GM Targets Up to $10,000 in Chevy Volt Cost Savings
General Motors Co. (GM), which loses money on every Chevrolet Volt it sells, wants to cut as much as $10,000 per car from the model’s production cost to make the next generation of the plug-in hybrid affordable and profitable, Chief Executive Officer Dan Akerson said.
“That’s our goal,” Akerson said yesterday in an interview after a presentation at the Fortune Brainstorm Green forum in Dana Point, California. “Every new technology takes a while to get traction, you’ve got to work out all of the associated issues.”
The Volt, which starts at $39,145 before a $7,500 U.S. tax credit, was introduced in 2010 and has struggled to meet some sales targets. Volt is Detroit-based GM’s flagship car for its efforts to have about 500,000 vehicles on the road by 2017 with some form of electrification. The Volt can travel 38 miles (61 kilometers) on battery power before a gasoline engine engages.
The CEO said during his presentation yesterday GM wants to reduce Volt’s production cost by $7,000 to $10,000 each without removing features.
Volt sales in the U.S. rose 8.4 percent to 4,244 through March after more than tripling for all of last year to 23,461, about half of Akerson’s original target of 45,000.
“We know we have to reduce costs,” Akerson said during the interview. “We’ve got to look at smart ways at getting it better positioned from a price perspective and that means we’ve got to take cost out of it.”
Asked if the new version of the Volt would be introduced in 2015 or 2016, he said “yes” without elaborating.
Akerson is putting his stamp on the automaker, seeking to cement GM’s position as the best-selling foreign carmaker in China with this month’s announcement that the company and its partners will invest $11 billion in the country through 2016. He’s also seeking to gain sales in the U.S. with the introduction of about 20 new vehicles this year after GM’s market share dropped to an 88-year-low in 2012.
GM rose 0.2 percent to $30.84 at the close in New York yesterday. The shares have gained 7 percent this year compared with a 12 percent increase for the Standard & Poor’s 500 Index.
Akerson compensation mix was changed by GM in 2012 to accommodate the possibility he may retire before his long-term restricted stock vests in three years, the company said last week in a regulatory filing. Akerson’s 2012 compensation rose 44 percent to $11.1 million.
The CEO said he didn’t know if he’ll retire in 2015 and “it depends how long the board will put up with me and what my personal life calls for.”
“I’ve got to be honest with you, I don’t spend too much time thinking about my retirement,” Akerson said. “I’m 64, that’s in the proxy, so I’m not giving you any news flash there.”
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