Automotive News [sub] dug deep for its latest piece on the Volt project, a sprawling opus which fills in a number of the missing pieces in TTAC’s own Volt Birth Watch. From the birth of the concept (“I was getting so pissed off about reading about how the wonderful, far-sighted Toyota is the only one who understands technology”) to its design (“Within 15 minutes, [John Lauckner] had the vehicle basically laid out”) GM’s Bob Lutz takes us inside GM’s moonshot. So what’s the view like from that tin can now, Major Bob?
After “[Lauckner] did all the calculations, what the vehicle weight would be. I was smart enough to realize this made a hell of a lot of sense,” explains Maxstronaut Lutz. Too bad he wasn’t smart enough to realize that the Volt would cost more than $25,000.
When I said I hope to sell it in the 20s, I just thought, ‘Well, if a conventional car of that size with a conventional four-cylinder engine, we can sell it for 15 or 16 thousand dollars, then let’s notionally add $8,000 for the battery and we’re at $25,000. That’s the way my brain worked on that one.
Even the famously clueless GM management knew from experience that Bob’s baby would be trouble. “One senior executive, senior to me, said: ‘Bob, we lost a billion dollars the last time we tried that [with the EV1]. What do you want us to do, lose another billion?'” To which Lutz’s answer was apparently “Yes.”
The problem wasn’t even that the Volt would need an $8,000 battery pack; almost all of GM’s synergies and efficiencies of scale are useless when it comes to the Volt. “There are no systems synergies in that car; everything is stand-alone,” Lutz explains. “But that was just because the electric guys had to do their job, the cooling guys had to do their job, the hydraulic guys had to do their job, and there wasn’t time to go back through it and say, ‘Wait a minute, how come we have two of these?'” Worse still, GM’s supplier options were extremely limited.
And then there’s the issue of price. Though the Prius, which bugged Lutz enough to launch the Volt program, sells for $22K-25K, the Volt has a projected transaction price of $43,000. Which means GM will have to sell to dealers for a significant loss. Sure it qualifies for a $7,500 tax credit, but that isn’t recouped until tax season and it doesn’t reduce insurance costs.
The Volt project could easily have been killed, says AN [sub]’s GM source. And considering that the program’s billion-dollar pricetag could have developed three new vehicle platforms, it probably should have been. “But the Volt’s high public profile — stoked by a massive public relations effort — made that virtually impossible,” is how AN phrases it. Couldn’t the bailout have had something to do with that decision?
Meanwhile, Lutz admits that “vehicle price is going to be a big issue for a long time to come.” So much so, in fact, that GM engineers are already “beavering away,” (to use the Lutzian phrase) to cut costs out of the car. Which always augurs good things to come at General Motors. Especially for a car that starts at $43K.
“I was smart enough to realize this made a hell of a lot of sense.”
The money quote.
Keeping Bob Lutz around is worth almost every penny of my share of the tax dollars for the GM bailout. Almost.
“beavering away”. Hilarious! GM management certainly makes me think more of the proverbial grasshopper. You remember the grasshopper, right? He’s the one who had time to prepare, but instead pissed away any opportunity to be self-sufficient. I guess that makes us taxpayers the ants. Sounds about right.
“I was smart enough to realize this made a hell of a lot of sense.”
You’ve gotta love Lutz. This much ego on the eve of so much failure, and yet the ‘hits just keep on coming…’
“When I said I hope to sell it in the 20s, I just thought, ‘Well, if a conventional car of that size with a conventional four-cylinder engine, we can sell it for 15 or 16 thousand dollars, then let’s notionally add $8,000 for the battery and we’re at $25,000. That’s the way my brain worked on that one.”
Okay, here we are, teachable moment.
This man has received hundreds of millions of dollars in compensation and stock options from car companies during his career.
Not only are his ideas toxic to GM. That Lutz wasn’t fired the first time he opened his mouth just shows how weak GM management is, and how susceptible to truly atrocious ideas.
