Chevy Volt: Foolish Government Project?

The electric car continues to polarize

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Last week, to much fanfare, General Motors announced the sticker price of the Chevrolet Volt. At $41,000, many wondered if the extended-range electric sedan would catch on. The vehicle's electric battery stores enough charge to go 40 miles and then the gas engines takes it an additional 300 miles. After a $7,500 federal tax credit, the price drops to $33,500. Will the vehicle succeed in the marketplace? A number of intelligent voices are disputing the car's worth:

  • The Volt Is a Huge Mistake, writes Edward Niedermeyer at The New York Times: "For starters, G.M.’s vision turned into a car that costs $41,000 before relevant tax breaks... It also requires premium gasoline, seats only four people (the battery runs down the center of the car, preventing a rear bench) and has less head and leg room than the $17,000 Chevrolet Cruze, which is more or less the non-electric version of the Volt. In short, the Volt appears to be exactly the kind of green-at-all-costs car that some opponents of the bailout feared the government might order G.M. to build."
  • Don't Give Up on It So Easily, urges Jonathan Cohn at The New Republic:

The Volt is a new kind of vehicle. When you drive a conventional hybrid, such as the Toyota Prius, the car is constantly switching back and forth between electric and gasoline power. When you drive a Volt, the car draws exclusively on electric power until the battery is depleted. Only then does the car switch over to gas. Under normal driving conditions, you could go about 40 miles on the battery alone.

You can recharge the battery at home overnight, or in just a few hours if you have the right equipment, so that the car is ready to go on electric power again the next day. If you're using your car only for short drives, like a quick commute to and from work, it's theoretically possible you'd never use a drop of gasoline. Even now, the EPA isn't certain how to calculate the Volt's mileage.

  • This Is a Flawed and Elitist Government Project, complains Charles Lane at Slate:
The Chevrolet Volt, the new plug-in electric hybrid car from General Motors, will cost $41,000—that's a four-seat hatchback for about the base price of a BMW 335i. To be sure, a $7,500 federal tax credit cuts that to $33,500, and electricity is cheaper per mile than gas. But barring some huge oil price spike or stiff new gas tax, it would take more than a decade to offset the higher purchase price. Some will pay a premium for the frisson of going green or being the first "early adopter" on the block. Still, this little runabout is a rich man's ride.

And that's my problem with the Obama administration's energy policy, or at least with his lavish subsidies for the Volt, Nissan's all-electric Leaf (likely sticker price $33,000), and Tesla's $100,000 all-electric Roadster: Where does the federal government get off spending the average person's tax dollars to help better-off-than-average Americans buy expensive new cars?
  • That's a Preposterous Line of Thinking, counters Daniel Gross, also at Slate:

I appreciate Lane's concerns for the prerogatives of the working, taxpaying poor and the ways in which the wealthy benefit from favorable policy at the expense of those below them on the income scale. (It's certainly a welcome shift from Lane's call last December to cut the minimum wage.) But in his effort to tag this tiny financial effort as a wasteful sop to the rich, Lane misunderstands the process of innovation, economic history, and the current macroeconomic situation.

We're in a period of slack demand and low capacity utilization, with lots of empty factories, buildings, and stores. Companies are sitting on hoards of cash. In a time like this, they need special inducements—bribes, incentives, tax breaks—to make large new investments... Lane's article also ignores the historic role that government and public investment has played in developing new productive capacity, and in constructing commercial infrastructure and platforms that, while insanely expensive at first, become remarkably cheap in the long run.
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