You asked for it, you got it — except you didn’t ask for it

Edward Niedermeyer discusses the GM Volt in the NYT of all places:

G.M.’s vision turned into a car that costs $41,000 before relevant tax breaks…but after billions of dollars of government loans and grants for the Volt’s development and production. And instead of the sleek coupe of 2007, it looks suspiciously similar to a Toyota Prius. It also requires premium gasoline, seats only four people (the battery runs down the center of the car, preventing a rear bench) and has less head and leg room than the $17,000 Chevrolet Cruze, which is more or less the non-electric version of the Volt…

the Volt appears to be exactly the kind of green-at-all-costs car that some opponents of the bailout feared the government might order G.M. to build. Unfortunately for this theory, G.M. was already committed to the Volt when it entered bankruptcy. And though President Obama’s task force reported in 2009 that the Volt “will likely be too expensive to be commercially successful in the short term,” it didn’t cancel the project.

Nor did the government or G.M. decide to sell the Volt at a loss, which, paradoxically, might have been the best hope for making it profitable. Consider the Prius. Back in 1997, Toyota began selling the high-tech, first-of-its-kind car in Japan for about $17,000, even though each model cost $32,000 to build. By taking a loss on the first several years of Prius production, Toyota was able to hold its price steady, and then sell the gas-sippers in huge numbers when oil prices soared…

Quantifying just how much taxpayer money will have been wasted on the hastily developed Volt is no easy feat. Start with the $50 billion bailout (without which none of this would have been necessary), add $240 million in Energy Department grants doled out to G.M. last summer, $150 million in federal money to the Volt’s Korean battery supplier, up to $1.5 billion in tax breaks for purchasers and other consumer incentives, and some significant portion of the $14 billion loan G.M. got in 2008 for “retooling” its plants, and you’ve got some idea of how much taxpayer cash is built into every Volt.

This madness has to end before it’s too late — and perhaps it already is too late.

One Response to “You asked for it, you got it — except you didn’t ask for it”

  1. MarkD Says:

    Anyone who has read the comments on Dinocrat knows I am no fan of big government, but we support our enemies by buying their oil. Our national security depends on reducing our need for foreign oil. You could argue that we should be generating more electricity through nuclear or other means. The oil companies aren’t going to do that for us. The direct cost of oil, and the switching costs going to anything else have us stuck. The car companies can’t do it alone. I’d argue if we factored in the costs, direct and indirect, of using oil, the case for change might be persuasive. This is one conundrum where the government has to be involved.

    How much do we spend keeping control of sea lanes to protect shipping? How would we treat Saudi Arabia if it had no oil? I’d argue much closer to the way we treat North Korea than the way we treat them today. What would be different if we produced cheap electricity and could use it for much of our transportation needs? Would we be drilling in the Gulf? Would we even have been involved in Iraq or Afghanistan were it not for oil? If we could get all the oil we ever needed from Montana, I’d be OK with gasoline powered automobiles forever. We can’t.

    They won’t sell many of these cars, and the bigger part of the money is already spent. I see this as a relatively small problem, and we have much bigger problems to deal with.

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