Wednesday, December 21, 2011

Volt May Be Most Government-Supported Car Since the Trabant, and Average Owner Makes $170k/year

Michigan Capitol Confidential -- "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.

The Volt is subsidized by multiple companies on its way to 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. These are among many of the subsidies and tax credits for the vehicle.

It’s very unlikely all the companies involved in the production of the Volt would ever receive all the $3 billion in incentives. But the analysis looks at the total value that has been offered to the Volt in different aspects of production – from the assembly line to the dealerships to the battery manufacturers. The tax credits and subsidies are offered for periods up to 20 years, though the majority is offered over a much shorter time frame.

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 subsidies were realized.  The $3 billion in total value includes $690.4 million offered in incentives 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.

“This might be the most government-supported car since the Trabant,” said Hohman, referring to the car produced by the former Communist state of East Germany (pictured above).

According to GM CEO Dan Akerson, the average Volt owner makes $170,000 per year."

64 Comments:

At 12/21/2011 10:28 AM, Blogger morganovich said...

but look how well the trabi worked out!

 
At 12/21/2011 10:34 AM, Blogger PeakTrader said...

Obama's first stimulus plan, in 2009, was to spend $750 billion to create or save three million jobs.

It would've been better to give three million American workers $250,000 each (or the 150 million workers at the time $5,000 each).

I suspect, most of the jobs saved with the $750 billion were government jobs (in 2009 and 2010).

 
At 12/21/2011 10:48 AM, Blogger PeakTrader said...

And, if Obama wanted to more effectively stimulate growth in the private sector and save the auto industry, he should've bought autos from domestic producers and gave them away to government workers as fringe benefits.

 
At 12/21/2011 10:49 AM, Blogger Walt G. said...

Here are some more government supported cars ($3.8 billion worth of support in non-inflation adjusted dollars). Not a penny of this money had to be paid back! (Source: Huffington Post 12-13-2008):

Honda, Marysville OH, 1980, $27 million*

Nissan, Smyrna, TN, 1980, $233 million**

Toyota, Georgetown, KY, 1985, $147 million

Honda, Anna, OH, 1985, $27 million*

Subaru, Lafayette, IN, 1986, $94 million

Honda, East Liberty, OH, 1987, $27 million*

BMW, Spartanburg, SC, 1992, $150 million

Mercedes-Benz, Vance, AL, 1993, $258 million

Toyota, Princeton, IN, 1995, $30 million

Nissan, Decherd, TN, 1995, $200 million**

Toyota, Buffalo, WV, 1996, more than $15 million

Honda, Lincoln, AL, 1999, $248 million

Nissan, Canton, MS, 2000, $295 million

Toyota, Huntsville, AL, 2001, $30 million

Hyundai, Montgomery, AL, 2002, $252 million

Toyota, San Antonio, TX, 2003, $133 million

Kia, West Point, GA, 2006, $400 million

Honda, Greensburg, IN, 2006, $141 million

Toyota, Blue Springs, MS, 2007, $300 million

Volkswagen, Chattanooga, TN, 2008, $577 million

Total: more than $3.58 billion

* total of direct subsidies to all Honda facilities in Ohio

** includes about $200 million for expansions of Smyrna and Decherd plants

List does not include joint ventures with U.S. companies

These data, drawn primarily from contemporary media accounts, are very conservative. They do not account for inflation; some would be worth far more in today's dollars.

They do not include any estimate of subsidies granted to hundreds of foreign-owned auto supplier companies that have located in the same areas, virtually all of which were also heavily subsidized. Finally, they do not reflect later news accounts, which often place higher subsidy values.

 
At 12/21/2011 10:52 AM, Blogger Methinks said...

Hey, what do you have against toy cars?

Peak, I think government workers have enough fringe benefits at our expense.

 
At 12/21/2011 11:00 AM, Blogger Buddy R Pacifico said...

Should affluent consumers consider the Volt?

From the U.S. News link cited:

"The 2012 Chevrolet Volt ranks 1 out of 21 Upscale Midsize Cars. This ranking is based on our analysis of 28 published reviews and test drives of the Chevrolet Volt, and our analysis of reliability and safety data."

I don't know much about the Trabi but the Volt is a very good car. The Volt seems to be government incentivized but not subsidized.

