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Each Chevrolet Bolt Sold Will Drill a $9,000 Hole in GM’s Budget

Most car manufacturers have started, some more recently than others, walking down the electric avenue. Others, however, are not so convinced. They claim that making electric cars at this point is a sure way to lose money, and carmakers, like everyone else, don’t like losing money.
2017 Chevrolet Bolt 28 photos
Photo: Chevrolet
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One of the best examples in this regard Is Fiat’s Sergio Marchionne. The CEO has constantly expressed his doubts over the profitability of EVs, and said his company will only start taking them seriously (they do build the 500e, after all) once that hurdle had been cleared. People have been questioning Marchionne’s position by pointing their fingers at Tesla, but recent reports surrounding GM’s Chevrolet Bolt might prove him right.

GM has succeeded in being the first to bring to market a long-range, affordable EV, since the Bolt can boast about a 238-mile maximum range and a starting price of $37,495 before incentives. Its hegemony should be challenged by Tesla’s Model 3 when it eventually arrives, even though most analysts expect Elon Musk’s company to sell very few base-priced sedans (claimed to be $35,000), making the Model 3 a fake direct competitor for the Bolt.

According to the famous “person familiar with the matter,” cited by Bloomberg, GM stands to lose $9,000 for every Chevrolet Bolt it sells. If the planned 30,000 units per year production rate turn out to be true, that will lead to an annual loss of $270 million for GM. But that might not necessarily be the case.

The real reason behind GM’s decision to push the Bolt and even sell it at a loss might have something to do with the sunny state of California. More to the point, with its zero-emission vehicle mandate that forces manufacturers exceeding a certain number of sales to also include electric cars. Exceeding these quotas – something Tesla has been constantly doing, for example – translates into accumulated points that can be sold to other manufacturers. While that might not offset the $270 million, it would still be money in the bank.

But the most important way GM could profit off the new Bolt is to establish the brand as an early leader in the EV segment. With the one year headstart it has over the Model 3 and the much better specs compared to cars from the rest of the traditional manufacturers, some people might start to associate electric cars with GM, just like the Prius was synonym with hybrids for so long. Bolt, however, only has one year at its disposal, so it will be a much tougher task - not to mention information travels much faster these days.
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About the author: Vlad Mitrache
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"Boy meets car, boy loves car, boy gets journalism degree and starts job writing and editing at a car magazine" - 5/5. (Vlad Mitrache if he was a movie)
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