How much is a new Chevy Volt electric car worth?
The sticker price is $41,000. However, with federal subsidies, you could pay as little as $33,500. Additional subsidies provided by the state of California could knock it down even lower, for residents of the Golden State. So what’s the price?
$41,000, of course. The subsidies just mean you don’t pay all of it.
… But wait, there’s more. Almost four hundred million dollars in federal subsidies were pumped directly into the design and production of the Volt. The initial production run consists of just ten thousand units, with 45,000 more planned for 2012 if sales are good. This would add just over $7200 more in taxpayer subsidies to each Volt produced over the next two years. Since 2012 production will be scaled back if early sales are disappointing, it might be more logical to add the subsidies to the first 10,000 units only, which would leave early adopters outside of California paying $33,500 for a car which actually costs $81,000 per unit, with taxpayers picking up the remainder. It’s actually even worse than that, because GM expects to lose money on every Volt sale. Those losses will be spread among other GM products, or perhaps wiped out with further taxpayer subsidies.
… (Taxpayers have paid) almost fifty grand apiece to underwrite the production and sale of a little fleet of tiny cars with laughable battery cruise ranges… and overall fuel efficiency that would take decades to equal the cost of purchasing and fueling a more attractive, existing vehicle that didn’t require massive government subsidies.
… Worst of all, consumers never see the opportunity costs of enforcing political mandates on the economy. They never see what could have been done with all the money taken from them to provide subsidies to the politically connected. They’ll never know what other auto manufacturers would have done to win over the market share released by the richly-deserved death of General Motors, or how many jobs would have been created by the production of goods the free people of the United States actually want.
The number of Chevy Volts desired by those free people is zero. By government decree, there will be up to 55,000 of them gathering dust in the far corners of three-car garages by 2012. The government didn’t subsidize this boondoggle. The “government” doesn’t subsidize anything. You do. Imagine what the taxpayers of America might have done with the billions taken away from them to produce those cars, divide that lost value by 55,000, and you will begin to comprehend the true cost of a Chevy Volt.
Hot Air’s resident Green Room guru Doctor Zero could also have gone back further for an explanation of why the Volt is even with us at all.
A Forbes article from roughly mid-2007 that I unfortunately couldn’t locate credibly alleged that GM CEO Rick Wagoner and his cronies were deliberately fast-tracking the idea of the Volt as a way to make a government financial bailout of some kind more likely if it were needed.
The receptiveness to any kind of bailout in the Bush administration was very low in late 2006. GM’s and the industry’s goal at the time was primarily to get the government somehow involved in subsidizing health care costs. But as GM’s situation deteriorated, the Volt became the centerpiece of a “See, we’re really environmental good guys” PR campaign to make the idea of full-blown bailout more palatable. Wagoner et al didn’t reckon with the idea that if the government were ever allowed into the room it would chew them up and spit them out — which is exactly what happened.
I also contend that GM deliberately softened up talk radio’s leading hosts and perhaps the listening audience with tons of advertising dollars during the 2-3 years leading up to the initial bailout “loan” proposals in late 2008. I believe that the talkers otherwise would have responded more quickly and aggressively if GM’s ad dollars hadn’t been there (not that I believe they could have stopped it at that point; Congress tried, but it didn’t matter). One could of course argue that GM’s goal was to increase sales, but that doesn’t explain the company’s virtual absence from the key shows during the previous 15 years. (In August of last year, I noted that Sean Hannity was still flakking for GM even after its government-assisted, creditor ripping-off trip through bankruptcy. Somebody must have talked some sense into him shortly after that.)
In 2006 and 2007, leftists were appalled (examples here and here) at GM’s foray into talk radio. But as shown here, such criticism virtually disappeared during 2008. Barack Obama or Hillary Clinton could easily have gained leftist brownie points questioning why a clearly hurting GM would send ad dollars to unions’ supposed enemies, and didn’t. How odd.
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UPDATE: From a New York Times op-ed by Edward Niedermeyer at The Truth About Cars –
In the industry, some suspect that G.M. and the Obama administration decided against selling the Volt at a loss because they want the company to appear profitable before its long-awaited initial stock offering, which is likely to take place next month. For taxpayers, that approach might have made sense if the government planned on selling its entire 61 percent stake in G.M. But the administration has said it will sell only enough equity in the public offering to relinquish its controlling stake in G.M. Thus the government will remain exposed to the company’s (and the Volt’s) long-term fate.
So the future of General Motors (and the $50 billion taxpayer investment in it) now depends on a vehicle that costs $41,000 but offers the performance and interior space of a $15,000 economy car. The company is moving forward on a second generation of Volts aimed at eliminating the initial model’s considerable shortcomings. (In truth, the first-generation Volt was as good as written off inside G.M., which decided to cut its 2011 production volume to a mere 10,000 units rather than the initial plan for 60,000.) Yet G.M. seemingly has no plan for turning its low-volume “eco-flagship” into a mass-market icon like the Prius.
… In the end, making the bailout work — whatever the cost — is the only good reason for buying a Volt. The car is not just an environmental hair shirt (a charge leveled at the Prius early in its existence), it is an act of political self-denial as well.
If G.M. were honest, it would market the car as a personal donation for, and vote of confidence in, the auto bailout. Unfortunately, that’s not the kind of cross-branding that will make the Volt a runaway success.
The IPO may enable the government to claim it doesn’t have a “controlling stake” in G.M., but I believe it will be still be the largest shareholder. If so, it will still retain substantive control.
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