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GM and Heartland


General Motors is feeling some heat for its support of the Heartland Institute and their extremist climate change denying agenda. It’s sad to see GM working with these extremists, but it’s not surprising. The auto companies fear changes in American transportation habits as much as the petroleum companies fear wind energy. GM could work harder to corner the marker in energy-efficient cars, but by pricing the Chevy Volt so high ($40,000 before any tax credits), it has severely depressed demand.

I’m not exactly surprised to see GM management make stupid mistakes as they are with the Volt and Heartland, but given their willingness to keep at least some union jobs in the U.S., I wish they were smarter.

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  • What do you think they should have priced the Volt at, and on what do you base that view? I really don’t know what the price should be- I don’t have information on the cost of production, expected markets, etc., but I’d assume that they set the price based on what they thought the best return would be. Perhaps they were wrong, but what’s your reasoning?

    • Quick check of the Prius prices has it starting at $24,000. There’s no way that the Volt can compete at $40,000.

      • TT

        The Prius was a loss leader for years, with production often costing twice as much as MSRP. The Volt is in the same boat, unfortunately, because a lithium-ion battery of that size just costs a ton of money, even before you get to the engineering challenge of marrying it to a (smaller) gasoline engine.

        I sure hope GM sticks with it. The car’s gotten good reviews and could become a real market force in an era of $100+ per barrel oil. And watching the likes of Charles Lane and George Will dance an I Told You So jig is reason enough to hope the Volt succeeds big time.

      • Sure- but that doesn’t mean that GM can afford to sell it at $24,000, especially since it seems that Toyota was losing money at that price.

        • Yes, but given that sales are terrible because of the price, the Volt clearly needs to become more competitive on that front.

          • mpowell

            “We’re losing money on every sale! How are we going to make this business model work?”

            “We’ll make it up on volume.”

            Seriously, business does not work this way (at least not post internet bubble). GM doesn’t care if Toyota sells more Prius’ if they are losing money on them.

            • cackalacka

              There was another way; they could have limited production, sold in limited quantities as a halo for a loss, gotten folks in the dealerships to look into the windows and walk out the door with a decent Cruze (with same frame/proportions, decent value/economy and an extra seat, to boot.)

              Instead they’re cutting production and embarrassing themselves.

              I’m sure we’ll all feel good next time we shell out a rescue package, it will probably effect us some April 15th in the next decade, shortly before the time the third generation LEAFs are released.

      • JRoth

        It’s a very good car that they’re selling at a price that reflects its costs. It’s not clear to me what other avenues are open to GM. I’m pretty sure that they need to be profitable to remain viable – losing money every year didn’t seem to work so well for them.

        I absolutely think (and thought) that they (and Ford and Chrysler and, to a lesser extent, Toyota*) should have spent their early ’00s SUV profits on pivoting towards a Peak Oil future, but that management team is long gone. I just don’t see how they could viably plan to run marginal corporate profits in order to subsidize a niche car (Toyota hasn’t been selling that many Prii, either – it was huge 2 summers ago, but it was sitting on lots this winter the same as the Volt).

        Honestly, what the Volt needs is $4.50 gas. Which is the current conspiracy theory (correction – one of many current conspiracy theories) on the right.

        * arguably Honda, too, as they introduced their biggest, most gas-guzzling Pilot ever on the eve of the combined market crash/gas spike. Their hybrids have been serial failures, although near as I can tell the worst thing about the Civic hybrid was that it didn’t proclaim its owners’ righteousness clearly enough

      • JRoth

        Oh, and to be clear: the Volt is a technological leap ahead of the Prius. The Prius’ gas mileage is basically matched by any number of modern diesels and efficiency-tuned compacts. But the Volt can go weeks without requiring any gas at all. Neither one is big enough for my family*, but if they were both available in a suitable body type, the Volt is the one I’d want.

        * 2 kids, a dog, and a mother in law.

        • Right; I think the question is whether buyers are going to decide the extra $15K is worth the advanced technology. Given that status is a not small part of buying alternative vehicles, I think that a lot of people are going to be happy enough with the Prius.

