Chevrolet Volt High Price is its problem

When GM first announced the Chevrolet Volt project, Bob Lutz said the production version could end up being priced somewhere in the high US$20,000s. That’s not so bad. The car is Cobalt-sized and a Cobalt starts at just under US$15k and tops out at US$23k. For about US$29k you can get a fully loaded up Chevy Impala. So I suppose you’ll be trading an upsize in vehicle class for the advanced EREV powertrain. But not any longer. It turns out the price tag was a big underestimation.

Apparently now the realistic price tag for the Volt hovers at somewhere around US$43,000. For that kind of money you can buy a fully loaded top of the range 3-Series, or even a basic BMW 5-Series. A Prius starts at just under US$22k. And how did Lutz end up with high US$20k range in the first place? “I just thought if a conventional car of that size with a four-cylinder engine can go for US$15k-16k, add US$8k for the battery and we’re at US$25k,” admitted Lutz.

But of course the Volt is more than a regular inline-4 car with a battery. Yes, the battery did end up being US$8,000, supplied by Korean company LG Chem. But you also have to add the electric motor, ECU and various controls for the motor and battery charging systems, as well as equip the car with new auxiliaries that can continue to work via other methods rather than draw power from an internal combustion engine via an aux belt. The Volt also ended up using many one-off parts which does not benefit from economies of scale from use in other GM cars.

Even at the US$43k to the customer price tag, GM will also have to sell the car to the dealers at a loss. They are banking on warranty costs being much less than they provisioned and for technology advancement to reduce the costs of the Volt’s components halfway down the road to make the car profitable.

It was last reported that our neighbours up in Thailand north will be getting it beginning 2011, and who knows, maybe we’ll get it too, albeit if that happens it will probably be only as a halo model of some sort because of the kind of price tag it will have. Even in Thailand it is estimated to be priced at nearly 3 million Thai baht (roughly RM300,000), because of Thai import duty structures.