Obama, the "Volt", and you

Obama's Car Puzzle

Excerpts:

[The Volt] is a car that, by GM's own admission, won't make money. It's a car that can't possibly provide a buyer with value commensurate with the resources and labor needed to build it. It's a car that will be unsalable without multiple handouts from government.

The first subsidy has already been written into law, with a $7,500 tax handout for every buyer. Another subsidy is in the works, in the form of a mileage rating of 100 mpg -- allowing GM to make and sell that many more low-mileage SUVs under the cockamamie "fleet average" mileage rules.

Even so, the Volt will still lose money for GM, which expects to price the car at up to $40,000.

We're talking about a headache of a car that will have to be recharged for six hours to give 40 miles of gasoline-free driving.

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Hardly mentioned is the fact that gasoline goes bad after a few months. If the Volt is used as intended, for daily trips of 40 miles or less, the car's tank will have to be drained periodically and the gas disposed of.

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If consumers really wanted green cars, no mandate would be necessary. Washington here is just marching Detroit deeper into an unsustainable business model, requiring ever more interventions in the future.

The Detroit Three will not bounce back until they're free to buy labor in a competitive marketplace as their rivals do. In the meantime, private money, even in bankruptcy, almost certainly will not be available to refloat GM and colleagues. Nationalization, with or without a Chapter 11 filing, is probably inevitable -- but still won't make them competitive.

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The simplest step forward would be to get rid of the "two fleet rule," devised by Congress's fuel-mileage managers to keep Detroit making small econoboxes in high-cost UAW factories. Dumping the rule would force the UAW to compete directly inside each company for jobs against cheaper workers abroad.

Even better would be to dump CAFE altogether. If Congress really thinks consumers must be encouraged to use less gas, replace it with an intellectually honest gas tax. Mr. Obama promised to transcend the old stalemates -- let him begin with the 30-year-old fraud that our fuel-economy rules represent.

He ran a brilliant campaign, but his programmatic prescriptions amounted to handwaving designed to capture the presidency rather than tell voters what really to expect. This may have been a virtue in campaigning but it becomes a handicap in governing.

Comments:

1. Obama: He ran a brilliant campaign, but his programmatic prescriptions amounted to handwaving designed to capture the presidency rather than tell voters what really to expect.
   
2. The Volt: a car that can't possibly provide a buyer with value commensurate with the resources and labor needed to build it.
   
3. You: If consumers really wanted green cars, no mandate would be necessary
   

More: I want "a green car". While I am 2 or 3 years off from replacing my sedan, I have my eye on a Prius. I'm (below) one of the skeptics that doubt that GM will survive - even with bailout money! It's the "don't chase good money after bad" argument.

Skeptics Present Another Obstacle for GM - Politicians, Analysts Doubt Firm's Ability to Effect Turnaround

The effort by General Motors Corp. to secure a federal bailout faces an overlooked hurdle: skeptical politicians, policy makers and industry analysts who don't think the world's largest auto maker is capable of turning itself around.

"Detroit has had a lot of time to understand what it takes to compete. They wouldn't stand up to the labor-union bosses, and now they're facing the consequences," said Rep. Jeb Hensarling, a three-term Texas congressman and chairman of a group of fiscally conservative Republicans. "We can't be in the business of picking winner and losers. What's next, the airlines? What about Starbucks or ....