        • Jager

          My nieghbor has a Volt, he got one of the first ones sold in SoCal. He commutes about 26 miles a day, round trip. Other than a trip to San Francisco, he spends about 6 bucks a month on gasoline. He claims he hasn’t noticed an uptick in his electric bill from plugging it in. The Volt is a really good looking car with a fine interior. The Prius can’t match it until you reach the 30k price point for a loaded model. With the tax rebate they are both in the same ballpark. The company that does the landscaping for our association bought a Volt for their supervisor, he loves it. We have two Prius owners in our area, they love their cars, too.

          • BradP

            He claims he hasn’t noticed an uptick in his electric bill from plugging it in.

            I doubt that.


            With the tax rebate they are both in the same ballpark.

            That’s not a win for the volt.

            • From your very own link:

              That’s due in part to our high electricity rate – had our rate dropped to $0.24 per kilowatt-hour, we’d have reached parity on a cost-per-mile basis between electrons and dinosaurs.

              It should be mentioned that the base rate for electricity in the Volt’s early roll-out states is $0.16 per kilowatt-hour and many areas of the nation charge significantly less than that.

              Now, surely you read that, and understood it, right?

              • BradP

                Yes, I read it. But his friend lives in California, where this test was run.

                Even under the best conditions there would still be a bump in electrical costs the is approximately half of what one would have paid for gas, and one would notice that sort of jump in an electricity bill.

                But odds are his friend is paying somewhere around 25% more for the electricity than he would have for gas.

                He would have noticed.

                • DocAmazing

                  Unless he had solar panels on his roof, a popular innovation that has been pushed by the State of California for the past decade or so.

  • DrDick

    The US car industry is still being dragged, kicking and screaming, into the late 20th century. They really are not ready for the 21st century. At least since the 1970s, they have actively resisted most change and innovation (it costs money that the CEO should be getting!).

    • Jager

      You can buy a Chevy Cruz Eco model, it gets 40mpg on the highway, 30 in town. My Corvette (428 hp) gets 20 in town and 31 on the highway at 85 mph. The new pickups and SUVs are roughly up over 20% in mileage. My Jeep Grand Cherokee Overland with a Hemi V8 gets 16mpg pulling a 5200lb Airstream trailer at the 55mph trailer speed limit. I have a Chevy Cobalt that’s 3 years old at my office, it is used for errands, etc, it never gets less than 26 in town driving. Cut the BS about American cars…I own 2 American cars and a Benz, the Benz is great and the US rides are very good!

      • DrDick

        They are getting better, but they are still largely behind the Japanese and Europeans and they did not really start improving gas mileage until after 2000. Overall quality on US cars is also improving, but again still behind the competition. Their priorities are still skewed more toward rent seeking than quality (a larger problem that infects most of American business culture).

        • Jager

          I didn’t own an American car from the early 70’s until 2007 for the reasons you brought up. Quality, fit and finish, etc. When I was traveling monthly I rented and drove almost all the brands. The Toyota Carolla and the Nissan Sentra were trash, wheelspin and torque steer on wet streets, scary in the snow, light front ends at highway speeds. The worst car I ever rented was a late 90’s Pontiac, the Toyota and Nissan are a close 2nd and third. The car that turned me around on American cars was the Mustang. Best car I’ve ever rented outside of “premium” was a Ford Focus. I have an associate who is on the road 2 weeks a month, only thing he’ll rent is a Chrysler 300, good mileage with the V6 and its a good handling, comfortable car. I had a series of 911 Porsches, $650 for an oil change with filters vs 86 bucks for the Corvette. The Corvette is not as nice inside of course, but the handling, performance is outstanding and the car is a lot more practical to own and drive. Then again, nothing beats a Benz, it has 133,000 miles on it and other than routine maintence, we haven’t spent a nickel on it. Can’t give it up after 13 years.

  • mining city guy

    What objective evidence exists that would indicate that GM management is particularly smart? The decisions that it made over the last 40 years?

    • DrDick

      None at all. Of course the same could be said of most corporate management in the US.

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