One of Barack Obama's achievements is the Chevy Volt, GM's entry into the hybrid market. The Administration pushed the development of the vehicle and why should it not? There's global warming and the fact that the US government now owns a car company.
There is a bit of a problem, however. From Reuters:
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. GM on Monday issued a statement disputing the estimates.
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.
Hybrid vehicles are great for car buyers who are want to publically display their environmental bone fides. They are not actually good for the environment. Heavy government subsidies are necessary to make them affordable enough for an Ivy League Dean. That means that wealth produced elsewhere, and not by wind power, has to be shifted over to the production of these eco-friendly lemons. Eighty-nine grand will buy you a really nice house in Aberdeen. Of course you still have to plug it in.
The Washington Post published a scathing editorial on the President's electric car policy.
AS A CANDIDATE for president in 2008, Barack Obama set a goal of getting 1 million all-electric and plug-in hybrid vehicles on the road by 2015. In February 2011, the Obama administration's Energy Department issued an analysis purporting to show that, with the help of subsidies and tax credits, "the goal is achievable." This was a paltry claim in the first place, since 1 million cars amount to less than 1 percent of the total U.S. fleet. Yet it is increasingly clear that, despite the commitment of many millions of taxpayer dollars, the United States will not hit Mr. Obama's target by 2015. A recent CBS News analysis suggested that we'll be lucky to get a third of the way there.
The Energy Department study assumed that General Motors would produce 120,000 plug-in hybrid Volts in 2012. GM never came close to that and recently suspended Volt production at its Hamtramck, Mich., plant, scene of a presidential photo-op. So far, GM has sold a little more than 21,000 Volts, even with the help of a $7,500 tax credit, recent dealer discounting and U.S. government purchases. When you factor in the $1.2 billion cost of developing the Volt, GM loses tens of thousands of dollars on each model.
Some such losses are normal in the early phases of a product's life cycle. Perhaps the knowledge and technological advances GM has reaped from developing the Volt will help the company over the long term. But this is cold comfort for the taxpayers who still own more than a quarter of the firm…
No matter how you slice it, the American taxpayer has gotten precious little for the administration's investment in battery-powered vehicles, in terms of permanent jobs or lower carbon dioxide emissions. There is no market, or not much of one, for vehicles that are less convenient and cost thousands of dollars more than similar-sized gas-powered alternatives — but do not save enough fuel to compensate. The basic theory of the Obama push for electric vehicles — if you build them, customers will come — was a myth. And an expensive one, at that.
Ouch. The WaPo points out that, as the plug-in car lines sputter,
they are taking the much-ballyhooed U.S. advanced-battery industry down with them. A Chinese company had to buy out distressed A123, to which the Energy Department has committed $263 million in production aid and research money. Ener1, which ran through $55 million of a $118 million federal grant before going bankrupt, sold out to a Russian tycoon.
Reality is mocking the President's promises. Ron Bailey offers us a bit from the President's State of the Union:
In three years, our partnership with the private sector has already positioned America to be the world's leading manufacturer of high-tech batteries. Because of federal investments, renewable energy use has nearly doubled....
I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here.
Well he was a quarter right about the batteries. He is ceding the industry to China and Russia. At least the Germans didn't get it. This is dreadfully bad policy. It is failing on all its aims and costs a bundle to boot. Energy and environmental policy have to be based on clear thinking, not wishful thinking. Government is really bad at venture capital.