Volt/GM = D.O.A.
MSM Double Negative on Volt?s Chances of Success
Driving a typical 14,000 miles a year, or 38 miles a day, the Prius would use about 280 gallons of gasoline.
With gas at its current price of about $2.65 a gallon, that would come to about $742 a year in gas, or $421 more than the Volt owners would pay if they can stick with electricity.
Even if gas goes back to the record high of $4.11 and stays there, gassing up a Prius would cost about $1,150 a year, giving the Volt an $830 a year cost savings.
But a Prius costs $25,428, on average, according to sales data from Edmunds.com, while GM will probably have to spend $40,000 or more to build each Volt.
While Volt buyers will get a $7,500 tax credit that reduces the still undisclosed purchase price by that amount, the fact is that GM will have to subsidize much of the remaining $7,000 difference in cost to make it competitive with the Prius.
At current gas prices, the $421 a year savings over a period of six years that a new car is typically owned, would mean that a Volt would only be cost competitive with a Prius if was about $34,500 before the tax credit.
That means GM would have to take about a $5,500 loss on each Volt if it is to be strictly competitive.
If you assume modest sales of 20,000 Volts the first year, that would mean about $110 million in additional losses for the cash-strapped automaker.
CNNMoney