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Isn't that also a bit tautological given how fixed costs are divided over units produced? If they produced and sold more they would be cheaper. Of course that a

Isn't that also a bit tautological given how fixed costs are divided over units produced? If they produced and sold more they would be cheaper. Of course that assumes they would sell well if they put more effort into doing so.

bilbo0s 7y ago
>Of course that assumes they would sell well if they put more effort into doing so... And there's the rub. People say they want these things, but when it comes time to open the pocketbook, their calculations change. Worst thing is that the people who can afford this stuff will instead drop more money on an ICE SUV. :(
freehunter 7y ago
That works if they're losing money due to not selling enough volume to recoup the startup costs. However if they're actually selling them for less money than they cost to make, every unit sold is just adding to the loss. If it costs $1,000,000 to design a car and I sell that car for $30,000 and I sell 33 cars, I've lost $10k. But just selling one more car will turn a profit. On the other hand if that car costs $32,000 to make and I'm selling it for $30,000... GM has long been in the business, for whatever reason, of selling cars below cost [1]. And for the Volt, it's more like selling a $40k car that actually costs $80k to manufacture [2], not even taking engineering and marketing costs as a factor. Selling more Bolts and Volts would hurt GM, not help. [1] https://www.hotcars.com/gm-admits-bolt-not-profitable/ https://www.hotcars.com/gm-admits-bolt-not-profitable/ [2] https://www.forbes.com/sites/michelinemaynard/2012/09/10/stunner-gm-may-be-losing-50000-on-each-chevrolet-volt/#107188aa2cc9 https://www.forbes.com/sites/michelinemaynard/2012/09/10/stu...
- chrisbolt 7y ago
  > not even taking engineering and marketing costs as a factor. It looks like engineering is included as "Development" in the original report: https://www.reuters.com/article/us-generalmotors-volt/factbox-estimating-costs-of-making-general-motors-volt-idUSBRE88904V20120910 https://www.reuters.com/article/us-generalmotors-volt/factbo...

bilbo0s 7y ago

>Of course that assumes they would sell well if they put more effort into doing so... And there's the rub. People say they want these things, but when it comes time to open the pocketbook, their calculations change. Worst thing is that the people who can afford this stuff will instead drop more money on an ICE SUV. :(

freehunter 7y ago

That works if they're losing money due to not selling enough volume to recoup the startup costs. However if they're actually selling them for less money than they cost to make, every unit sold is just adding to the loss. If it costs $1,000,000 to design a car and I sell that car for $30,000 and I sell 33 cars, I've lost $10k. But just selling one more car will turn a profit. On the other hand if that car costs $32,000 to make and I'm selling it for $30,000... GM has long been in the business, for whatever reason, of selling cars below cost [1]. And for the Volt, it's more like selling a $40k car that actually costs $80k to manufacture [2], not even taking engineering and marketing costs as a factor. Selling more Bolts and Volts would hurt GM, not help. [1] https://www.hotcars.com/gm-admits-bolt-not-profitable/ https://www.hotcars.com/gm-admits-bolt-not-profitable/ [2] https://www.forbes.com/sites/michelinemaynard/2012/09/10/stunner-gm-may-be-losing-50000-on-each-chevrolet-volt/#107188aa2cc9 https://www.forbes.com/sites/michelinemaynard/2012/09/10/stu...

chrisbolt 7y ago
> not even taking engineering and marketing costs as a factor. It looks like engineering is included as "Development" in the original report: https://www.reuters.com/article/us-generalmotors-volt/factbox-estimating-costs-of-making-general-motors-volt-idUSBRE88904V20120910 https://www.reuters.com/article/us-generalmotors-volt/factbo...