Chevrolet Volt could top $30,000

All along in the Chevy Volt’s development and marketing, the target price was under $30,000.  Everyone pretty much took that to mean $29,995, but that was ok.  After all, 40 miles per charge is pretty strong, and could eliminate gasoline usage entirely for a lot of it’s buyers.  Considering many folks spend $200-$300+ on gas per month, $30 grand doesn’t look as scary anymore.

However, recent comments by Bob Lutz have been pretty discouraging.  He alluded to the fact that the Volt is likely to cost more than $30k, and move closer to the $40k mark.  If Chevy brings the Volt to market in the high $30k range, then it will be a complete failure.  The reason the Volt will be so expensive is because of the technology – everything is being built from the ground up.  New technology + low initial volume = high price.  To get those prices lower, GM will need to create a high demand.  To create the demand, GM will need to sell a lot of Volt’s. 

There is the catch-22.  GM needs to , must, has to, price the Volt correctly from the start to spark the demand.  Sell them at a loss for awhile, it doesn’t matter.  Creating and meeting this demand will allow the economy of scale concept to take effect, and battery / parts prices will drop.  Eventually costs will drop below the sale price, and the Volt will become profitable.  But it must be priced reasonable from the outset, or the scale will not be achieved, and pricing will not be able to drop. 

Look at the Prius – Toyota initially sold these at a loss, but did so happily.  Their strategy paid off handsomely, as the Prius is one of the best selling cars in America today.  The Volt has the same potential, if it comes to market at the right time, and with the right MSRP.  GM – the ball is in your court.

Published on January 17, 2008 in Chevrolet

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