Science Forums 2

[CraigD]

Originally Posted by TheBigDog

The cost of the 1100 cars produced came to $900,000 each when the R&D costs exclusive to that vehicle were included.

It would be interesting to see a more detailed breakdown of EV1 financials.

The Wikipedia article “EV1” states that 1100 EV1s were manufactured, that “GM stated that they spent over $1 billion developing and marketing the EV1” (emphasis mine), and that “One industry official said that each EV1 cost the company about $80,000, including research and development costs”. This suggests that over 90% of the cost of the EV1 was “marketing” – a not unreasonable, but potentially eye-opening statistic

To have sold the cars to the public would have required GM to maintain spare parts for these engineering abortions for ten years. Even if the actual cost of manufacturing each vehicle was only estimated at $80,000 each, keeping a network of parts, supplying training, and the other things that are required by the federal, CA and AZ governments would have cost GM millions more to make a hundred or so customers stay happy. They did the smart thing and cut their losses.

Absent terming them “engineering abortions”, this is the argument commonly presented to explain GM’s refusal to sell individual EV1s following the termination of their lease program. There are, I believe, flaws in it:

“Keeping a network of parts, supplying training, and the other things that are required by the federal, CA and AZ governments would have cost GM millions.”
As described in an open letter to then and present GM CEO Richard Wagoner, some buyers were willing to enter into sworn releases of responsibility for parts and service, and purchases EV1s at GM’s stated residual value of $24,761.60 each.

“They did the smart thing and cut their losses.”
If GM’s sole motivation for destroying rather than selling the EV1s was financial loss-avoidance, why would they not accept offer such as those made by EV1 enthusiast and collectors? Even assuming a very adverse tax accounting scenario, I can’t see that income of up to $19,000,000 – though a small item for a $190,000,000,000/year revenue company like GM - would have been financially less desirable than a stated loss of the same amount, even assuming a worst case tax accounting scenario.

I’m not an expert in the pertinent law, but the argument TBD offers seems to depend on the implication that it’s legally impossible to release a manufacturer from responsibility for parts and service. I don’t believe this to be the case. Rather, I believe that GM’s destruction of their EV1 fleet was made for other reasons, the most likely, IMHO, being to reduce the likelihood of California’s Zero Emission Vehicle Program create a disfavorable market for them and other manufacturers. In short, I believe that GM was “playing to lose”.