Steven L. Rattner, as President Obama’s former auto bailout chief, worked with General Motors as it struggled to find its footing amid a bankruptcy reorganization in 2008. During that time, the company was also developing the Chevrolet Volt, an innovative plug-in hybrid car that is going on sale soon.
In his new book, “Overhaul,” Mr. Rattner, who faces legal troubles unrelated to his work on the auto task force, writes that the Volt, which is priced at $41,000, is costing around $40,000 apiece to build. “At least in the early years, each Volt would cost around $40,000 to manufacture (development costs not included),” he writes.
In an interview a couple of weeks ago, Mr. Rattner said he had learned of the Volt’s costs in the course of due diligence during the G.M. bankruptcy process. “I don’t know the precise number,” he said. G.M. was nonetheless “right to do it,” he added, even in the absence of profit, because the program helped quiet critics “who’ve said for many years that the company was behind the curve.”
Rob Peterson, a G.M. spokesman, declined to disclose how much the Volt costs to build. “We haven’t released any numbers related to costs,” he said. But Mr. Peterson said that G.M. would benefit from the Volt program in many ways, including the use of its drivetrain components on other cars. “The importance of the Volt is more than a single profit-and-loss statement,” he said.
G.M. has certainly accrued goodwill from the Volt. It was recently named Green Car of the Year at the Los Angeles Auto Show. But the economic challenges of such a costly program are clear. In his book about G.M., “Sixty to Zero,” Alex Taylor III, an editor at Fortune, writes that the Volt, which he describes as a billion-dollar development program, is “about as relevant to G.M.’s economic survival as an electric pogo stick.”
Mr. Rattner agrees that the Volt program will be valuable for G.M., but he’s convinced that electric vehicles will not be a profit center for automakers anytime soon. “E.V.’s are everybody’s latest fantasy,” he said. “No doubt they are important and they are real, but they won’t have an impact on profitability and sales for the foreseeable future.”
Mr. Rattner also said that, despite the profit problem, established automakers were better positioned to sell electric cars than start-ups, like Tesla Motors. “E.V. markets will be dominated by the existing companies,” he said. “They have the scaled operations and the dealer networks. The idea that a bunch of E.V. companies will come along and G.M. and Ford will go out of business is kind of crazy.”
Mr. Rattner’s legal problems are continuing. On Thursday, Andrew M. Cuomo, New York’s attorney general and governor-elect, formally accused Mr. Rattner of engaging in a kickback scheme involving the state’s pension fund system. Mr. Cuomo is seeking from Mr. Rattner $26 million and a lifetime ban from the securities industry. On the same day, Mr. Rattner agreed to settle Securities and Exchange Commission complaints by paying a $3 million penalty and disgorging $3.2 million related to the accusations. He was also barred for two years from engaging in certain types of financial business.
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