The further to the left or the right you move, the more your lens on life distorts.

Sunday, August 01, 2010

The Volt

Now that GM has officially announced the price ($41,000) of its new plug-in hybrid electric vehicle, the Volt, it appears that commentators on both the Right and the Left are rushing to trash the car and the Obama administration for its efforts in promoting electric vehicle (EV) technology. That’s sad, short-sighted, and ill-informed.

The Volt is a revolutionary vehicle that will allow its drivers to avoid using any gasoline for the first 40 miles driven each day. For millions of Americans who drive fewer miles per day than that number, their daily gasoline consumption will be exactly zero. Yes, they’ll use electricity to charge their cars in their own garage or driveway each night, but power generation capacity is under-utilized at night, often generated with home-grown (e.g., coal, nuclear, hydro-electric)energy sources, and is considerably less expensive than the equivalent amount of gasoline.

On the Right, commentators suggest that tax-credits for the Volt are ill-conceived and that the government should not try to manipulate the automobile market. Such arguments are laughably disingenuous. The U.S. Government subsidizes industries of all kinds, often in ways that are both illogical and ill-conceived. Yet conservatives are somehow exercised over tax credits for a new transportation technology that is well-conceived and is an absolutely essential step in the long road to energy independence.

On the Left, some writers extend their knee-jerk class warfare arguments to the Volt. Charles Lane , writing in Slate makes the typical argument:
It's official: 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?

President Obama's ostensible goals are reducing both carbon emissions and the nation's dependence on foreign oil and creating "green" jobs. But it's far from clear that his program will actually achieve these laudable aims at a reasonable cost. And there are cheaper, more equitable policies.

So, the government has no right to subsidize “better-off-than-average Americans” to help them support a fledgling new transportation technology because, poor people won’t be able to afford the first few generations of the product? Following that logic, the federal government should have never built the Interstate Highway system because at the time it was conceived, only “better-off-than-average Americans” owned cars. Even more ridiculous, we should continue our oil gluttony hoping that some miraculous class warfare resistant technology is developed that will punish the “rich” while benefiting the poor. Puleeze.

Writers on both the Right and the Left cite studies from prestigious consulting organizations that project a small market for EVs. I’m old enough to remember similar studies that the very same consulting companies conducted during the late 1970s. Those studies projected small markets and limited growth for PCs. Need I say more?

So what do the Right and the Left propose? On the Right, the argument is to let the free market work without government intervention. The problem is that a market driven approach in the automotive area has tended to reinforce the status quo, and the status quo (foreign oil consumption) threatens our national security. On the Left, we get vacuous comments like Lane’s:
If the federal government wanted to dent carbon emissions and gasoline consumption without subsidizing a handful of rich consumers and client corporations, it would accept that the internal combustion engine is going to be the dominant technology for decades to come—and focus on getting more mileage out of it.

The Obama administration's toughened Corporate Average Fuel Efficiency standards may help in that regard, though they are suboptimal compared with higher gas taxes, which the president—like almost all other politicians—is loath to discuss. At MIT, a team led by engine expert John Heywood has recommended a gradual increase in the gasoline tax, phased in over years and rebated to low-income households, coupled with a system under which consumers would receive a per-MPG bonus every time they traded up from a less fuel-efficient car to a more fuel-efficient one—and a penalty every time they traded down.

I guess it never occurred to Mr. Lane that we can do both—improve gasoline fuel economy while at the same time encouraging a new automotive segment. I guess he has trouble understanding that increased gasoline taxes will hurt the “average middle class” driver far more significantly than a tax credit on PHEVs and EVs.

If I were conspiracy minded, I might conclude that all of the recent Volt bashing is a concerted effort by special interests who feel threatened by the PHEV/EV and want to destroy it before it has a chance to succeed. No, that’s paranoid. I’m sure those who are opposed are simply offended by our long overdue effort to do something about energy independence rather that just talking about it.