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Originally Posted by vasudeva 
Second point: How do you make up US$46 billion in net losses and explain to shareholders. Chrysler is forecast in bankruptcy in the next 1 year, and the current slump (or a severe recession) could advance GM's date with bankruptcy. Its great hope, the Volt, is behind schedule, over price ($40-45K), and not very practical. To keep Volt and GM going, it is now lobbying for handouts on the Volt. sEE THIS: Business World - WSJ.com
WSJ says, At best, the Volt will be an affluent family's third car. It will have to be plugged in for six hours a day – i.e., it will be a car for a suburbanite with a sizeable garage wired for power. It won't be a car for a city dweller who parks on the street or in a public lot. It will travel 40 miles on a six-hour charge. After that, a small gas motor will kick in to recharge the battery while you drive. Some reports claim the Volt will get 50 mpg in this mode, but that's hallucinatory: If using a gasoline engine to power an electric motor were so efficient, the streets would be full of such vehicles. (Our guess: The car will be lucky to get 15 mpg under gasoline power.)
Soon there could be a fire sale at GM. |
I think you are quite mistaken about the whole scenario.
GM might have declared $46 billion in losses last financial year, but those are not losses only for that year. Instead they are accumulated losses and expenditures over the last 10 years which GM decide to write off completely in one financial year (probably to make the company more transparent to the shareholders).
What GM's accountants claim now is that they do not have any pending losses from previous years and from this year onwards, they'll be starting on a clean sheet. Which means that whatever losses (if any) you see from next year onwards will be incurred in that year only.
About the Chevy Volt, GM did announce couple of days back that they have reduced the driving range to 360 miles (from 400 miles) by fitting it with a smaller fuel tank. Even then it should be sufficient for the average owner to run the car everyday on battery power and charge it for 6 hours at night, since the Volt can run 40 miles on the electric motor with switching to the gasoline engine and that's the average distance traveled by an average American everyday.
Also recently, both Obama and McCain have indirectly pledged Government support (tax breaks, "other" options) to GM in case they ever face any difficulties.
McCain has already announced a $5000 tax break on the Volt if he comes to power.