Report: So, that Chevy Volt still isn’t doing too hot, is it?

posted at 1:21 pm on September 10, 2012 by Erika Johnsen

Dear federal government,

Why do you hate green energy?

Oh, yes — you bet your bottom dollar that I am in earnest. When, time and again, the evidence unfailingly indicates that the federal government meddling in some economic sector only serves to convolute it with bureaucratic inefficiencies and encumber it with non-market signals, why does the government ever think it’s a good idea to be in the business of hand-picking economic winners and losers? Why am I supposed to believe that the profit motive is somehow far more ignoble than the political motive, when in reality, the only way the profit motive is rewarded is when it provides something that people actually want to buy, because it actually works. Political motives can reap benefits through fiat, and encourage businesses, investors, and resources to rent-seek, chasing subsidies and political favor, rather than focusing their energies on producing a viable product.

With that in mind, why do the feds continually feel the need to stick their fingers into everything, most notably of late by fancying themselves green venture capitalists? If there are good technologies out there that can provide consumers with workable alternatives, the market will provide, and coddling infant technologies out of their fledgling stages before they’re ready has only serves to provide us with a bunch of environmentally-and-financially costly wind energy that nobody wants to buy and more Department of Energy-sponsored ailing-or-failing solar panel manufacturers than should have ever been allowed to exist. If they really want renewable energies to succeed, maybe that should consider — oh, I don’t know — just butting the heck out.

Ah, here’s yet another case in point, of which the federal government never seems to tire of offering: Reuters just released essentially a cost vs. benefit rundown of Government Motors’, oops, I mean General Motors’ Chevy Volt sales and operations. …I find myself discouraged:

Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds, according to estimates provided to Reuters by industry analysts and manufacturing experts.

Cheap Volt lease offers meant to drive more customers to Chevy showrooms this summer may have pushed that loss even higher. There are some Americans paying just $5,050 to drive around for two years in a vehicle that cost as much as $89,000 to produce. …

GM’s basic problem is that “the Volt is over-engineered and over-priced,” said Dennis Virag, president of the Michigan-based Automotive Consulting Group. …

Some are put off by the technical challenges of ownership, mainly related to charging the battery. Plug-in hybrids such as the Volt still take hours to fully charge the batteries – a process that can be speeded up a bit with the installation of a $2,000 commercial-grade charger in the garage. …

“I don’t see how General Motors will ever get its money back on that vehicle,” countered Sandy Munro, president of Michigan-based Munro & Associates, which performs detailed tear-down analyses of vehicles and components for global manufacturers and the U.S. government.

It currently costs GM “at least” $75,000 to build the Volt, including development costs, Munro said. That’s nearly twice the base price of the Volt before a $7,500 federal tax credit provided as part of President Barack Obama’s green energy policy.

The Obama administration, you’ll remember, orchestrated a $50 billion rescue from bankruptcy for GM in 2009, and has dedicated more than $5 billion in subsidies for the sake of green-car development — and let’s not forget the implicit costs of all of those arbitrary emissions standards they’ve been oh-so-magnanimously implementing. And yet, here we are, still providing subsidies to one of the least efficient alternative vehicles out there — and the technical challenges of ownership are so daunting, dealerships are having to practically give them away. If GM can come up with a car that sells itself (their Nissan Leaf, apparently, is doing better than the Volt, and Toyota’s Prius is in its third generation and doing just fine), then great — that’s awesome, more power to ‘em if consumers judge it to be a good substitute to a traditional vehicle. But something about the Chevy Volt is clearly not working, and the Obama administration’s green-energy whimsy is only helping them to keep up the charade.

The federal government’s abilities to stand in the way of free-market competition, a.k.a. innovation and progress, are really quite miraculous.


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