Chevy Volt: The Car from Atlas Shrugged Motors
by Patrick J. Michaels
Patrick Michaels is senior fellow in environmental studies at the Cato Institute and author of Climate Coup: Global Warming’s Invasion of our Government and our Lives, which comes out April 22.
The Chevrolet Volt is beginning to look like it was manufactured by Atlas Shrugged Motors, where the government mandates everything politically correct, rewards its cronies and produces junk steel.
This is the car that subsidies built. General Motors lobbied for a $7,500 tax refund for all buyers, under the shaky (if not false) promise that it was producing the first all-electric mass-production vehicle.
At least that’s what we were once told. Sitting in a Volt that would not start at the 2010 Detroit Auto Show, a GM engineer swore to me that the internal combustion engine in the machine only served as a generator, kicking in when the overnight-charged lithium-ion batteries began to run down. GM has continually revised downward its estimates of how far the machine would go before the gas engine fired, and now says 25 to 50 miles.
Patrick Michaels is senior fellow in environmental studies at the Cato Institute and author of Climate Coup: Global Warming’s Invasion of our Government and our Lives, which comes out April 22.
It turns out that the premium-fuel fired engine does drive the wheels — when the battery is very low or when the vehicle is at most freeway speeds. So the Volt really isn’t a pure electric car after all. I’m sure that the people who designed the car knew how it ran, and so did their managers.
Why then the need to keep this so quiet? It’s doubtful that GM would have gotten such a subsidy if it had been revealed that the car would do much of its freeway cruising with a gas engine powering the wheels. While the Volt is more complicated than the Prius, and has a longer battery-only range, a hybrid is a hybrid, and the Prius no longer qualifies for a tax credit.
In other words, GM was desperate for customers for what they perceived would be an unpopular vehicle before one even hit the road. It had hoped to lure more if buyers subtracted the $7,500 from the $41,000 sticker price. Instead, as Consumer Reports found out, the car was very pricey. The version they tested cost $43,700 plus a $5,000 dealer markup (“Don’t worry,” I can hear the salesperson saying, “you’ll get more than that back in your tax credit!”), or a whopping $48,700 minus the credit.
This is one reason that Volt sales are anemic: 326 in December, 321 in January, and 281 in February. GM announced a production run of 100,000 in the first two years. Who is going to buy all these cars?
Another reason they aren’t exactly flying off the lots is because, well, they have some problems. In a telling attempt to preserve battery power, the heater is exceedingly weak. Consumer Reports averaged a paltry 25 miles of electric-only running, in part because it was testing in cold Connecticut. (My engineer at the Auto Show said cold weather would have little effect.)
It will be interesting to see what the range is on a hot, traffic-jammed summer day, when the air conditioner will really tax the batteries. When the gas engine came on, Consumer Reports got about 30 miles to the gallon of premium fuel; which, in terms of additional cost of high-test gas, drives the effective mileage closer to 27 mpg. A conventional Honda Accord, which seats 5 (instead of the Volt’s 4), gets 34 mpg on the highway, and costs less than half of what CR paid, even with the tax break.
Recently, President Obama selected General Electric CEO Jeffrey Immelt to chair his Economic Advisory Board. GE is awash in windmills waiting to be subsidized so they can provide unreliable, expensive power.
Consequently, and soon after his appointment, Immelt announced that GE will buy 50,000 Volts in the next two years, or half the total produced. Assuming the corporation qualifies for the same tax credit, we (you and me) just shelled out $375,000,000 to a company to buy cars that no one else wants so that GM will not tank and produce even more cars that no one wants. And this guy is the chair of Obama’s Economic Advisory Board?
It really is enough to get you to say Atlas Shrugged. For those who do not know, or who are only vaguely familiar with, the Ayn Rand classic, it is a story of a society in decay, where politically favored technologies and jobs are foisted on the nation, where innovations that might threaten existing corporatist cartels are financially or physically sabotaged as unemployment mounts and the nation spirals into a malaise that makes the Carter years look like Mr. Rogers’ Neighborhood.
Atlas Shrugged is about to come out as a surprisingly good and entertaining movie (which will be destroyed by Hollywood and New York Critics) on — you guessed it — April 15. Maybe the government could put in an ad before the show with Immelt exhorting Americans to care about “the environment and green jobs.” All must buy Volts.
Addendum
Patrick Michaels is a senior fellow in Environmental Studies at the CATO Institute and the editor of the forth coming Climate Coup: Global Warming’s Invasion of our Government and our Lives, as well as the author of several other books on global warming. His Forbes column on the ChevyVolt is a case study in the nexus between big government corruption and big business rent-seeking.
Michaels briefly recaps the well-known consumer fraud in which GM has touted the Volt as an all-electric mass production vehicle on the supposed basis of which its sales receive a $7,500 taxpayer subsidy, which still renders it overpriced and un- marketable.
Michaels notes that “sales are anemic: 326 in December, 321 in January, and 281 in February.” There seems to be a trend here.
Michaels adds that GM has announced a production run of 100,000 in the first two years and asks what appears to be a rhetorical question: “Who is going to buy all these cars?” But wait! Keep hope alive! There is a positive answer to the question. Jeffrey Immelt’s GE will buy a boatload of those uneconomic GM cars.
Here the case study opens on to the inevitable political angle: President Obama selected General Electric CEO Jeffrey Immelt to chair his Economic Advisory Board. GE is also awash in windmills waiting to be subsidized so they can provide unreliable, expensive power. Consequently, and soon after his appointment, Immelt announced that GE will buy 50,000 Volts in the next two years, or half the total produced. Assuming the corporation qualifies for the same tax credit, we (you and me) just shelled out $375,000,000 (that’s $375 MILLION) to a company,that paid no Federal Income Taxes in 2010, to buy cars that no one else wants, so that GM will not tank and produce even more cars that no one wants. And this guy is the chair of Obama’s Economic Advisory Board? But of course.
Michaels includes this hilarious detail in his case study: In a telling attempt to preserve battery power, the heater is exceedingly weak.Consumer Reports their tests averaged a paltry 25 miles of electric-only running, in part because it was testing in cold Connecticut . (The [GM] engineer at the Auto Show said cold weather would have little effect.) It will be interesting to see what the range is on a hot, traffic-jammed summer day, when the air conditioner will really tax the batteries. When the gas engine came on, Consumer Reports got about 30 miles to the gallon of premium fuel; which, in terms of additional cost of high-test gas, drives the effective mileage closer to 27 mpg. A conventional Honda Accord, which seats 5 (instead of the Volt’s 4), gets 34 mpg on the highway, and costs less than half of what CR paid, even with the tax break.
The story of the GM Volt deserves a place in the Harvard Business School curriculum…..but of course, it won’t. It’s a classic tale of the GOVERNMENT deciding what the public needs, not the market place.
PS.- Even the guy who sent this to me missed part of the point. What is one of the reasons for this? To keep the UAW in business, because Obama owes them … for his election . With their unaffordable wages, fringes and work restrictive practices, they cannot compete on an even playing field, so Obama has to subsidize them with your tax dollars…
Starting to make economic sense yet?
As recent as 5/15/11, Obama has purchased 50,000 volts for Government use!!!
“One of the penalties for refusing to participate in politics is that you end up being governed by your inferior.” Plato
