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The ugly math of low sales, high costs

http://finance.yahoo.com

General Motors Company sold a record number of Chevy Volts in the month of August. This is not good for the company's bottom line, however, as GM is losing as much as $49,000 on each Volt sold, according to industry analysts and manufacturing experts. GM is estimated to be years away from making money on the Volt, and will soon face new competition from Ford, Honda, and others. The Volt's steep ($39,995) base price and complex technology have kept buyers away from Chevy showrooms.

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Number_Six's picture
Created by Number_Six 1 year 49 weeks ago – Made popular 1 year 49 weeks ago
Category: New Technology   Tags:

Upon reflection the premise

jtk3 1 year 49 weeks 1 day 31 min ago

Upon reflection the premise of the article appears to be wrong. It reports that the base price of the volt is $39,995 and the current cost of production is $20,000 to $32,000. The development investment is a sunk cost, money already "lost", it's not money they are currently losing with each sale. By these figures GM seems to actually be making money on each Volt sold. That doesn't make the Volt a good investment or demonstrate that GM will ever recoup the investment, but at this point they would lose, not save, money by not selling Volts (ignoring possible opportunity costs).

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