Re-Evaluated: $250,000 Per Car
magic of government subsidies
been fascinated by the sad tale of the Chevy Volt, a heavily subsidized
electric car nobody wants. It’s
the purest, most perfect examples of government attempting to
create a marketplace, and failing miserably.
At the time
of the Volt’s launch, when rebates brought the consumer price down to
(which is still horribly high for such a tiny, unappealing car, and
factor in the enormous maintenance costs of the electrical system) I
total up all the subsidies pumped into the vehicle’s creation, divide
projected sales, and came up with a per-unit real cost of $81,000.
Volt buyers had any awareness of the vehicle’s true cost, because other
paid the difference between the $33,500 they were plunking down and the
true cost. That’s
corruption of the vital financial information stream.
Cost is data.
Nobody knows what anything really costs
anymore, due to the vast
machinery of subsidies and penalties thumping and groaning away just
out of our
view, but the Volt was an especially egregious example.
A year and a
half later, after a few Volts burst into flames, James Hohman of the
Center for Public Policy did an exhaustive evaluation of the Volt’s
true cost. He
included state and federal
assistance spread over “18 government deals that included loans,
grants, and tax credits.” This
measured against the roughly 6,000 Volts sold to date.
of Hohman’s calculations, as reported by Michigan Capitol Confidential,
“each Chevy Volt sold thus far may have as much as $250,000 in state
federal dollars in incentives behind it.”
That’s a worst-case scenario, as some of the
companies involved in
producing Volt components might not meet the targets necessary to
subsidies. On the
other hand, Hohman did
not include the massive taxpayer bailout that made it possible for
Motors to exist and push out those unloved little electric
firecrackers, or the
incentives paid to companies that lost bids to provide Volt batteries.
Michigan Capitol Confidential article garnered a laughably weak
Martin, director of Policy and Washington Communications for GM, wrote
email, “While much less than the hundreds of billions of dollars that
and Korean auto and battery manufacturers have received over the years,
investments provided by several different Administrations and
jump-start the country’s fledgling battery technology and domestic
vehicle industries (not just specifically for the Volt as Ford’s
also use LG Chem batteries and Fisker will use the A123 system for
matches the same foresight and innovation
leadership that other countries are exhibiting
and which America has
historically taken pride in.”
added that the Mackinac Center’s math was “simple and selective.”
offered no data or specifics to support his assertion.
compulsive force is used to “transform” the economy - “jump starting
country’s fledgling battery technology and domestic electric vehicle
industries” as Martin put it – and the result is an unmitigated
disaster. The only
way to finish the job and force
customers to buy Volts, as General Motors CEO Dan Akerson openly
last year, would be to artificially jack up the price of gasoline until
cars become reasonable alternatives.
Akerson had an extra $1 per gallon of extra
federal gas taxes in mind at
the time, although I’m not sure that would be enough anymore. Maybe $2 or $3 per gallon
would do it. That
would also give the government more cash
to spend on its wise Solyndra-style industrial policies.
least the $3 billion in taxpayer subsidies we’ve been forced to pump
Volt are putting sustainable cars in the hands of the poor, right? Er… not really, no. Here’s what Akerson said
about Volt buyers in
an interview he gave last week:
Q: Are you
moving past the early technology adopters on the Volt at this point, or
data surprised you on who is actually buying this vehicle?
average purchaser of a Volt is earning $170,000 a year. About a third
customers haven’t been in a Chevy store in more than five years and
never been in there. They aren’t just early adopters.
them - I think roughly half - are either Prius or BMW owners. So one,
say Prius owners were probably early adopters in the olden days, but
kind of passed through. But BMW people want styling, good design, and
innovative powertrain, or power source, and I think Volt is a game
So all that
money pulled out of your middle-class wallet has been subsidizing the
car purchases of people who make $170,000 a year, and might otherwise
looking at a BMW! Wonderful! Behold the magic of
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