Chevy Volts Fail to Electrify Customers

In the movie Field of Dreams, Kevin Costner’s character, Ray Kinsella, is on the brink of bankruptcy and debates whether or not it is completely absurd to build a baseball field in his cornfield and expect people to come watch games played by ghosts of former players. In a famous scene, Kinsella is walking in his backyard when he hears a mysterious voice call out, “if you build it, they will come.”

This appears to have been the Obama administration’s theory about electric cars – if you subsidize an entire industry and set lofty targets (a goal of putting one million electric cars on the road by 2015), a market will magically develop. While “they” (the ghosts of the 1919 Chicago White Sox) did eventually come to Kinsella’s field, consumer demand for electric vehicles has remained elusive. No vehicle illustrates this absence of demand more than General Motors’ (GM) Chevy Volt.

The Volt was launched in December 2010, touted by GM as the car of the future. Yet, it has not shown any signs that it will ever live up to that billing. Serious questions remain as to whether or not the Volt can ever be profitable. According to a September 12, 2012 article in the Washington Post, “So far, GM has sold a little more than 21,000 Volts.” Even with a $7,500 tax credit for consumers, dealer discounting, and high volumes of government purchases, GM is still losing money on every vehicle sold. According a September 10, 2012 Reuters article, “GM is still losing as much as $49,000 on each Volt that it builds.” Further, “it currently costs GM at least $75,000 to build the Volt, including development cost … That’s nearly twice the base price of the Volt before a $7,500 federal tax credit provided as part of President Barack Obama’s green energy policy.”

Underpriced lease offers for Volts that were designed to spur consumer demand have also added to GM’s financial woes. According to Reuters, “there are some Americans paying just $5,050 to drive around for two years in a vehicle that costs as much as $89,000 to produce.”

The sales figures and future sales projections are not even close to the Obama administration’s initial 2015 projections for Volt sales. The DOE predicted that 505,000 Chevy Volt’s would be made by 2015; the agency’s current projections slash that number to one-eighth of the original goal, or 62,000 vehicles. Leased vehicles are also counted as “sales,” so the actual demand for the Volt is even lower than its paltry sales figures suggest.

From the total $79.6 billion in taxpayer aid that Congress dished out to “save” GM and Chrysler, GM received about $50 billion. Even though the government successfully shaved its stake in the company and clawed back $23.2 billion, taxpayers have little reason to be optimistic about getting the rest of their money back. According to a November 2, 2012 article in the Washington Examiner, “GM continues to hemorrhage market share and controls just 17.7 percent of the auto market, a 90-year low. When GM made a public offering in November 2010, the share price was $33 a share. It’s now trading at around $25 a share. The federal government owns 500 million shares of GM, or about 32 percent of the company. The stock price would need to get to $53 a share to break even. At its current market price, the government is sitting on a $14.5 billion loss.” With products like the Chevy Volt, it is unlikely that the Treasury Department will be able to profitably unload the remainder of its shares anytime soon.

In another scene from Field of Dreams, James Earl Jones’ character, Terence Mann, a proponent of building the baseball field, reinforces Kinsella’s magical thinking by telling him, “People will come, Ray. People will most definitely come.” Unfortunately for taxpayers, the Chevy Volt is a nightmare rather than a dream.

  — P.J. Austin