Volt price cut

How often did you stick a tall person in the back of your prius. For me it was once in three and a half years. I carried 9 a couple times in my 5 seat lexus, but people liked that back seat. With the prius and a group of more than 4, its almost always a different car. Your passengers need to suck it up or be the driver. That picture is a clown car picture. Don't you really need a 7 seat SUV to carry the possible extra people (we had 9 in my cousin's explorer).
If you regularly need room for 5 and not 6, that is a reason to get a different car than the volt. Otherwise I see humoungous class SUVs with 1 or 2 people because they may need to seat 7.

People respond to value not cost. Well some really want to shop at walmart and support lowest cost items, but I hope we don't slide down to not caring about values and just buy the cheapest s&it around. Low cost buyers aren't going to buy hybrids or plug-ins. The prius liftback appeals to a high value proposition. It costs much more than a versa, but has features a hybrid person values.

Sales definitely don't fit toyota's goals, which might mean features like aer range, engine off power, don't meet potential phev buyers desires. That typically mean a poor value proposition and slow sales.

IMHO the prius phv's problem is not price, toyota is discounting it, its content. This includes missing the adopter crowd with With the discounting the price is not high, but other choices hit initial adopters better. There is no two trim with the phv nor can you get leather, so you need to buy things you don't want to get it (lowers value to the customer). Commercials highlight things that are unimportant, or down right insulting to potential customers. Dealers appear to not understand or not want to sell it. Toyota has chosen not to sell it in many states where sales might be be better, because they seem to think there is a content problem. Toyota can definitely do better in a next generation vehicle and improve sales. If they think the car doesn't need improvement, then that is a problem. All of these first gen plug-ins can use improvement.

 

I just hope Mitsubishi can bring their Outlander PHEV and Evo PHEV to the US to step up the EV/PHEV battle.

Toyota is charging an arm and leg for their Highlander hybrid (without a plug). Americans love their SUVs, so if Mitsubishi is successful, it will force Toyota to step it up.

 

I missed it also, can you post some links.

 

Oh. The Mitsubishi Outlander PHEV has a 12kwh battery pack. So it is good for $5836 IRS tax credit. And in CA, another $2500. That is almost $8500 more ammo to make Toyota make PHEV SUVs.

 

1. What is a low cost buyer? One with a $1-5k price range, or $6-15, or $16-25? People due indeed respond to value, but in a direct relationship with cost. Just because I value personal opinion on a shiny rolex in a store does not imply my pocket book with fly to the cashier...

2. Incorrect; Toyota leads the market in hybrid sales. A multimillion dollar mega operation such as them are likely to have tops minds with experience that surpass our own.

3. What scope do you have with the inter-workings of the automotive field? Is there something you know coming out in the future? The fact that there are EVEN plug-in hybrids in the wake of oil tycoon related transportation domination is quite mind-blowing.

 

The price of the volt to a consumer is similar to the price of a prius in tco terms. It is not a rolex (porsche,jaguar, etc). It also is not a yaris, versa, type price. The tco is in the heart of the car market. So now that we have established the obvious, that the price is not out of your league if you have a prius, we can go to value. Do you like the features you are getting for that price. People do vote with their pocketbooks, and they appear to like the features of a prius better than a volt, they like the value proposition.

I said prius phv. People don't seem to like that value proposition. John is arguing that it is fine the way it is. I say that is not the case. Do you disagree? We have your rollex (tesla S) greatly outselling it in volume. We have the volt and leaf also greatly outpacing it in volume. If the content is fine, and the discounted pricing is fine, then why isn't the volume there? IMHO its content. Since I am probably one of the target consumers (own a prius, want a plug-in next vehicle) I would say they have missed the mark at least with me. I don't care if they think they are smarter than the consumer.
From march
Toyota Motivated to Match 2012 Prius Plug-In Sales; Defends Discounting | Sales & Marketing content from WardsAuto
toyota has not been hitting the new lower expectation numbers, something that can be fixed with content in a next generation vehicle

Rumors of the next generation say they will partially improve on the phvv, in the directions I mentioned in the older post

If you are asking personal knowledge of plug-ins, my father worked for a major auto supplier that was always involved with plug-ins. I have been able to see them progress throughout my life. I have consulted on the toyota manufacturing system (and done this with ex toyota executives at various points), to non-automotive companies, and have consulted to bmw at various times. I am not a car guy all my life like Lutz, but that may be an advantage in understanding the market. No inside knowledge of toyota. Some inside knowledge of the industry, that I am not using here. Extensive knowledge of cost of manufacturing.

