September 23, 2012
Big Chevy Volt Discounts Boosting Sales

GM loses some unknown amount per Chevy Volt sold.

Sales rose mostly because of discounts of almost $10,000, or 25 percent of the Volt’s sticker price, according to figures from, an auto pricing website.

Combine US federal rebates, in some cases state rebates, and GM's discount, and it becomes an affordable car. But since GM is losing some undisclosed amount per sale and taxpayers are footing another part of the loss we obviously have a long way to go before PHEVs make the grade. How big is GM's manufacturing cost loss per car?

Fred Schlacter reports that All-Electric Cars Need Battery Breakthrough. Agreed. A new report from the Congressional Budget Office finds that electric vehicles cost more to own even after cutting their cost by a $7,500 subsidy. Cut $12000 out of the cost of an electric car and then it becomes competitive.

At current vehicle and energy prices, the lifetime costs to consumers of an electric vehicle are generally higher than those of a conventional vehicle or traditional hybrid vehicle of similar size and performance, even with the tax credits, which can be as much as $7,500 per vehicle. That conclusion takes into account both the higher purchase price of an electric vehicle and the lower fuel costs over the vehicle’s life. For example, an average plug-in hybrid vehicle with a battery capacity of 16 kilowatt-hours would be eligible for the maximum tax credit. However, that vehicle would require a tax credit of more than $12,000 to have roughly the same lifetime costs as a comparable conventional or traditional hybrid vehicle.

Using 16 kwh of expensive lithium ion battery capacity in a pluggable hybrid Volt seems a waste of expensive battery capacity. Consider by contrast the new 2013 Ford Fusion Hybrid which manages to get 47 mpg with just 1.4 kwh of lithium ion battery capacity. The same amount of battery capacity as used in the Chevy Volt capacity can be used to make 11 conventional hybrids with a far larger net fuel savings. That's a far more cost effective use of expensive lithium ion batteries.

Ford's use of lithium in the Fusion hybrid will provide lots of demand for battery manufacturers to develop better batteries, probably more total lithium ion battery demand than comes from the far lower production volume Chevy Volt.

Share |      Randall Parker, 2012 September 23 10:16 PM  Energy Electric Cars

Engineer-Poet said at September 25, 2012 7:54 PM:

I'm inclined to agree.  On the basis of gallons saved per dollar (or per kg-Li), conventional hybrids and micro-hybrids win overall.

This does not mean there aren't serious market niches for PHEVs and BEVs even today, they just won't dominate until batteries get a lot cheaper.

Semi-OT: could use some re-writes, if anyone has time.

Anthony said at September 27, 2012 9:48 AM:

... or until gas becomes more expensive.

Ronald Brak said at September 27, 2012 2:26 PM:

All electrics look better in most countries that aren't the United States because of higher fuel prices. That said, I wouldn't buy one for myself yet. I think one of the problems with the adoption of electric cars is that the sort of people who are in the habit of buying new cars are often also the sort of people who are in the habit of replacing their car every few years and so aren't likely to be too interested in trying to work out if their particular driving habits mean they will save money over the lifetime of the car. But if all electric cars reach a point where they are commonly used as taxis, in many company car fleets, and for some car rental purposes, I imagine more people will consider them. Personally, I think if they sold all electrics with free servicing for say 10 years here in Australia or Europe, it would be a good marketing campaign, as car servicing costs are higher than in the US.

Brett Bellmore said at September 30, 2012 4:52 AM:

Nah, energy costs high enough to make electric cars cost effective with current battery technology would cause the economy to collapse, (Cost of energy figures into everything.) and you'd have no place to do your less wildly expensive driving, as you'd be out of work.

Engineer-Poet said at September 30, 2012 5:21 AM:

It's disingenuous to talk about "energy" costs when this whole issue is about arbitrage between different forms of energy.

Germany in particular has motor-fuel prices around twice the US level, and has the strongest economy in Europe.  I would not be surprised if electric cars are cost-effective for local driving in much of the region.

Randall Parker said at September 30, 2012 5:59 PM:


The word "disingenuous" is rather strong, don't you think? Someone can be making a mistake in reasoning or just being imprecise with language without being disingenuous. John Q. Public routinely uses energy costs to refer to fuel costs because John Q. Public thinks more about oil energy than about other forms of energy.

German fuel prices: And yet we do not see large numbers of electric cars sold in Europe. That's what is amazing to me. One thing different though: higher electricity prices.


We can't get to really high oil prices until either Asia industrializes much farther or oil production really shrinks. We are seeing a lot of demand destruction (and far less economic growth in the US and Europe) that is keeping oil around $100 per barrel. I'm wondering at the rate of demand growth in China and India. China's economy is having a hard time currently. But I still expect oil demand there to grow as more people buy cars.

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