How Long Until General Motors Profits from Electric Vehicle Sales? (GM)
Due to competition between major automakers to capture market share in the electric vehicle industry, the sector has seen considerable growth within the past year.
General Motors (NYSE: GM) is just one of the many automakers that has recently put a lot of emphasis on the EV industry and developing its Chevy Volt.
The price wars in the EV sector have put a strain on General Motors' attempts to capture early market share. General Motors has begun to offer massive discounts on its 2012 Volt ($5000) in order to compete with the Nissan Leaf and Tesla Model S. High production costs also present a massive obstacle in profiting from Volt sales; each Volt costs more than $75,000 to manufacture, and at a retail price of $28,495, the company loses almost $50,000 on each Volt it sells.
The company has sold 4,421 Volts in 2013 so far in 2013, this represents a $221 million loss for its electric vehicle segment so far in 2013. Unless GM finds ways to drastically reduce production costs for the Volt, it will continue to lose money on every Volt it sells for years to come.
General Motors' stock is currently trading at $32.16, up 1.06 percent from its Tuesday close at $31.82.
Bottom Line: General Motors plans to capture market share in the EV market in the early stages of its growth while reducing the costs of producing Volts. General Motors needs a breakthrough in the EV sector in order to start profiting from its Volts, otherwise it could still be years away from profiting from EV sales. Thus far, General Motors has not benefited from its early move into the EV sector.
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.