Yes, this is the future of GM: lose money on each sale, but make it up with volume. And future bailouts.
The article is very defensive of this policy (“It’s called R&D, folks”). It fails to mention that the Nissan Leaf, AKA “the competition,” has a positive profit margin.
(via naked capitalism)
Derp. I am going to win that bet so hard.
Yeah. It looks pretty bad for me. With a production of 10,000 cars this year, if GM loses 10,000 per car after sunk costs, they could be looking at losses of $100,000,000. That’s like multiple days of profits for the company. Sure, the Volt might be a high-demand iconic car that will change the face of the company … but GM is losing enough money to set them back a full work week. There’s no way that’s worth it.
Your statements do nothing to mitigate that others are building better cars cheaper and making a profit on them. Nissan had the same R&D requirements. And where would GM’s sales be without government purchases? Would GE purchase 12,000 Volts without government pressure? Don’t pretend the bailouts have stopped.
Iconic? That’s an issue of marketing (for which GM receives government subsidies). High Demand? That remains to be seen.