As for this quote specifically, he’s employing the reasoning of a 14 year-old boy. That argument would just barely fly in the comment section of internet message boards.
Where does the $7500 tax credit come from? I thought the hybrid credit was at most $3500 and was phased out over the year.
@jberger: PEHV tax credit of $2500 per 4kWh, it’s in the Energy Improvement and Extension Act of 2008 (pdf)
EDIT: signed into law October 3, 2008, by then President George W. Bush
I think this stupid thing is classified as an “electric” car so it’s $7500 of our hard earned money p*ssed away on a rebate for someone dumb enough to plump for a $43,000 plus Chevy with a big battery and redundant gas engine.
All the while, Toyota is no doubt working on their NEXT generation Prius, due in what – 4 or 5 years? I suspect it’ll run $22,000 – about 1/2 of the Chevy – and will have had multiple generations of Prius’s behind it (as well as millions of sales and billions of owner miles).
Another EPIC FAIL by GM. Except that now, we taxpayers get to carry the can…
Can’t we impeach Obama and then fire the congresscritters, and start over? God, I wish.
As for this quote specifically, he’s employing the reasoning of a 14 year-old boy. That argument would just barely fly in the comment section of internet message boards.
Actually, he’s making the mistake many vice-presidents make. It’s called “Making Molehills out of Mountains”, but I’ve also heard (and used) the term “Vice President Syndrome”
There’s a tendency, when you’re signficantly abstracted from the business, to see all problems as simple and easily surmountable. People like Lutz (who I have been in meetings with often) either fail, refuse, or are actively hostile to the possibility that their understanding of an issue is fatally oversimplified. In their eyes, you’re either overcomplicating matters, cowardly or stupid.
After all, they’re vice presidents and you’re just a paeon. They know all about how everything works already. Just run along and Make It Happen.
That the same tack is used by fourteen year old boys on the internet just points to the emotional and intellectual shortcomings of much of western corporate culture.
Can’t we impeach Obama and then fire the congresscritters, and start over? God, I wish.
If you couldn’t impeach Clinton for lying about a blowjob and hadn’t the balls to impeach Bush for gross violations of the constitution, civil and basic human rights, good luck nailing Obama on simply wasting money on a few car companies.
After all, it’s not like the large-scale flushing of money down the toilet is new or unheard of. After all, you didn’t bust Reagan for it.
What you need is at least two additional political parties: a left-wing one without Boomer baggage and a right-wing one without social conservatism.
Justin Berkowitz: “As for this quote [Lutz’ Volt cost estimation process] specifically, he’s employing the reasoning of a 14 year-old boy. That argument would just barely fly in the comment section of internet message boards.”
That would represent the pinnacle of logical reasoning over at GM-Volt, where adulation is available in equal measure for both the Volt and El Lutzbo.
Actually, he’s making the mistake many vice-presidents make. It’s called “Making Molehills out of Mountains”, but I’ve also heard (and used) the term “Vice President Syndrome”
Scott Adams restated this as the “Dilbert Principle” — anything you don’t understand must be easy.
”I was getting so pissed off about reading about how the wonderful, far-sighted Toyota is the only one who understands technology,”
Did you get annoyed because it was true? Face it, Mr Lutz, Toyota pushed hybrid technology when petrol prices were milling around $1 per gallon, the technology was financially unviable and diesel had similar fuel economy. But with consistent work Toyota (and to a degree, Honda) hybrids are now an alternative powertrain alongside diesels and petrols. Mr Lutz, credit where credit is due, GM were quite happy to coast along on regular technologies, even push forward ethanol. Then, they got forced into hybrids because that’s where the market was going.
Mr Lutz, you said that the Volt would have a working prototype by Easter 2008.
You failed.
You said it’d cost under $30K
It won’t.
And you’re having to use tax breaks to make the Volt viable.
