Saturday, February 1, 2014

Chevy Volt - Development and Manufacturing Cost - Divergent views

Sep 2013

September 2012

The sticker price of Volt is $39,995.
Auto industry consultants suggested that, currently, each Volt costs GM around $80,000 ( somewhere between $76,000 and $88,000.)

The breakdown of  80k: Each Volt currently has $56,000 in fixed costs – $18,650 in development costs and $37,350 in tooling costs; $24,000 in parts and labor. $56,000 fixed cost is calculated as follows: GM has invested an estimated $1.2 billion into the Volt program so far. 21,500 volts were so sold so far. When you divide $1.2 billion by the 21,500 Volts sold in the U.S. so far, you get $56,000 as the fixed cost for each Volt.
A rebuttal by General Motors on Reuters report

One billion dollar is being given as an average development cost of a car. If the production run is estimated as 250,000 cars, the development cost per car works out to $4000. In such a case the cost of volt will come to $28,000. If it sold 21,500 cars so far, in the next 10 years it can sell 250,000 cars.

Also, the learning curve effect will come in and the manufacturing cost may go down in the future. Like in aerospace industry, learning curve effects can be significant in car industry also.

Case Study on Chevy Volt Development,%20rev_%208-27-2013,%20incl%20JLL%20comments.pdf

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