 
At 12/21/2011 11:23 AM, Blogger morganovich said...

buddy-

"the volt is a very good car"?

have you missed the recall, the fires, explosions, and other disasters that have led GM to offer to buy them back from anyone who has purchased one?

i think you (and they) may have missed some news here.

but again, so what?

there are lots of $250k items i would be "very satisfied" with if i could buy them for $40k.

i mean, would you rather have a chevy volt or a lamborghini aventador?

they seem to cost about the same. it's just the price difference that leads people to buy a volt.

selling things for 16% of cost is always popular with consumers.

to my mind, the real question is: would anyone pay the real cost for a volt?

i bet they couldn't sell 4 worldwide at an unsubsidized price.

 
At 12/21/2011 11:28 AM, Blogger Duncan said...

Tesla provides a nice counter example for a private design. The model S sold out 1800 electric sedans for 2012 and plan for 20,000 in 2013. True they took a $495m gov loan. but that averages to around 10000 cars to pay back, which I believe they will.

Also, image all the start up cars companies that might have occured had GM not been salvaged. The administration is always quick to point jobs saved by this or that, they should also point to opportunities lost and companies that might have been created that never were.

 
At 12/21/2011 11:35 AM, Blogger Buddy R Pacifico said...

"the volt is a very good car"?

Yes it is. There have been no Volt fires reported at crash sites. If Volt fires occur at the actual crash site, I will change my opinion.

I will correct my statement that the Volt is incentivized. The Volt is incentivized by government, but grants have been made that don't to have to be paid back. Grants should not be made to private companies, or temporarily government controlled cos.

 
At 12/21/2011 11:40 AM, Blogger Walt G. said...

There also have been no reports of battery fires in Volts during everyday usage. Both of the reported fires happened after letting batteries sit days after a crash against design recomendations. That's not much different than complaining that a car caught on fire after dropping a lit match on leaking gasoline.

 
At 12/21/2011 12:09 PM, Blogger Che is dead said...

"Here are some more government supported cars ($3.8 billion worth of support in non-inflation adjusted dollars)." -- Walt G

Since you did not include a link to confirm, I suspect that these "subsidies" were, in fact, property tax incentives. If so, so what? Corporations, whether foreign or domestic, should not be paying taxes anyway as the employment and opportunity that they provide adds value to the community. And that $3.8 billion is a drop in the bucket when you add up all of the real subsidies ( and by that I mean the real transfer of wealth from private individuals to private companies and by default their unions) that the domestic automakers have received.

The UAW is a cancer, and it will ultimately kill the domestic automakers. Making arguments to justify the squandering of tens of billions of U.S. taxpayers dollars in an effort to spare the unions the consequences of their indolence and greed just doesn't cut it.

 
At 12/21/2011 12:13 PM, Blogger Jon said...

Government subsidy is key to all kinds of technological innovation. And it's not just in the US. Pretty much everywhere in the world.

The government of Japan subsidized Toyota for decades and imposed drastic tariffs to prevent the people from buying alternatives. It was very expensive and tough on Japanese residents in the 60's and 70's that couldn't enjoy better alternatives made in America. But guess what? It worked. Toyota is the standard bearer for excellence in quality today.

Take a look at S Korea. This country has produced the most drastic economic growth in the world over the last 50 years. Same thing Japan did. Block the residents from purchasing alternatives to Hyundai, Kia, Samsung, LG. Subsidize these companies in various ways. Artificially reduce prices for foreigners, using foreign demand to stimulate growth. What happens? 20 years ago a Korean television was off to the side at Best Buy at a major discount and still nobody would buy it. Today Samsung and LG are prominent and among the best products you can buy.

The fastest growth of the last 30 years is in China which follows a similar policy.

The problem with right wingers is they never take a look at the world and learn what actually works. They just look at the nose on their face and say "But it cost a lot today to build a Volt." Sure, it cost a lot today, but look ahead a bit. This initial investment can pay dividends. It's like educating your own children. Do you just say that they should pursue their comparative advantage and go into a tomato field and pick the crops? Skip an education because they make more money this way? Sure, they make more money that way today. But paying the up front price of educating them is what is going to make them much more productive down the road. Look past the nose on your face and consider what has actually worked throughout history.

 
At 12/21/2011 12:17 PM, Blogger Walt G. said...

Che,

I didn't attempt to justify anything. I just pointed out taxpayer subsidies for the auto industry are wide spread in the U.S. A lot of places want automakers, and they pay money and fight to get them. The amount is not as important as the practice.