 

Usually, but not for everything. For example, in mature industries, sometimes the cost of raw materials increases (at least short term). Housing costs (even excluding land prices) seem to constantly increase (excepting the recent several year blip).

Mike

 

GM bean counters are seeing the "red ink" and feeling the pain. Dealers, also are trying to minimize "losses" on the Volt in addition to move them off their lots. The extra investment in the specialized tools for Volt maintenance and repair needs to be recovered by the dealers. This is hard for the dealers to do with the Volts' sales record. Other profitable products such as the Cruze, Spark, Malibu, and Silverado can help recover the steep investment in Volts' tools.

How long will this continue? Back to the bean counters, they report to the CEO who reports to the stockholders and Wall Street.

The financiers always have the final say.

After all GM is in business to make a PROFIT. They are not a charity.

DBCassidy

 

This is something that people seem to miss. On new products, with new production processes, and unique parts, experience decreases costs.

Its a rule of thumb not a rule. Fisker didn't survive long enough for costs to come down. Sometimes demand raises production costs as suppliers have to be paid extra to speed up. With a phev, the price premium will continue to go down for years versus an ice vehicle.

The biggest extra cost component is the battery, which seems to be going down at about 7%/year. We should expect 40% price reduction every 5 years. As there is likely to be mass, volume decreases and power increase per unit energy during that time period, keeping energy equal, power to weight will increase, cost of suspension will decrease. Other components like electronic ac, or heat pump hvac, and electric power steering are also decreasing in cost but at a slower rate. Waranty costs for batteries should also decrease over time as chemistries improve.

 

How many Volts have been sold this year compared to how many Pruis Hybrids? Fortune says 11k Volts which is a darn few vehicles to spread the costs over.

The market for a plug in car is limited by the number of folks who have the life style to use a limited range car. And by the number of folk who can afford the initial investment to achieve life cycle cost reductions. Or those so green they will just buy a plug in. Gotta be a green tinged well off short commute person with probably a long range car also in the garage.

I looked at the Volt and couldn't cope with the lack of trunk space even as a second car to my wife's Avalon. When I think of the load I took to the dump today on my way elsewhere, just not the right size.

Toyota just keeps roaring back - Aug. 8, 2013

 

July 2013 Dashboard - HybridCars.com
In the US 92,061 prius liftbacks, 11,643 volts, 5031 prius phvs
For perspective the ford f-series trucks sold 427,935 and the Lexus LS sold 5908, Chevy Corvette 6344 in the same period.
I don't have the world wide numbers. Volts are 9% ahead of last year in the US. Last year they sold just over 30,000 world wide. The last 5 months normally sell higher than the first 7. We should expect world wide volt/ampera sales somewhere in the the thirty thousands. I don't know how well they are doing in europe. Plenty of vehicles to overcome variable costs. Too low of margins to cover the R&D costs to get here. That will have to come from a 2nd generation.

That is a failure of the companies to educate the public. PHEVs like the volt, prius phv, fusion energi act like hybrids once there plug-in power is used. THese are initial adopter cars. There is lots of fud like limited range and expensive battery replacements. Market is small but growing at over 100% a year for plug-ins.

That is a good reason to not choose it, that you want a pick-up, suv, or larger hatch for the stuff you think you want to carry. I actually have borrowed pick up trucks to go to the dump, didn't want some of that stuff inside my prius.

 

Yes, that certainly limits it. But it is MORE limited by people who "think" it wouldn't work for them rather than those who it wouldn't really work for them at all. Of course there are people who just have no place to plug in.

But even in a Leaf, going just 50 miles per day, this is 18K miles per year which is more miles than most people drive. But then it is what about when I want/need to drive 80 or 100 miles in a day (or even if I can recharge mid day...what if I want to drive 150 or 200 miles?) If you only do this a few times a year you could rent a car. Or you could get a PHEV (PIP, Volt, Ford).

Of course even then some people will need to carry 5+ people and lots of luggage on a long trip. Well then the EV or PHEV could be the second car, not the first/primary car. IMO, the fact is that EVs and PHEVs are selling far below their possible usage within the entire car fleet. It is just going to take time for them to show up on most people's short list of possible cars to look at when it comes time to get a new car. It will probably take another 3-5 years before there is a really strong market for them.

Mike

 

Huh?

