Forum Post: Chevy Volt Costing Taxpayers Up to $250K Per Vehicle
Posted 12 years ago on Dec. 22, 2011, 4:23 a.m. EST by Teacher12
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Chevy Volt Costing Taxpayers Up to $250K Per Vehicle Analyst: 'This might be the most government-supported car since the Trabant' By TOM GANTERT | Dec. 21, 2011 Follow Tom Gantert on Twitter
(Editor’s note: This article has been updated with a reaction from a General Motor's official.)
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.
Hohman looked at total state and federal assistance offered for the development and production of the Chevy Volt, General Motors’ plug-in hybrid electric vehicle. His analysis included 18 government deals that included loans, rebates, grants and tax credits. The amount of government assistance does not include the fact that General Motors is currently 26 percent owned by the federal government.
The Volt subsidies flow through multiple companies involved in 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 (combination tax breaks and cash subsidies). These are among many of the subsidies and tax credits for the vehicle.
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. 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. Some tax credits and subsidies are offered for periods up to 20 years, though most have 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 subsidy milestones are realized.
If those manufacturers awarded incentives to produce batteries the Volt may use are included in the analysis, the potential government subsidy per Volt increases to $256,824. For example, A123 Systems has received extensive state and federal support, and bid to be a supplier to the Volt, but the deal instead went to Compact Power. The $256,824 figure includes adding up the subsidies to both companies.
The $3 billion total subsidy figure includes $690.4 million offered 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.
Additional state and local support provided to Volt suppliers was not included in the analysis, Hohman said, and could increase the level of government aid. For instance, the Volt is being assembled at the Poletown plant in Detroit/Hamtramck, which was built on land acquired by General Motors through eminent domain.
“It just goes to show there are certain folks that will spend anything to get their vision of what people should do,” said State Representative Tom McMillin, R-Rochester Hills. “It’s a glaring example of the failure of central planning trying to force citizens to purchase something they may not want. … They should let the free market make those decisions.”
“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.
According to GM CEO Dan Akerson, the average Volt owner makes $170,000 per year.
I may not necessarily like how it was done, but the fact of the matter is that the Volt is long, long overdue. I don't like that we import so much of our energy from a generally unstable, often hostile region of the world and I'm not exactly enthused with the idea of ripping up Alberta's tar sands and processing their extract for fuel either, but as long as America drives and as long as our cars require gas there won't be many other options.
The Volt is the first step in changing that; it's one of the first of its kind and as such is quite expensive to design, develop, prototype, and put out on the market. A cost of $250K per car in R&D incentives isn't that bad, and I'm pretty sure that once you overcome the initial hurdles and stop trying to kill it left and right the cost will come down further and it will develop quite a strong market for itself.
For everyone on here who's complaining about how electric car research is prohibitively expensive and wasteful, consider the fact that big pharma saw fit to throw well over 40 billion dollars into R&D this year alone (with the taxpayers picking up a fair amount of that tab with tax breaks and subsidies) and most of that research didn't go to groundbreaking or lifesaving treatment but rather to try to beat or extend patents on drugs we don't necessarily need anyway. If you're going to complain about where our money is going, do us the courtesy of getting your target right.
Of course the Obama administration supports this garbage to promote it's "Green Propaganda" and Union workers. We bailed out GM and the Liberal left CLAIMS they are paying us back. It sounds like the government is now giving them the money to pay us back.
Ah the next bubble continues to shear, it is leaking @ the seams, the GREEN bubble, the fallout is on the way....