 
At 12/21/2011 1:14 PM, Blogger morganovich said...

buddy-

personally, you could not pay me to drive a volt, but that's just one man's opinion, so perhaps you will permit me to rephrase the question as this:

"for $250k, is the volt a good car?"

do you think anyone would pay that for one? selling dollars for 16 cents is always popular, but it's unrealistic.

to compare the volt to other $40k cars is a bad comparison. it costs (all in) 6 times as much. you should be comparing it to a bentley or his and hers 911 turbos.

 
At 12/21/2011 1:27 PM, Blogger Walt G. said...

You can't compare the Volt's current cost to a gasoline-powered vehicle because the developmental cost of gasoline power has an economy of scale that the Volt technology does not yet have.

You need to determine the developmental cost of a gasoline-powered vehicle in today's dollars by how many units will be produced against the Volt's current developmental cost and how many units using this technology will be produced in the future.

I remember paying $1200 for my VCR in 1986, which is almost $2500 in today’s dollars. I can buy a DVD player for less than $50 today that does the same thing and is a vast improvement over my VCR. The Volt technology might prove out to have the same savings effect.

 
At 12/21/2011 1:36 PM, Blogger ondra said...

The problem with right wingers is they never take a look at the world and learn what actually works

And the problem with people with you is they never consider what is not seen. I am right now trying to do some inovation in some particular field in IT.

If the government came and subsidized some competition, I would probably not do it. Yes, the competition could come and after burning 10x money what I would need, it would provide a decent product. And then you come and tell me, that I should be thankful that government provided innovation incentives?

This initial investment can pay dividends. It's like educating your own children. Do you just say that they should pursue their comparative advantage and go into a tomato field and pick the crops?

No. Because investment in education will pay them dividends. It's that forbidding your children to buy a computer from abroad is not the same as telling them not to invest...

 
At 12/21/2011 1:37 PM, Blogger Buddy R Pacifico said...

morganovich states:

"for $250k, is the volt a good car?"

"do you think anyone would pay that for one? selling dollars for 16 cents is always popular, but it's unrealistic.

to compare the volt to other $40k cars is a bad comparison."

Morgan, you need to grab some alpha, and purchase a Volt. That 16 cents on the dollar will vaporize quickly if production ramps up.

Tell everyone at Christmas dinner you bought a 250k car for forty grand: "and it's rated #1 for upscale medium sized cars".

 
At 12/21/2011 1:56 PM, Blogger morganovich said...

buddy-

it's only alpha if there is a real arb, and there isn't.

it's not like a i can sell one for $250k, and as i said, you'd have to pay me to drive one.

i'd spend $40k for a car i hated.

where's the alpha in that?

i said it cost $250k, i didn't say it was worth anything like that.

i'd put it's actual value at about -$30k. that's what you would have to pay me to take one home and have it eat garage space for a year before i chucked it.

i can spend $250k making mudpies too. it would not make them valuable.

 
At 12/21/2011 2:04 PM, Blogger Hydra said...

In the end, I doubt the Volt will be much better than the Prius. In fact, it will do well to get close.

I do not understand the (current) drive to achieve 100% electric drive, when the hybrid drive works so well. The savings does not seem to justify the expense of the extra battery power, especially if the volt will have a charging angine anyway. It is just a hybrid with a different ratio of gas to electric power.

When in use, (below 25% of battery charge) the smaller volt engine will have the advantage of running at a near constant and optimum RPM to charge the batteries which move the car.

With all ectric drive the transmission is rudimentary. Rather than adding gears Chevy added another smaller electric motor/generaor to achieve the same result. The system uses three clutches, however.

For persons who always drive short distances and can always charge at home, none of this matters. I suspect that the driving range will be much less than advertized in real world operation, and the charging engine will be used more frequently than people suppose.

The Volt has a 1.4 Liter 62KW ICE The Prius has a 1.8 liter 72KW ICE(formerly 1.5 liter). The Volt has a larger battery pack and larger electric motor, so it really boils down to a different trade off on what percentage of time the engine runs, the battry being a buffer device in either case.

Figure that the cars will need about the same amount of energy to move them, either way. Absent home charging, the smaller Volt engine would have to run a longer percentage of time to deliver the same energy to the battery which then runs the car. It will do that by running longer at red lights or when coasting downhill, when the Prius engine normally shuts down.

Charging up at home takes some of that run time off the engine. The Prius system depends totally on the engine, (since home charging is not yet avaialble) and uses the Electric motor as a transmission and for extra boost when nneded.

Both cars have rudimentary transmissions and depend on the electric drive system to provide torque balancing. The Volt system uses three clutches to manasge the ICE, the electric motor, and the motor generator.

It is a different set of trade offs, but on paper I don't see that big a difference.

