The Chevy Volt, the plug-in car that has been plagued by sluggish sales and mounting losses since General Motors rolled it out in 2010, has one deep-pocketed customer: the Pentagon.
The Department of Defense is planning to purchase 1,500 electric cars including Volts as part of its effort to make the military more environmentally friendly. But given the federal government’s bailout of Chevy maker General Motors, President Obama’s praise of the Volt and the car’s long-running problems, the federal purchase is likely to become the latest controversy in the Volt’s short life.
Earlier this week, Reuters reported that GM is losing up to $49,000 on every Volt driven out of the showroom. The report took GM’s huge investment in the pioneering car and divided it by the meager sales to date and concluded that each car costs the company nearly $90,000 – more than double the sticker price.
GM blasted the report, disputing the numbers and insisting that as sales build, the initial costs will be recouped and the cost-per-car will fall.
Those sales will be boosted at taxpayer expense. The Department of Defense began buying Volts this summer as the Marine Corps Air Station in Miramar, Calif., purchased two in July. Another 18 Volts will soon be delivered to Joint Base Andrews in Maryland, where Air Force One is based, according to military magazine Stars and Stripes.
The Obama administration has been among the Volt’s biggest backers with the president vowing to “buy one and drive it myself … five years from now when I’m not president anymore.”
But despite ultra-cheap lease deals and tax breaks of $7,500 for buyers, sales have still been moribund.
Such perks, however, have failed to drive consumers to GM car lots. The vehicle has been forced to suspend production twice this year and will again suspend production later this month after only 2,831 were sold last month.
The General Services Administration bought 100 Volts in 2011 for various agencies.