Chevy Volt: GM's (GM) Politically Charged Hot Potato
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Price: $76.72 -1.45%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 0.9%
EPS Growth %: +25.7%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 0.9%
EPS Growth %: +25.7%
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Not long ago, the Chevy Volt was held up as the future of GM (NYSE: GM). If that proves to be true, skeptics say GM is about to begin a walk down a path that may not lead to the flower speckled green fields seen in the commercials for electric vehicles. Instead, it might be a walk into the cold arms of an electric chair.
The problem, according to critics, is the Volt attempts to create a market for a product that, so far, has very little demand. Through July of this year, GM has sold only 10,666 Volts in the U.S. As a result of lack luster demand and oversupply, GM plans to stop production for 4 weeks in Sept and Oct.
News about the car's problems surfaced when a Reuters article estimated that GM is in the hole $49k every time a customer purchases a Volt. GM claimed the numbers in the Reuters article are misleading, and argued that its investment will pay off over time as Volt sales accelerate and the cost comes down.
The truth is that both points are valid. From GM's point of view it is way too early to call the Volt a dud, and from the perspective of Reuters, yes, the car is a money pit.
Investors and GM customers are going to have to get used to the idea that the Volt is no longer just a car. It is, thanks to President Obama's widely publicized support, a political hot potato.
The problem, according to critics, is the Volt attempts to create a market for a product that, so far, has very little demand. Through July of this year, GM has sold only 10,666 Volts in the U.S. As a result of lack luster demand and oversupply, GM plans to stop production for 4 weeks in Sept and Oct.
News about the car's problems surfaced when a Reuters article estimated that GM is in the hole $49k every time a customer purchases a Volt. GM claimed the numbers in the Reuters article are misleading, and argued that its investment will pay off over time as Volt sales accelerate and the cost comes down.
The truth is that both points are valid. From GM's point of view it is way too early to call the Volt a dud, and from the perspective of Reuters, yes, the car is a money pit.
Investors and GM customers are going to have to get used to the idea that the Volt is no longer just a car. It is, thanks to President Obama's widely publicized support, a political hot potato.
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