The Electric Car Imbroglio Is About To Get Even More Expensive...

by Eric Peters

Recently by Eric Peters: A Few Questions To Ask….

In just a few months from now, it will be $2,500 easier to “buy” a new electric car. I put “buy” in quotes because in fact, other people will be paying a good chunk of the purchase price – to the tune of a $10k direct cash payment (it is euphemistically called a “tax credit”) per car, courtesy of The Man With The Plan. (But without much understanding of economics or engineering.)

A line item snugged deep within Barack Obama’s 2013 federal budget – which hasn’t passed yet and won’t be passed until after the (s)election this November – will up the existing electric lemon inducement from the current $7,500 per car to $10,000 per car. This means the subsidy payout alone on something like a new Chevy Volt will be almost as much as the total cost (without any subsidy) of a decent little economy runabout such as the 2012 Nissan Versa.

And the government giveaway will be immediately available, too – dangled in front of “buyers” (cough) “at the point of sale, making it transferable to the dealer … allowing consumers (italics mine) to benefit when they purchase a vehicle rather than when they file their taxes.”

Well, yes, they will be consuming . . . other people’s money. A tremendous buttload of it. How much is a tremendous buttload, exactly? Well, if you assume 10,000 electric lemons, that’s $100 million bucks. And Obama’s stated goal is to “…put one million (italics mine) advanced technology vehicles on the road by 2012.”

You do the math.

Don’t want to? Here, I’ll do it for you: It’ll come to about $10 billion – if Obama’s goal of one million electric lemons is realized. That’s just under 10 percent (in inflation adjusted dollars) of what it cost to put Neil Armstrong on the Moon. Back in ’69, at least, the American people got something for their money. After all, Apollo 11 did make it to the Moon – and back. Most electric cars can’t make it to the store – and back.

Problem is, even a $10,000 per car federal giveaway – $10 billion thrown into the wind – might not be enough to do the trick.

$7,500 per car sure hasn’t.

Each Volt – which has an MSRP sticker price of $39,145 – costs GM about $89,000 to build. So GM is losing – roughly – $50,000 per car. That’s a helluva way to do business. It might make more sense just to build a fire with all that money. At least some heat – as opposed to hot air – could be gotten out of it.

Even with the existing $7,500 tax credit and sweetheart lease offers as low as $199 per month designed to “move product,” not much product has been moving. As of mid-September, year-to-date Volt “sales” have yet to reach 14,000 – just a bit shy of the projected 40,000 GM anticipated.

And how about those Obama Jobs the Obama Car was supposed to confect? GM has had to idle the production line where the Volt is (well, was) built – and “temporarily” lay-off 1,300 workers.

What’s shocking is that GM – apparently – wasn’t able to anticipate any of this. It does not require the proverbial rocket scientist.

So, are the guys in charge stupid? How else to explain their inability to anticipate that a car that costs more than $33,000 – that’s after the current $7,500 tax subsidy – and which will still cost $30,000 after the pending $10,000 subsidy or as much as an entry-level Lexus or BMW – might not be very appealing to people concerned about paying $3 and change for a gallon of gas?

People who, you know, are concerned about spending money – unlike GM and Obama.

Well, that may be just the point. They’re not stupid. It’s simply that it’s not their money. It’s yours. Always more where that came from.

So, they don’t care that the Volt – and the rest of them – suck ass, economically speaking. Functionally, too. Though interesting as technology demonstrators, they still can’t go nearly as far – without lots of hassle – as the most humble non-electric new car.

Perhaps a car like the Volt will pay for itself down the road, in the form of reduced operating costs (well, except for the cost of electricity and that $2,000 charging station you”ll need to have installed in your garage). But even assuming the Volt and its kind are cheaper to drive, long term – and that’s by no means certain or even probable – they still cost Lexus-BMW money up front. Even with the $7,500 subsidy. Even with the pending $10,000 subsidy. And people in a position to buy a Lexus or BMW want… a Lexus or a BMW. Not a Chevy.