Volt Jolt

During the recent Democratic National Convention, we heard a lot about how General Motors is back, thanks to its government bailout.  Now Reuters has a report that reveals, again, that things aren’t all that great at GM.

The report addresses the economics of the Chevy Volt.  Using information from industry analysts and manufacturing experts, Reuters estimates that GM could be losing as much as $49,000 on each Volt it sells.  The Reuters piece concludes that the Volt uses complex technology and expensive components and notes that analysts say it is “over-engineered and over-priced.”  GM says the Reuters report is “grossly wrong” because it doesn’t allocate product development costs over the lifetime of the Volt program — but even GM concedes that it is losing money on the car.

Volt sales are poor.  GM forecast that it would sell 40,000 Volts this year; through the first eight months of the year it had sold only 13,500 — and that’s even with an incentive program that allows a Volt buyer to get a two-year lease for as low as $199 a month.  GM has had to halt Volt production lines twice this year due to low sales, and some people question whether American consumers will ever want a plug-in car that takes hours to recharge its battery.

Politicians can argue about whether the bailout and government-sponsored bankruptcy were the best way to handle GM’s struggles and saved hundreds of thousands of jobs or instead simply locked in excessive labor costs and inept management.  Those debates shouldn’t affect a clear-eyed appraisal of GM now, four years later, with American taxpayers having invested billions of dollars in the company.  Let’s not kid ourselves:  successful companies don’t market products that are sold at less than cost.  The Reuters analysis of the bad economics of the Volt helps explain why GM’s stock price is in the doldrums, and why we should all be concerned about the company’s future rather than engaging in empty cheerleading.

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Non-Journalism

Today still more members of the news media — in this case, Reuters and CNBC — fell for a hoax.  On the basis of a dubious press release, they reported that the Chamber of Commerce had changed its position on climate change legislation.  CNBC read the fake press release on the air, and Reuters reported it, in an article that was then picked up by the New York Times and the Washington Post.

I was struck by the explanation of the Reuters spokesman quoted in the linked article.  The spokesman is quoted as saying:  “Reuters has an obligation to its clients to publish news and information that could move financial markets, and this story had the potential to do that.”  My old professor at the Ohio State University School of Journalism, Marty Brian, must be rolling in her grave at that one!  Consider that the quote from the Reuters spokesman equates an admitted hoax with “news and information” and suggests that Reuters’ paramount obligation is to publish whatever comes its way, without doing anything to determine its veracity first.  That concept is antithetical to true professional journalism, which values accuracy above speed and insists upon sourcing and careful fact-checking — particularly of a story that reports that a vocal opponent of legislation has abruptly and inexplicably changed its position.  Doesn’t anyone at CNBC and Reuters have a reporter’s gut instinct, or at least a willingness to take a moment to check the Chamber of Commerce website to see if the press release even is posted there?

Normally I would decry the efforts of the hoaxers, but I have come to believe that they probably are performing a salutary function for the world at large.  Why attach credibility to what you read from the news media if they don’t even bother to check press releases before publishing them?