I must say I have been entirely happy with both of my Priuses, until older one had its first repair after 160,000 miles, when a headlight burned out. Turns out it is next to impossible to replace the bulb, and the bulb itself is expensive. There is no excuse for that kind of engineering.

It took me a while to realize that a lot of the savings with the car is not from the fuel. Since the engine is off about 25% of the time, the engine hours are low for the mileage the car has. The regenerative electric braking means the original brakes are still in the car, and oil changes are on a 10,000 mile interval. All that stuff adds up.

For my needs, it is a fine car, quiet and comfortable, and routinely getting over 50 mpg actual. I am still PO'd about that stupid headlight though.

The Prius was also subsidized heavily also, but we cannot easily tell by whom. But, the handwriting is on the wall: Lowes offers a home charging station now. Prices are coming down on the hybrid technology, too: the KIA hybrid is only a little more money than the standard model similarly equipped.

 
At 12/21/2011 2:06 PM, Blogger Hydra said...

Let's see, all thoughs high arners got that way because they are smart and work hard, right?

Does that mean buying the Volt is a good decision?

 
At 12/21/2011 2:08 PM, Blogger juandos said...

"I will correct my statement that the Volt is incentivized"...

buddy is speaking in euphemisms...

 
At 12/21/2011 2:12 PM, Blogger juandos said...

"all thoughs high arners got that way because they are smart and work hard, right?"...

Wrong again hydra, a high earner is apparently worth that much to the person paying that earner regardless whether that high earner works hard and is smart...

 
At 12/21/2011 2:16 PM, Blogger juandos said...

The Chevy Volt & Nissan Leaf: Proof That A Sucker’s Born Every Minute

 
At 12/21/2011 2:20 PM, Blogger Walt G. said...

Since all the cost is attributed to the first 6000 Volts sold, the next ones after that will not cost anything to produce, right?

 
At 12/21/2011 3:05 PM, Blogger morganovich said...

walt-

note:

that's just the subsidy, not the actual cost to produce the car.

even at 60k volts, you're looking at over 70k a car.

40k in sticker, 25k in subsidy, and 7.5k in tax break (which is per unit and not amortizable.

also keep in mind that when these subsidies end, the sticker price will go up as components will have to start being paid for at full rate etc.

i doubt you ever get the cost of this car under $90-100k per unit.

 
At 12/21/2011 3:07 PM, Blogger geoih said...

Quote from Walt G: "Here are some more government supported cars ($3.8 billion worth of support in non-inflation adjusted dollars)."

There is a big difference between a subsidy and a tax abatement. Companies that keep their momey instead of paying taxes is not a subsidy anymore than than me keeping my money instead of being robbed means I'm getting a subsidy from criminals.

 
At 12/21/2011 3:30 PM, Blogger David said...

I'm not an advocate for subsidies of this kind, but it makes no sense to divide the total up-front subsidy figure by the unit sales *to date* and claim that the result is a meaningful susbsidy-per-unit number.

If you took the construction cost of an Intel chip factory and divided it by first-year sales only, you'd get a pretty high per-unit "cost."

 
At 12/21/2011 3:34 PM, Blogger Jet Beagle said...

Walt,

A few points about the $3.8 billion subsidies you listed:

1. You are correct that older subsidies are not stated in 2011 dollars. But some of the recent tax benefits - such as the 20 year, $200 million job tax credit given Volkswagen in 2008 - will not be realized for many years and are thus overstated.

2. The property tax "forgiveness" granted for billions of dollars in new factories should be compared to the alternate low-tax use of the mostly rural property had the factories not been built. Furthermore, the values of properties in the vicinity of the new factories have increased so much that most new plant locations are realizing a net increase in property taxes.

3. State and local subsidies have been granted to Big 3 American automakers, such as the subsidies given to GM when it built the Tennessee Saturn plant. Or the tax incentives granted recently to the Kansas City Ford plant expansion. Why did your list not include any such subsidies for so-called "American" auto manufacturers?

4. Finally, what your comment fails to note is that the subsidy per automobile produced for all those so-called "foreign" manufacturers is far, far below the subsidy per automobile for the Volt.

I'm not defending subsidies to manufacturers, Walt. I'm just arguing that the implied comparison in your comment doesn't tell the true story.

 
At 12/21/2011 3:45 PM, Blogger Brian said...

