Volt has ever really sold at sticker price.

A wide range of incentives, lease programs, and sweetheart deals has made sure that perhaps none but the very first Volts really sold for $42,000 or above. It's possible to argue that this $5,000 price cut is really just a forthright reflection of what's going on with real-world transaction prices.

Let's get back to that every-Volt's-a-born-loser thing, however: Does GM lose money on Volts? If so, how much?

Last year, the Christian Science Monitor published a defenseof the Volt's potential profitability. It has to be noted, however, that with total Volt sales in the 40,000 range over the vehicle's life, each Volt is "born" with a $30,000 price tag on its toe before a single penny of the $10,000 in batteries and electronic components is added --- or before the cost of building the rest of the Volt, which has to equal or exceed that of building a similarly configured Chevrolet Cruze, is considered.

No matter how you twist the numbers, Bob Lutz and other GM figures have admitted that the Volt isn't a money maker at the old full retail price. Which isn't a problem from a corporate standpoint. Most automakers have some sort of loss leader to generate showroom traffic and/or burnish the brand image, whether it's the $9,995 Nissan Versa that made headlines a few years ago or the Lexus LF-A that probably isn't a money-maker even at $400,000.

The Volt doesn't need to make any money if it helps Chevrolet sell more Cruzes or Sonics. The same thinking has traditionally been used to justify the continuance of the Corvette program even in economic hard times where that sporting icon can't make the numbers.

The problem, honestly, comes when one considers GM's' status as a primary beneficiary of both government largesse and election-year politics. It doesn't take any leaps of logic or evidence to paint the Volt as a luxury car with a production cost in the $60,000 range, being sold to upper-class eco-yuppies and doubly subsidized by taxpayer cash in an era where critical programs are going unfunded and veterans' hospitals are short of equipment. Call it the Obamacar: a feel-good "American techo-triumph" that runs on South Korean batteries (that are, at least, finally assembled in the United States) and greenwashes a national electric infrastructure that largely depends on the burning of coal.

If you accept that point of view, then every Volt on the road represents a double swindling of the already-hard-pressed working American, a massive tax grab that diverts money from national defense and health care to upper-middle-class toys with "ice"-colored, Apple-wannabe center display stacks. It's a program that's long since overstayed its welcome and it should be permanently retired. Even if every potential Volt buyer in America immediately turned around and bought a Toyota Priusplug-in, at least the United States Treasury wouldn't be directly funding their acquisition, right?

A more positive way to look at the situation is that the Volt keeps some American workers employed and it serves to introduce a few thousand people a year to the concept of a long-distance hybrid vehicle with a domestic badge.

Furthermore, if GM's past history is any guide, maybe the current Volt is like the Pontiac Fiero - ugly, underperforming, prone to sudden ignition - and the Volt to come will be like the final Fiero GT - sleek, delightful, desirable, thoroughly perfected. Let's just hope that GM doesn't spend too much of our money on the process, and let's hope that they don't kill the Volt the moment it turns out to be a great car, right?

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