Home > Public Service, The Outsiders > The Sad Case of the Chevy Volt

The Sad Case of the Chevy Volt

Michigan’s Mackinac Center for Public Policy is reporting that the Chevy Volt, far from being a mid-priced car at some $40,000, actually costs about $250,000 when you factor in state and federal incentives and subsidies.

In an amusing aside, it is described as “the most government-supported car since the Trabant.”  Well played.

Each Chevy Volt sold thus far may have as much as $250,000 in state and federal dollars in incentives behind it – a total of $3 billion altogether, according to an analysis by James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy.

Hohman looked at total state and federal assistance offered for the development and production of the Chevy Volt, General Motors’ plug-in hybrid electric vehicle. His analysis included 18 government deals that included loans, rebates, grants and tax credits. The amount of government assistance does not include the fact that General Motors is currently 26 percent owned by the federal government.

Like the late, unlamented Trabant, the Chevy Volt stands out to me as emblematic of the failures of state central planning.  I agree with Johan de Nysschen, president of Audi of America, who calls the Volt “a car for idiots.”

“No one is going to pay a $15,000 premium for a car that competes with a (Toyota) Corolla. So there are not enough idiots who will buy it.” The Volt, you’ll recall, is expected to cost around $40,000 once tax credits are applied.

De Nysschen also laid into full-on electric vehicles: “They’re for the intellectual elite who want to show what enlightened souls they are.”

Of course they are.  The premium you pay for a Volt – even with aforementioned subsidies excluded – will almost certainly never be recouped by the savings in fuel over something like a Corolla.  And God help you if you actually need to get anywhere, since the range is dismal.

Of course I am not saying that electric cars per se are terrible things; what is terrible is that the American taxpayer is being forced to subsidize the Volt’s rich ($170,000 median income) buyers so that the government can feel good about its “green” credentials.

When people genuinely want to pay for an electric car, the market will emerge spontaneously, and I already see stirrings of an economical product line in some smaller companies. However, the value proposition is not there yet, and there is no use attempting to force an uneconomical product to market.

Like almost all new technologies, these cars will start out as expensive toys for the rich, then the free market will commoditize them and expand their reach into the mass market, sending prices down and volume up. Personal computers have followed this path, and there was never any need for the government to subsidize computer companies, or pick winners and losers in computer technology.  The story is the same for televisions, microwaves, CD players, telephones, and even the car itself more than a century ago.

But I’m sure the fact that the government is the beneficial owner of a huge chunk of GM had nothing to do with GM being the recipient of billions in subsidies.

So go ahead and give a one-finger wave to the next Volt driver you see.  After all, you helped pay for his car.

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