Saturday, August 14, 2010

Debating the price of the Chevy Volt

This will be a quickie.
Chevy's new Volt is priced at $41,000, with a $7,000 government rebate. Earlier today, @emptywheel said that since the net price of the Chevy Volt was $34,000, it is not very expensive compared to the average price of US (Ford, GM, Chrysler) vehicles, $30,400. This is based on the New York Times report on the Chevy Volt.
All I wanted to point out was that the NYT did not specify what that "average" represented. Did it compare other mid-size sedans? Or was that a general average of *all* vehicles, ranging from a Chevy Cobalt ($14,990) to a Cadillac Escalade ($86,000+)?
This lead to a long exchange with @emptywheel and @bmaz. But at the end of all that, the basic question remained unanswered: What is the basis for this comparison?

Here is why that question is important. Say we sell 100 Cobalts at $15,000 each and 15 Escalades at $86,000 each. The average price comes out to $24,260.
Now say we introduce a fictitious Chevy Current, an electric vehicle priced at $35,000 (say), which after a government rebate of $7,000, comes to $28,000.

Essentially, @emptywheel argues that the Current is not that expensive, since it costs only $3,740 more than the "average US vehicle."
However, one should be able to figure out that the Current, even after the government rebate, at $28,000, is almost twice as expensive as 87% of the vehicles we sold at $15,000! Would one still be able to say that the Current is not that expensive?

I am willing to concede all of @emptywheel's and @bmaz's points - that this is an "early-adopter" marketing strategy, that the Chevy Volt is the greatest thing since sliced bread, etc. etc.

However, I would still like to know: What is the basis for that comparative "average US vehicle price"?

Easy, right?