ReVolted

When I first read about GM's Volt, I was actually excited and wanted to buy one. The way it was described as a multi-wheel drive (my term) with a reasonable price tag made it sound very interesting. Then reality set in. The price to buy one was a lot higher than the earliest estimates. They have a tendency to explode and burn. Finally we have the ultimate absurdity. 

Michigan Capitol Confidential has this estimate: 

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.

 What? A $250,000 subsidy for each car! How was this done?

The Volt subsidies flow through multiple companies involved in production. The analysis includes adding up the amount of government subsidies via tax credits and direct funding for not only General Motors, but other companies supplying parts for the vehicle. For example, the Department of Energy awarded a  $105.9 million grant to the GM Brownstown plant that assembles the batteries. The company was also awarded approximately $106 million for its Hamtramck assembly plant in state credits to retain jobs. The company that supplies the Volt’s batteries, Compact Power, was awarded up to $100 million in refundable battery credits (combination tax breaks and cash subsidies). These are among many of the subsidies and tax credits for the vehicle.

Of course with the very low sales (6,000 so far, many of them government fleet sales), many of these subsidies will not be paid because the various subsidies are based on employment. But the minimum estimated subsidy is $50,000. This is for a car that retails at about $40,000. 

Does the Volt make any sense at all? The president of Audi, Johan de Nysschen, does not think so:

No one is going to pay a $15,000 premium for a car that competes with a (Toyota) Corolla...They’re for the intellectual elite who want to show what enlightened souls they are...so there are not enough idiots who will buy it.

Of course he was later forced to restate his view.  

De Nysschen notes that since most electricity is generated by coal that the end result will be greater pollution than if a diesel engine was chosen. 

This inevitably happens when government attempts to mandate products by subsidy. Favored products get produced, but other, better alternatives are ignored. Electric is sexy, diesel is not. 

If CO2 is indeed a problem, a far better approach would be to tax CO2. This would allow the market to decide how best to achieve the desired goal. Al Gore, in a rare fit of sanity, actually proposed this. He wanted to phase out the employment tax (Social Security) and replace it with a carbon tax. I favor this approach. This is the second time in a week that hell has frozen over—last week I agreed with the ACLU, and this week with Al Gore.  

If energy independence and less pollution are desired, then make the tax structure support these goals.