Yet another great example of Keynesian economic policy failure, demonstrating that governments are better at destroying value than efficiently creating anything. And inefficient centralized planning isn't the only thing the Volt and Communist German "Trabant" have in common. Just as state built cars could only be consumed by the upper crust of Communist society, the Volt's average customer earns $170k. It's clear the Obama administration is ensuring the top 8% has adequate transportation by supporting each buyer with $250,000 in taxpayer subsidies.

 
At 12/21/2011 3:55 PM, Blogger Benjamin said...

In terms of true national security, each Volt is worth 1000 F-22 fighter jets.

Actually, since the F-22 is too dangerous to even fly, or have never been used in real combat, maybe each Volt is worth an infinite number of F-22's.

Some more stats on the F-22:

" The Washington Post stated that between October 2008 and May 2009, 55 percent of the deployed F-22 fleet has been available.[187] Air Force Magazine responded to the Washington Post article, stating it was incorrect and that mission capable rates were climbing; by June 2009 they stood at 62.9%, compared to approximately 70% for the F-15 and F-16 aircraft.[188][189] In 2010, the Air Force Association stated the mission capable rate for the F-22 fleet was 70%.[190]
In July 2009, the Air Force reported that the F-22 requires more than 30 hours of maintenance for every flight hour, with the total cost per flight hour of $44,000.[187] The Office of the Secretary of Defense puts that figure at 34 hours of maintenance per flight hour at a cost of $49,808."

Jeez, my off-the-shelf car looks like a paragon of virtue next to the crap built for US taxpayers.

Imagine $50k of maintenance to fly a jet for one hour.

My 1986 Isuzu Trooper looks better and better and better.

The Volt look heroic too.

 
At 12/21/2011 3:57 PM, Blogger Jet Beagle said...

David: "but it makes no sense to divide the total up-front subsidy figure by the unit sales *to date* and claim that the result is a meaningful susbsidy-per-unit number."

I agree with your point, David. But consider the difference between the Volt subsidy and subsidies for Nissan, Honda, and Toyota plants. Those companies already enjoyed huge demand for their products, and were willing to invest billions to open plants in the states most willing to offer tax relief. The demand for Volt was completely unknown.

I'm not defending the subsidies granted to the Japanese companies. But it was very clear that the benefits from the Japanese companies to Ohio, Tennessee, Indiana, and other states were real. Volt's economic impact was and is a mirage. Governments should not be gambling with taxpayer money.

 
At 12/21/2011 4:07 PM, Blogger morganovich said...

geo-

i'm not so sure about the way you characterize tax abatement as a non subsidy.

it sure works like a subsidy.

you wind up with more money at the end of the day and do so at someone else's (in this case other taxpayers) expense.

taking money out of the expenses side or the income side of the government balance sheet makes no functional difference.

 
At 12/21/2011 4:08 PM, Blogger Che is dead said...

"Government subsidy is key to all kinds of technological innovation ... The problem with right wingers is they never take a look at the world and learn what actually works." -- Jon

Right.

Politicians who assert their role in directing funds to the "industries of the future" want to play entrepreneur with someone else's money. They are ill suited to the role. The politician who takes over the direction of capital is quickly revealed as this year's amateur following last year's experts. -- Economist Lawrence Lindsey in "The Growth Experiment"

 
At 12/21/2011 4:10 PM, Blogger morganovich said...

"but it makes no sense to divide the total up-front subsidy figure by the unit sales *to date* and claim that the result is a meaningful susbsidy-per-unit number.""

that gets a little tricky though, no?

let's say a supplier gets a $1000 subsidy per battery that goes into a volt. if that goes away, the price of the battery is going up, and thus, so is price.

thus, when subsidy goes away, sticker price hikes. i would bet you cannot make a volt for less than twice what they sell for paying full price for everyhting.

so, when subsidies go away, sales stop. this will keep overall unit count low forever.

 
At 12/21/2011 4:24 PM, Blogger Che is dead said...

"when subsidies go away, sales stop. this will keep overall unit count low forever." -- morganovich

Beat me to it, this is exactly right. There is no real demand ex-subsidy as the real costs make the price prohibitive.

This is a make work project designed to satisfy the demands of two important Democrat constituencies - the "greens" and the unions.

 
At 12/21/2011 4:28 PM, Blogger Walt G. said...

Jet Beagle,

A lot of the subsidy is for U.S. bragging rights for the ion-battery technology. A lot of people want that. I'm not sure how you quantify that or if we should even be doing that. The technology will be almost definitely used in other cars in the future besides the Volt.
Sure U.S. automaker get subsidies, but they are not the only ones. That was my point.