All I’m saying is maybe the kudos being given to Toyota was EARNED?
It had been previously reported that El Lutzbo had a hissy fit over, not the Prius and Toyota, but over Tesla’s plans to get a 200 mile BEV on the road and that Tesla’s plans were the goad that started the Volt.
I couldn’t believe that even El Lutzbo would ignore Toyota in favor of a boutique operation that was going to sell a two seater for $110K or so and could not challenge GM for decades… but eventually saw persuasive evidence that it was true.
Now, AN suggests that El Lutzbo was, in fact, motivated by competitive pressure from Toyota.
One might think the AN story was inconsistent but I believe both stories, as reported, are true; which is to say, El Lutzbo’s story has changed over time and AN is simply reporting Volt History 2.0.
And they asked him to stay!
‘GM engineers are already “beavering away,” (to use the Lutzian phrase) to cut costs out of the car.”
Now that’s a truely nightmarish thought. A $50,000 electric chevy that has the looks and durability of a 2001 Pontiac Grand Am.
$43k is the highest price I’ve ever seen for the Volt. What will the even-more-ridiculous Converj (Cimarron) be priced at, $60k?!
And still no data on the ICE driveability. It will be killed by other competitors available by 2011. Actually, it’s already bested by numerous cars.
GM could best demonstrate its “newness” by euthanizing this 3-legged dog. But its/our political masters have already decided that this is the kind of vehicle we want.
The Volt will stand alongside the Chevy SSR as another bum idea by GM.
Lutz the Putz.
another destined-to-be classic, right along with the Beretta convertible, Cutlass Supreme convertible, Quad-4 powered cars and , don’t forget, the “gotta have ” XLR and the awe-inspiring GMC Envoy XUV.
Lutz’s error is easy to sum up, but it’s amazing that nobody called him on it: he assumed that EV + gasoline drivetrain (and EV-specific accessory hardware) would cost as much as its gasoline counterparts.
It’s a common myth that the only thing that contributes to the high price of electric cars is the battery pack. Most people overestimate the cost of the battery — Lutz, to his credit, was pretty close. The problem is that the other EV components don’t have economies of scale, so they cost several times more than ICE components. A motor, inverter, and charger will each cost you several thousand dollars, not counting labor. And accessories normally run by the engine, such as the heater and air conditioning, likewise need different, presently-low-volume parts.
Ultimately, most EV components are simple enough that they should end up cheaper than ICE components, but for now, pretending that EV parts and ICE parts are the same price is going to give you way off base figures.
The next thing we will hear are accusations Toyota is dumping Priui on the market below costs, because if it costs GM 25K to make a Volt then surely it cost at least that much to make the Prius.
Hello Congressman? Can we have a little protectionism along with our free loans? How about a little tariffs too? What? The Prius is built here? How about a special tax, like the AIG execs but only directed at the cars and owners of cars that are more successful than ours.
43K minus 7500 of someone elses money. What a rip. Wait until the hoods start going up.
“considering that the program’s billion-dollar pricetag could have developed three new vehicle platforms, ”
Not really. That’d get you 2 new top hats on an existing chassis, or maybe a new trans and top hat.
A $300 million program isn’t much more than new wheels,a new grill, and a bit of a faff around with the interior, and bringing the powertrain and safety systems up to the latest regs.
Having said that program costs are notoriously flaky, to the extent that I think a billion for the Volt is a bit of an underestimate.
It appears that one-off components and systems are doing the most to keep the price going up. Such must be why GM is looking at throwing Voltec at that Orlando wagonette they’re bringing here; along with the Converj and the Volt itself (and the tax rebates for electric vehicles), the three vehicles should work with the more rapid pace of economies of scale granted by the Voltec system to bring overall costs down in a few years or less.
From a marketers’ perspective: One other mistake was making it a Chevy. $43K for a Chevy??? No way. $43K for a Cadillac? Maybe!