Gov’t subsidies for Chevy Volt up to $250,000 per car?

If you thought that the subcompact electric Chevy Volt was overpriced at an MSRP of $40,000 — which after a point-of-sale tax credit comes to $32,500 — you haven’t seen anything yet. According to a Mackinac Center study of government subsidies throughout the manufacturing and distribution chain, the actual cost of the vehicle is almost $300,000 — with a quarter-million dollars of taxpayer subsidies going into every vehicle (via the Drudge Report and David Freddoso):
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. …

GM has estimated they’ve sold 6,000 Volts so far. That would mean each of the 6,000 Volts sold would be subsidized between $50,000 and $250,000, depending on how many government subsidy milestones are realized.

If battery manufacturers awarded incentives to produce batteries the Volt may use are included in the analysis, the potential government subsidy per Volt increases to $256,824. For example, A123 Systems has received extensive state and federal support, and bid to be a supplier to the Volt, but the deal instead went to Compact Power. The $256,824 figure includes adding up the subsidies to both companies.
The $3 billion total subsidy figure includes $690.4 million offered by the state of Michigan and $2.3 billion in federal money. That’s enough to purchase 75,222 Volts with a sticker price of $39,828.

That kind of information is enough to turn any taxpayer green.

As in sick to the stomach.

Well, it’s just another middle-class subsidy like “Cash for Clunkers” covered by the fig leaf of bogus environmentalism. No big surprise, since middle class subsidies are what this administration is all about. The poor, of course, can eat cake.

Based on Mr. Obama’s business experience, they can make it up on volume.

Actually, I think most administrations are all about middle class subsidies, since that is basically what Social Security and Medicare are. In addition, education spending is another middle class subsidy, federal government subsidized and guaranteed student loans, etc.


Sooo … I take back my jocular remark about “volume”.

Uh how about a little critical thinking? I’m all for honest criticism, but wouldn’t this article ONLY be true if GM ceased production of the Volt tomorrow, burned the factory down, deleted all of the design information and zapped the memories of all the researchers who did the work? Raise your hand if that’s what you expect to happen.

The same sort of drivel could have been posted lambasting Toyota and Japan, Inc for the Prius after the first nine months it was on the market (in which it didn’t sell well either).

Zoom out a little bit before reacting guys. Big investment is required to execute revolutionary new tecnologies. Nobody expects to get that back on the first 6,000 units sold.

All that said, I’m not buying a Volt. IIRC gas has to hit about $6 a gallon before it would be a financial positive for my uses. But then I don’t understand why people pay $50,000 for BMWs and Mercedes that aren’t any more capable at getting them to work than my $1,500 used econobox…

They don’t call it Government Motors for nothing.

With volume at at 12,000 units per year there is a very good chance production will cease in the very near future. Even common cars that share many parts with other GM vehicles (which the Volt does not) need to sell around 60,000 units a year just to break even. With sales as low as the Volt’s their “direct” production costs are probably not being met - let alone an offset to the initial capital investment.

In two more years the design information will be out of date (techs will need to be retrained) and the equipment at the plant will need to be replaced to build a different car. No there doesn’t need to a be fire for those costs to be accurate.

Toyota learned out how to make a parallel hybrid that works, and sells in a competitive market.

Serial hybrids suffer from simple physics.
The battery is essentially too small to have any real competitive range or to handle the number of discharge cycles expected in real world use. Also, there is loss in conversion of fuel to mechanical energy, loss in rotary mechanical motion to electrical, loss in conversion of DC to variable frequency AC, loss in converting variable frequency AC back to mechanical rotary motion. That doesn’t include the system losses in wide area power generation/distribution, conversion losses in the charging equipment. That’s a lot of losses to account for in overall efficiency!

Having batteries that catch fire aren’t a big selling point either.

Which is precisely why the Volt isn’t marketed as a ‘serial hybrid.’ It is marketed as an electric vehicle for those who mostly make short urban trips but need a vehicle ABLE to take periodic longer trips when needed.

Take my commuter needs, for example. I drive 30 miles from home and park the car in the office lot for 8 hours then drive home (there actually is a charging station at my workplace as the CEO owns a Volt). Now once a week on average, I have to go to a meeting that drives my total mileage for that day to 160 or so miles with no likely charge stop time in there. A total electric like the Leaf would be useless to me.

The Volt’s problem is that gas is too cheap to ever pay for itself. Even the ideal use above where 60 miles a day is done on all electric would only save 2 gallons of gas compared to a comparable sized 30 mpg commuter car. Gas has to get pretty expensive before that will ever pay off for anybody.

On the other hand, there are a billion Chinese and a billion Indians up and coming fast in the global economy and they are soon going to want energy hungry lifestyles too. Gas could easily zoom past $6/gallon in this decade and if so it will be a good thing to have technology ready to adapt to that. I think it’s premature to get smug about government wastefulness on this issue. How about we pan the new aircraft carrier class that’s costing us about the price of 4 Nimitzes??

The Nimitz class averaged about 4.5 billion each - but then the first one was built with 1972 dollars and the last one was built with 1997 dollars. Pretty easy to lower that average with inflation. The Gerald R Ford will run about 9 billion to build.

OK, my memory went wild on the 4x number. But you’re out of date too. Cost overruns have already put the Ford tag at 11.5 Billion in 2012 dollars and given the history of first time ships, there are likely to be a couple more trips to the well before she’s active duty. The Reagan came in at $5 billion not that long ago because she was a known, settled design with no oopsies to resolve during the build.

Just like the Volt subsidies, you can assemble arguments for why the Ford is in the nation’s best interest. But you can also make it look absurd quite easily. What China’s piece of crud ex-Soviet carrier is too tough for a Nimitz so now we need to buy ones that cost double? Seriously?

Because the US doesn’t fight to tie - despite what Truman did in Korea.

Well there’s a quick way to lose and a slow way. We’re several decades into the slow way, thanks to poor leadership from both parties. We’ve got military hardware enogh to take on the rest of the world combined and win, but we sold our grandchildren into slavery to pay for it. That’s Charlie Sheen “winning” if you ask me…

You know, I really don’t believe our government has any business in providing businesses with subsidies and things like that. If a business can’t survive on its own then we should just let it die so that way better and more successful businesses can take its place. That is my opinion anyway.

Easy, now. The article actually says “between $50,000 and $250,000, depending on how many government subsidy milestones are realized,” not “$250,000” (some of the subsidies carry contingencies). And a lot of the subsidies won’t be realized unless the Volt keeps selling over the next few decades (some of the subsidies are 20-year grants, so dividing their value over the 6,000 Volts sold so far seems fishy – 6,000 Volts a year over 20 years would yield a subsidy per car of $25,000, not $250,000).

Plus, what whackjob decided to include the amount of loans in the analysis? I could see including the interest on the loans in the analysis, but why the loans themselves? That wouldn’t be valid in a standard business model, so why is it suddenly okay here?

And, as the article went on to point out, the subsidies aren’t just for the Volt; as merely one example, the subsidies to the battery-manufacturing companies have produced batteries that can be used in other applications, even if the Volt plant shuts down tomorrow (the guy doing the analysis included in his figures the value of the subsidies to a battery-manufacturer that doesn’t even supply batteries to Volt, because it lost out on the contract; that company is out there making batteries for other applications entirely).

Sounds like a Don’t-let-facts-get-in-the-way-when-there-are-political-points-to-be-scored hackjob to me.

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