I noticed volkswagon is going to make a dip into the electric car pool.
I imagine every car designer has, at one time, doodled out an electric car, but the profit margin was too small…
along comes the federal govt, which is providing a 7500 dollar coupon for gm’s model. Love to know the profit margin that provides. I’m imagining that the margin is ‘less’ than 7500 dollars.
volkswagon probably expects that once they roll out their model, the coupon will be smaller, but given the parameters to justify the 7500 dollar coupon, they are probably expecting a 2500-4000 price assist.
so how does this work? vw lets the govt/unions(77% of stakeholders in gm) prep the market for an electric car, watches the complaints, adjusts design accordingly, and releases their own model.
vw knows the production cost of the volt, and also knows that the govt will be unable to drop the coupon rate below a certain threshold, where profits for gm would evaporate. eventually, the vw product will cut sales of the volt in half, and find themselves produing a better vehicle, at a lower cost, and turning a better profit margin than gm.
gm, or the govt/unions, should enjoy their growth, as it will be short-lived, and quickly consumed by better companies, making better models.