About your point 4): ”It’s unlikely that all the companies involved in Volt production will ever receive all the $3 billion in incentives, Hohman said, because many of them are linked to meeting various employment and other milestones”

Again, it’s more about the way things are done across the board than the amount, which is probably highly inaccurate anyhow.

Morganovich,

GM is taking the lead with this technology—with a lot of help. Only the future will tell whether it pans out. Yeah, it’s expensive.

"taking money out of the expenses side or the income side of the government balance sheet makes no functional difference."

Actually it does make a difference. There is a difference between a disbenefit and a cost because a disbenefit goes in the numerator of a cost benefit analysis ((benefits - disbenefits)/costs). The project is usually not acceptable if the b/c is less than or equal to 1.

Che,

The real costs will not be determined until the future when we know the real units produced from that cost.

 
At 12/21/2011 4:32 PM, Blogger Mike said...

Oh, Jon....

"The problem with right wingers is they never take a look at the world and learn what actually works."

The problem with left-wingers is that they never look around the area they are in. Too troubled to notice that they live in the richest, most powerful, most comfortable country in the history of man - all made by usually doing things counter to the rest of the world. They just see the tiny, ancient apartments that cost a fortune and have no room for major appliances and say, "How quaint."

 
At 12/21/2011 5:57 PM, Blogger PeakTrader said...

Jon, if private firms "invested" $250,000 for something worth $50,000, they'd soon go bankrupt.

And $250,000 spent and squandered by government means private firms have less to invest.

If the $250,000 was borrowed, there's less for the future (which we see has caught up with GM, Fannie Mae, and the E.U.).

 
At 12/21/2011 6:19 PM, Blogger Ron H. said...

Jon: "The government of Japan subsidized Toyota for decades and imposed drastic tariffs to prevent the people from buying alternatives. It was very expensive and tough on Japanese residents in the 60's and 70's that couldn't enjoy better alternatives made in America. But guess what? It worked. Toyota is the standard bearer for excellence in quality today."

Yeah, who cares about the people, as long as government can promote a car company using the people's money? I wonder what the Japanese people who did the suffering would say about that if you asked them?

What is the purpose of government, again? Maybe you've forgotten that it's "to secure those liberties".

"Take a look at S Korea. This country has produced the most drastic economic growth in the world over the last 50 years. Same thing Japan did. Block the residents from purchasing alternatives to Hyundai, Kia, Samsung, LG. Subsidize these companies in various ways. [ - make the Korean people pay twice for these products - ] Artificially reduce prices for foreigners, using foreign demand to stimulate growth. "

You must agree that you would prefer to subsidize GM and Ford and be forced to choose only cars made those two while foreign buyers of those 2 can get the same models much cheaper than you can. All this in the name of economic gtrowth. Is this your position?

Of course you are already subsidizing GM, but you don't have to buy their cars.

What is the role of goverenment, again? You seem to have it backwards. It's incredible that you don't mind being forced to do things by people who think they know what's best for you.

"The problem with right wingers is they never take a look at the world and learn what actually works. They just look at the nose on their face and say "But it cost a lot today to build a Volt." Sure, it cost a lot today, but look ahead a bit."

But is a Volt what people want? Why is it necessary to bribe people using other people's money to convince them to buy a Volt? Only 6000 people out of 300 million seem to agree with you Jon.

By the way, are YOU driving one, or do you just think other people should drive them?

"This initial investment can pay dividends."

What dividends would those be, Jon?

"It's like educating your own children."

Ah! There is is. We are all like children and must be forced to do what you and those other really smart people think we should do, for our own good, right Jon?

Such incredible arrogance!

 
At 12/21/2011 6:38 PM, Blogger Ron H. said...

Walt: "The amount is not as important as the practice."

At a State or local level we can at least understand the practice, whether or not we approve, but at a national level, what's the purpose other than social engineering and favors to supporters? The US isn't fighting to keep Volts built here instead of somewhere else, and the $3.8bn you point to has helped build millions of cars, not just 6k for $3bn. It's not really much of a comparison.

Without questioning the morality of bribing companies, it seems that the price of these cars to the taxpayers has been extremely high.

 
At 12/21/2011 6:52 PM, Blogger Ron H. said...

Walt: "I remember paying $1200 for my VCR in 1986, which is almost $2500 in today’s dollars. I can buy a DVD player for less than $50 today that does the same thing and is a vast improvement over my VCR. The Volt technology might prove out to have the same savings effect."

