A Chevy Volt battery pack
Is the Volt a $30,000 car with a $10,000 battery?
Last I heard, GM is selling the Chevy Volt plug-in at cost. Likewise, GM has suggested that its battery pack costs about $8,000 per Volt, however, soon the Volt should be able to utilize new chemistries and materials to cut the cost of the Volt battery in half.
So, would Volt sales shoot through the roof?
Obviously, a cheaper Volt would lead to more sales, but how many more? More important, what happens when plug-in tax credits expire?
Today, the Volt costs almost $40,000. After a $7500 tax credit those costs drop to $32,500. If battery costs are cut in half, that could bring the cost down to $28,500 — still a lot more than a comparably sized Chevy Cruze, for instance. But, once the tax credit expires, the base Volt cost would jump back to $36,000.
Now, to be sure, other Volt costs will also decline as scale improves, but GM still needs to accrue a profit from Volt sales and Volt sales eventually have to help recover R&D costs — both past and future. So, I’d argue that in a best case scenario a 50 percent reduction in Volt battery costs, plus a few thousand here and there due to scale, only equates to a plug-in tax credit offset, as a best case scenario.
Some how, the numbers just don’t seem to add up.
Take away tax credits and offer the battery pack for free, and the Volt is still a $32,000 vehicle. Considering there still isn’t yet any profit margin, can scale do anything but create a profit margin?
I’m not trying to be cynical. I honestly believe that plug-in vehicles will be a critical component to killing OPEC dependence and moving the US energy paradigm towards an oil-free future, but the numbers seem to suggest that such a future isn’t going to be very cost-effective for some time if plug-ins and lithium-ion are the key technologies.
I have to be missing something, right?
I honestly don’t know if there is a simple answer, Tom.
For instance, we can say that people don’t own cars that long, but consider the legacy effect.
There are roughly 250 million vehicles on US roads, at 15 million sales per year, which could be very high today and in the next several years or decades, it still takes almost 2 decades to recycle the fleet.
12 million sales per year might be a more realistic number — which means 2 decades+.
But, if economic times don’t improve considerably soon, not only is 12 millions sales per year unrealistic, but ever more consumers will hold onto vehicles longer.
Inevitably, I think pushing towards hybrids makes the most sense — at least in terms of battery vehicles — because they are most cost-effective and they could be upgraded to plug-ins if a major battery breakthrough is achieved.
But, because of the legacy effect, if we’re not all-in hybrids or EVs, today, then drop in fuels seem most critical.
Go by Nissan’s numbers. 10 percent by 2020. That means 90 percent will still require liquid fuels by 2020 and the legacy effect ensures they’ll still need liquid fuels for about another 15 – 20 years.
If we’re not moving very aggressively today, then it just means that liquid fuels are that much more important for decades longer.
The truth is, we’re not moving that aggressively today, and that guarantees foreign oil dependence for decades more.
[...] Volt battery costs are cut in half, what happens? Posted on November 3, 2011 by administrator Is the Volt a $30,000 car with a $10,000 battery? Last I heard, GM is selling the Chevy Volt plug-in… This entry was posted in Uncategorized. Bookmark the permalink. ← COTD: Fast car slow [...]
I don’t know; maybe hybrids aren’t the right strategy to achieve energy independence that is.
Maybe we should just go all electric or higher efficiency Internal Combustion Engine {ICE} vehicles. If you can buy a 30-40 mpg car with and ICE why pay extra for a hybrid that takes 7-10 years to recover the cost? People don’t usually own cars for that long anyway. Aren’t we just wasting money?
Instead; for most daily drivers – just go pure electric. Forget the dual power trains of ICE’s, electric motors and batteries and all the plug in hybrid stuff. Reserve the plugin parking spots for all electric vehicles wouldn’t that make more sense?
I don’t know; what do you think. Are hybrids really the answer?