Have you actually ever examined any supplier contracts? Every one I have been involved with had very detailed price breaks vs. volume purchase language. You make it sound like automakers must contract for a set amount when in reality they contract for a minimum amount and then use options for greater amounts. The options are always on a sliding scale. Very often there is an NRE component that is included explicitly or implicitly in the minimum purchase, so the price breaks after the base order are substantial.

As for assembly machinery, the capital cost of the machinery is the same whether you build zero or a million autos. So the best amortization case is for maximize production volume. Your use of "assembly machinery" as an example of production cost inflexibility when it is the ultimate example of why production costs decrease with volume is a head scratcher.

Of course that is true for some items and mature production. But overall, and definitely for a new production startup, the few exceptions are not going change the major trend.

What is a real wild card are currency exchange rates. Those drive the automaker (or the maker's competitors) nuts since they can wipeout cost advantages vastly faster than any manufacturing cost curve.

It was always a rule where I have worked. We were on the competitive market supplier side, so winning the supply contract required continuously decreasing costs with volume.

It may sound strange, but the real trick to making a high volume, low cost assembly better than the competition was figuring out how to INSPECT/TEST it effectively, not necessarily how to ASSEMBLE it cheaply. This is because a good inspect/test setup shows you where your assembly money is badly spent. When the assembly cost were addressed first, the opposite was the case. Making high volumes of low quality parts can only be overcome by making even bigger volumes to handle the rejection/waste rate.

As a result, any contract with production options of significant volume depended on ending the final option run with an extremely lean crew and no rejections. (Or to put it into personal terms, the manufacturing crew was to make sure I was off their payroll at the end of the first production run with no need to call me back.)

 

sure. It depends a lot on industry and where the product is.

Things that can work against you are over time/hiring/turn over when trying to grow rapidly. Also there can be supplier problem, when you ask them to increase parts, these often result in expediting charges and possible reject parts. This can lead to quality problems. None of this had to do with the volt or leaf or prius phv. They all grew at a slower pace than any of these problems would occur. The Tesla S does have the problem of suppliers not being able to keep up with the factory. This is causing a slower growth in production though, they are no longer paying expediting prices they were paying at the end of last year/beginning of this year. That is always a choice to have a slower growth in production instead of higher production costs.

On a car like the prius liftback, the gen III did have some large production cost increases. The weak yen meant higher labor and electricity costs. The weather damage to plants in japan and Thailand, meant equipment replacement and expediting costs to suppliers, as well as higher electricity costs. This years drop in yen means that production costs in dollar terms should have droped significantly from last year.

 

"decreasing costs with volume" is indeed the key.

DBCassidy

 

Supplier information has been provided over time for us to consider. And yes, there is indeed a benefit from volume. However, we've seen there can be a penalty if you want the increase right away. The extra work is usually welcomed, but overtime pay comes with it. There are sometimes limited supplies of raw material too, requiring a premium if you want more quickly.

Long story short, the underlying effort to downplay is going well. Some contribute unknowingly. Others do it quite intentionally. It even comes from the automaker itself. Notice the doubt being raised? Meanwhile, the clock is still ticking.

We know progress is being made when goals are clearly being set & achieved. For Toyota, it is clear. We know they are pushing for higher engine efficiency and lower plug-in cost. Both criteria are based upon the models currently available and the method being taken to deliver that has been spelled out. For GM, all we've been told is a general order to reduce cost from $7,500 to $10,000 without any idea how that will be accomplished.

In other words, how is what's happening now different from the past? Seriously. There's a lot more in common with the blind hope of the past than anyone cares to admit. There isn't any accountability either. If very little is accomplished, oh well.

We have emissions & dependency issues to deal with still. What about those? How long should we wait, for what, and for who?

 

What are those? And please do send us those links about gm saying they are losing money on variable cost basis on the volt.

 

That's exactly what I mean about raising doubt.

As for not wanting to acknowledge about our problem with the air we breath and the oil we consume...

 

You were being quite cryptic. You made it sound like that was a problem with the volt, when oil dependency is reduced by the volt. That is why I asked what you meant. Reread it, and see why it was not clearly written. Or perhaps you were cryptic on purpose, making it seem like cars like the volt make us more dependent on foreign oil? Ability to run on electricity helps reduce unhealthy air in city centers, moving pollution of generation less dirty areas. These are reasons for a phev, not against one.

 

GM Seeks at Least 20% Range Improvement for Volt: Video - Bloomberg