Yes, anything's possible, but you bought that VCR at full price with no government subsidies. Would you pay the full cost of a Volt today? Why should someone in government decide that we should drive volts? If private investors liked the idea as they did the VCR, and if people like them enough to pay full price as you did for your VCR, then fine, but that's not the case with the Volt.

There is no reason for Volts to get cheaper over time as subsidies remove any need for them to compete with other cars in the open market.

 
At 12/21/2011 7:07 PM, Blogger Walt G. said...

I hear GM is having a problem with their dealers selling Volts above MSRP. Here's some research I performed.

There were 536 Volts listed within 300 miles of my house (Yahoo-Auto). Of those only 28 had a listed price at or below the MSRP of $40,280. The low was $33,939 and the high was $48,165. It would be interesting to know the price the Volt would command without GM pressure.

Ron H.,

I wish I had a crystal ball and could predict the future. Volts might be it and they might not. My dad was a farmer who took over the farm from his dad. His dad said contraptions such as tractors could never replace mules on a farm and would not allow a tractor on the land when he was alive. My dad proved him wrong, but his dad never lived to see it, so he died believing he was right.

The U.S. space program and military have resulted in a lot of technology that companies got for "free" (I know GPS units and probably VCRs are in there because we recorded the Russian miltary), so government investment in private industry is very common and not always transparent.

 
At 12/21/2011 8:34 PM, Blogger Ron H. said...

Walt: "You can't compare the Volt's current cost to a gasoline-powered vehicle because the developmental cost of gasoline power has an economy of scale that the Volt technology does not yet have. "

By that reasoning no new technology can ever be developed to compete with an older one, without government subsidies, but we know that's not true. You yourself used the example of DVDs replacing VCRs, and now we have Bluray replacing DVDs, as well as high speed streaming of media without the need for any physical medium.

The measure of the value of any new idea is it's acceptance by the market.

 
At 12/21/2011 8:50 PM, Blogger Buddy R Pacifico said...

This comment has been removed by the author.

 
At 12/21/2011 8:55 PM, Blogger Buddy R Pacifico said...

Juandos states:

"buddy is speaking in euphemisms"

in regards to the Volt is "incentivized".

Governments do incentivize with lower real estate taxes; or sales tax breaks for machinery purchase; or maybe building a road in front of factory; if a new factory is built.

It is not a euphemism, and to state so, is a dysphemism . :>)

 
At 12/21/2011 11:21 PM, Blogger jorod said...

Why do I get interrupted by some google hacker police??

 
At 12/21/2011 11:22 PM, Blogger jorod said...

Why do I get interrupted by some google police?

 
At 12/21/2011 11:24 PM, Blogger jorod said...

The Volt is to GM as the munitions industry was to Hitler.

 
At 12/22/2011 12:30 AM, Blogger Hydra said...

My 1986 Isuzu Trooper looks better and better and better.

++++++++++

How many nanosecond would it last in a fight against a mig?

 
At 12/22/2011 12:54 AM, Blogger Hydra said...

Juandos: so it is not hard work, dedication and smarts that got the high earners where they are?

 
At 12/22/2011 1:05 AM, Blogger Hydra said...

If the Prius is not all that different from the Volt, why does the volt cost so much?

Maybe it costs about the same and all That subsidy is just graft?

In many areas hybrid owners were incentivised by giving them access to the car pool lanes. For me, that meant a two hour savings every day.

10 hours x 50 weeks x $30 an hour = $1500 a year. Over three years that's is a $4500 subsidy per car.

As hybrids are now clogging the car pool lanes, those subsidies will expire, and the Volt will have to do without.

 
At 12/22/2011 2:31 AM, Blogger Ron H. said...

Walt: "The U.S. space program and military have resulted in a lot of technology that companies got for "free" (I know GPS units and probably VCRs are in there because we recorded the Russian miltary), so government investment in private industry is very common and not always transparent."

A quick look tells me that recording video to magnetic tape was developed in the private sector, for use in the TV broadcasting industry.

Buying technology and equipment for military use may encourage, or even affect the course of future development, but it's hardly the same thing as government subsidizing products to affect consumer choice.

 
At 12/22/2011 6:53 AM, Blogger Walt G. said...

"but it's hardly the same thing as government subsidizing products to affect consumer choice."

OK, OK. You could look at it as a return on investment. Those guys that make $170,000 a year and pay all the taxes need to get some of it back somehow.

I think I need to go test drive one of those electric babies. My 500 hp diesel truck is going to be too expensive to drive around the state in my new job.

 
At 12/22/2011 6:58 AM, Blogger Hydra said...

