After enduring years of Chevy Volt hype, we now get a new "new best thing" from General Motors in the form of an electric version of the Chevy Spark. And I have it on good authority that the Spark will be made in Korea.
The media seems to be pretty excited about the prospects for yet another green vehicle entry from Government Motors, despite the fact that the Volt did not exactly live up to the hype. Well, fool media once, shame on GM; fool media twice, shame on media.
What is the motivation behind GM producing yet another electric small car after sales results and surveys show that electric vehicles are not quite ready for primetime? GM says it wants to compete with the Nissan Leaf. Why try and compete with a vehicle that is only selling about 1,000 vehicles per month? Especially when producing electric vehicles is not yet profitable and requires loads of tax subsidies to compete. It's really hard to see the logic behind GM staking more credibility on another green venture and even harder to understand why many major media sources would not cover the news with a bit more skepticism.
Another very important question regarding the electric Chevy Spark production is, "where will it be built?" Will the technology be shared with China by SAIC so that GM can benefit from the huge Chinese subsidies? Will the taxpayer money that was used to bail out GM and then develop electric cars go towards creating green jobs in other countries while neglecting the American public that paid for the job creation? According to GM North America Director of Communications, Greg Martin, both conventional and electric versions will be built in Korea. I must add that Greg is an upfront guy that has been straight with me, despite my criticisms of GM. It is good to see at least some executives at GM acting in such a professional manner. It is not so good, however, to see taxpayer money benefiting Korea while the media helps hype the product made there.
The conventional Chevy Spark entry by GM is a couple of years late to the party. Mini car demand has died down over the past couple of years. Ford's subcompact entry, the Fiesta, sells at the rate of about one fifth of the mid-sized Fusion. About three years back, the mini-sized Honda Fit and the Nissan Versa were hot cars. Following a spike in gas prices, consumers flocked to the vehicles. Newer entries to the field, such as Ford's Fiesta and the Mazda 2, have not seen the same kind of success. Part of the problem for the current field of mini cars is that mpg ratings for roomier and more comfortable compacts, like the Hyundai Elantra, have improved and now have breached the 40 mpg mark. The new Spark will get an mpg rating in the low 40s. Unless the vehicle gets a significant advantage in mpg over competitors combined with an increase in gas prices, I would not expect sales to knock the cover off the ball. GM shareholders, including the US taxpayers, should not be encouraged by the direction the company is going; particularly if the decisions being made are based on political motivations rather than economic ones.
Certainly GM management knows the current environment is not conducive to the success of the Chevy Spark, especially in an EV version. At least I hope they are competent enough to be aware of that, maybe I give them too much credit. Now we have to question the logic behind the rush to electrify America's auto fleet. Is the Obama Administration influencing the decisions at GM? Does crony capitalism come into play, with Obama crony-led GE (who benefits from building charging stations and is one of the single largest holders of electric battery maker, A123, shares) playing its part? Or is this just political correctness and herd mentality run amok?
America's leaders should take a close look at the continued folly of blowing taxpayer money to subsidize so-called green initiatives like GM's electric cars or, for that matter, the ethanol industry, solar panel companies and wind farms (an area GE also benefits from.) Paul Chesser, of American Tradition Institute and NLPC Associate, also makes these points in his piece today . Before pursuing the electrification of the US auto fleet some thought should be given to electrical grid strain and lithium battery environmental issues. Although I am sure GE can help improve the grid at a mere cost of billions of dollars to taxpayers. The country just can't afford to keep throwing taxpayer funds at money-losing ideas that have debatable benefits to society. And it adds insult to taxpayer injury if vehicles like the Spark are produced in Korea.
Maybe GM has other reasons to produce another green vehicle. As I recently mentioned on a Fox Business (one network that has laudably questioned the Spark) interview, GM has admitted that it uses the Chevy Volt as a lure to attract consumers into showrooms , only to sell Chevy Cruzes. GM says that producing a Cadillac version of the Volt will help sell conventional Cadillacs. This wouldn't be as much of an ethical issue if taxpayers weren't footing a portion of the bill for electric vehicle production. The mainstream media has done its part to help GM hype the Volt. Maybe GM feels it can use that same strategy with the electric Spark, perhaps at a future time when GM knows that the Volt hype will be running out of steam (or coal.) Or maybe GM hopes to get yet even more taxpayer money from their friends in power to produce green vehicles; the same friends that purchased 26% more GM vehicles in September, year over year, at a time when hypocrites in office say government needs to cut spending.
The focus on electric vehicles also may be slowing other alternative answers to America's desire to cut fossil fuel consumption; alternatives that would not strain our electrical grid or wallets. Natural gas vehicles, clean diesel and bio-diesel vehicles along with conventional hybrids have great potential and the economics seem much more feasible than electric vehicles that guzzle more taxpayer dollars than fuel. The latest hybrid version of the Toyota Prius is rumored to get about 60 mpg while costing close to $20,000. No range anxiety, no $7,500 tax subsidy and half the price of a Chevy Volt. How much more logical is this vehicle that can compete in a free-market system without taxpayers footing the bill than the GM entries? But logic is the one element that seems to be missing from the green energy initiatives that are costing America billions of dollars while benefiting foreign countries.
Mark Modica is an NLPC Associate Fellow.
