GM isn’t insane. Each time they sell one of these cars, it “allows” them to sell a Chevy Cruze.
It’s how they meet the federal mandate for fleet fuel economy standards. They can’t meet the numbers in real life, because the real world is run by physics that isn’t subject to the whims of the fanciful liberal mind.
So instead, they bribe people to buy these “fuel efficient” cars, which average in with their other cars to raise their fuel economy standards.
Note that every car is assumed to be driven the same amount. So they don’t care if you ever use the electric car, just that they sell it. In fact, most people who have electric cars drive them less; not a bad thing perhaps — these people are the kind of people who would drive less because it’s good for the environment to do so. But it means that the whole process is flawed.
You sell a 20-mph SUV, and one of these electric cars that maybe are considered infinite mpg vehicles (Volt had an EPA number, I don’t remember if the leaf did or not). A car that uses no gas, averaged with teh 20-mph SUV, gives you a “fleet average” of 40 mpg. But the SUV gets driven 20,000 miles a year, the electric car is used for short commutes and drives maybe 8000 miles per year. So in fact, you might have raised mpg to 24 or 25, not 40.
We don’t have a free market making decisions for automobile manufacturers, because they have to meet this fleet standard.
But the big car manufacturers do like these standards, for one big reason — they pretty much lock out any new car companies. See, if you have billions of dollars of taxpayer money, you can throw it away on electric cars, sell your big SUVs, and hit the fuel standards.
If you wanted to start a new company, you’ll make ONE car. That ONE car has to meet the standard, so it has to be a small car, which people don’t want to buy . You can’t subsidize it to get it sold, because you don’t have a gas-guzzler that people WILL buy. So, the big three “reluctantly” accept government regulation that gives them a lock on the market.
There’s a reason all the upstart companies are making electric or alternate fuel vehicles — it’s the only cars they can make under regulations (they also can get some of the taxpayer dollars, so in the end it’s a big tax avoidance scheme).
Which is the other big thing. Rich liberals don’t mind getting their income taxes raised, because they’ll still get deductions and tax credits when they invest their money in these green alternate companies. They don’t care if the companies go under, because they invest in order to cover their tax liability.
That’s why they won’t allow the removal of deductions. The liberals fight that, because they use deductions to reward their voters and to force people to do what government wants.
I believe these cars would be a complete bust without the tax credits.
Excellent post. Also it needs to be said that electrics are MANDATED in Crazyfornia. If you don’t sell some electrics, you can’t sell any cars at all.
And Crazyfornia is too large a market to spurn.
http://content.usatoday.com/communities/driveon/post/2012/01/environmentalists-laud-californias-electric-car-mandate-/1#.UL0RfXdkiSk