Yes, but incentives. Even private irad is incenivised by government contracts, and tax treatment for irad spending.


I am pretty certain that some of the early laser work was government funded, and the DVD depends on lasers.

 
At 12/22/2011 7:02 AM, Blogger geoih said...

Quote from morganovich: "i'm not so sure about the way you characterize tax abatement as a non subsidy. it sure works like a subsidy."

Your position starts from the assumption that the government has a right to all of everybody's property and anything the government allows anybody to keep is a subsidy. Modifying this assumption from all property to half or 10% or some other arbirtrary amount doesn't change the premise.

People keeping their property, instead of giving it in taxes to the government (under threat of violence), is no more a subsidy than people keeping property from criminals is a subsidy.

 
At 12/22/2011 7:51 AM, Blogger marmico said...

R&D.

Nobody who has posted to this thread understands the difference and interaction between basic, applied and developmental R&D.

Take another developmental pill, RonH. Pfizer management and stockholders will salute you!

Government should focus resources on basic and applied R&D. Business should focus on applied and developmental R&D.

Government R&D is increasingly focused on the life sciences. Of course, they never stop researching better bombs. Business increasingly spends a greater portion of R&D on better life science pills.

It seems to me that the Volt is a hybrid - both applied and developmental R&D.

 
At 12/22/2011 11:02 AM, Blogger Hydra said...

high earners got that way because they are smart and work hard, right?"...

Wrong again hydra, a high earner is apparently worth that much to the person paying that earner regardless whether that high earner works hard and is smart...

++++++++++++++++++++++++++++++

So being a high earner has nothing to do with smarts, education, and diligence?


My working assumption was only that high earners are typically smart, and if they are buying Volts, then it must be a smart thing to do.

How uyou got from that to buyer/seller theory is beyond me, and I don;t see what it has to do with Volts.

 
At 12/22/2011 12:47 PM, Blogger geoih said...

Quote from marmico: "Government should focus resources on basic and applied R&D."

How should government decide what or how much research to do? How will you keep politics from corrupting these decisions?

 
At 12/22/2011 7:39 PM, Blogger Ron H. said...

Walt: "OK, OK. You could look at it as a return on investment. Those guys that make $170,000 a year and pay all the taxes need to get some of it back somehow."

Well that's more like it. We all need to pitch in to provide tax breaks for those making $170k/yr guys. Now you're making sense. Steal from the poor, give to the rich. :)

Hopefully, after we buy you that Volt, you'll report back on how our car works out. :)

 
At 12/22/2011 7:47 PM, Blogger Ron H. said...

"My working assumption was only that high earners are typically smart, and if they are buying Volts, then it must be a smart thing to do. "

No, a "typical" high earner drives a Beemer , Mercedes, or Porche, and they buy millions of them. That must be the smart thing to do. The paltry 6k of Volts sold may be to those really dumb high earners who are only interested in flying a green flag for everyone to see.

 
At 12/22/2011 8:31 PM, Blogger Walt G. said...

The numbers thrown around here are pretty useless. We have a maybe $3 billion spread over a wrong 6000 units bought by an average earner of $170,000 with no median earner stated.

I agree the idea of subsidies is controversial; however, none of the numbers are worth mentioning or are very credible.

 
At 12/22/2011 9:16 PM, Blogger REB said...

Any of you volt fans ever considered what would happen to the price of electricity if everyone "bought" one tomorrow? You are just trading oil powered cars for coal powered cars. And don't even start with the solar energy crap. A basic understanding of thermodynamics will forever rid you of the notion that solar power will ever work on a large scale. You would have to suddenly become a huge fan of nuclear power, because that is the only way we could recharge all of those Volts at night.

 
At 12/22/2011 11:03 PM, Blogger juandos said...

"So being a high earner has nothing to do with smarts, education, and diligence?"...

One can be brilliant as a sack of gravel but if that person has something an employer wants and there aren't many around that can fill that need well that possibly 'dumb person' will garner the big bucks...

 
At 1/03/2012 6:21 PM, Blogger Mark said...

Sad to hear some people defending government (tax-funded) subsidizing of big business --even at the admitted expense of poor people suffering (not to mention dying) because of it (look at you Jon).

Large corporations already have enough of an advantage due to their economies of scale and ability to hire squads of lawyers and accountants to find loopholes--not to mention lobbyists to open loopholes. It is beyond socialism becoming fascism of the meanest sort to praise taking tax money from the poor or middle class and handing it over to large corps--"for the good of the society!"

 

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