GM released its 2021 second-quarter earnings report and buried among the profit news was a little shocker. So far it has spent over $1.3 billion in recall costs. Within that category, it has spent over $800 million involving Chevy Bolt EV fires. Yikes!
Looking into the costs and profits for GM with the Bolt it looks like if GM sells one at the retail price it profits around $9,000. But that represents the difference in what it costs to manufacture it. We don’t know if development costs are factored in that “profit” number. Let’s say it does represent development so $9,000 is actual profit.
It looks like GM may never see any profit from selling Bolts
Since 2017 Chevy has sold 78,489 Bolts, not counting sales in 2021. But it will take selling roughly 89,000 Bolts to pay for what GM has spent on recalls and related Bolt EV fire issues. In other words, its Tesla Model 3 fighter is years away from giving GM any profit. And it has been produced since 2017.
While its SUVs and pickups ring up the GM cash register, they’re supporting a huge loss with the Bolt. When the Bolt debuted in 2017 with a starting retail price of $37,000-plus. Today, it retails for $36,500. So with the cost of inflation, GM is making less now than when the Bolt was first released.
Of course, if costs were amortized into the price over a certain amount of years GM could be seeing more profit now. We don’t know. But it at least paints a picture of how costly the Chevy Bolt is to GM. Both in terms of costs and reputation.
The cost of the Bolt recall is more than just a GM accounting error
There is plenty of wiggle room for losses when you record $2.8 billion in net profits for one quarter. That is what GM did in Q2. But $800 million represents over a third of that second-quarter profit. Let’s just say it is more than an accounting error.
As MotorBiscuit has reported over the last couple of years Bolts are catching on fire. Just two weeks ago we reported on the latest Bolt recall for fire risk. It covered 69,000 2017-2019 Chevy Bolts and was the second major recall of the EV.
The most recent recall was prompted by Bolt fires to previously “fixed” EVs from the first recall
The second recall was partially prompted by two Bolts previously “fixed” in the first recall, catching on fire. At the time GM said the cause was a second “rare manufacturing defect.” The batteries were made by LG Energy Solution.
The first Bolt recall was just in November 2020. So less than a year has passed with two recalls for the same battery fire issue. GM says it is aware of nine fires attributed to Bolt battery defects. In some cases, it has purchased back some Bolts from customers, but that number is unknown.
For anyone that owns a Bolt with questions about these recalls, GM says you should visit its Bolt recall website or contact its Chevrolet EV helpline at 1-833-EVCHEVY. Or you can contact your preferred Chevrolet EV dealer.