Posts tagged ‘Volt’

April 14, 2012

The Chevy Volt: Mistake or Magic?

General Motors will suspend production of its highly touted Volt next week resulting in the loss of 1300 jobs. GM has sold just three-fourths of the gas-electric hybrid cars it had projected to sell due at least in part to bad publicity generated by the National Highway Traffic Safety Administration’s (NHTSA) investigation into Volt batteries catching fire. The bad news continues.

Taxpayers are still on the hook for more than $25 billion from GM following the controversial 2009 bailout. Conservatives have said people don’t want to buy a car from “Government Motors” and that because the Treasury holds 500 million GM shares, the bailout amounts to a government takeover. In addition, they say the bailout was intended not to save GM but to save the United Auto Workers Union for purely political reasons. A recent headline in a leading conservative-leaning publication read After Volt Debacle; Obama Calls for More Spending on Car Batteries.

Was the right wing right on this one?

GM will stop production and send some folks home for a month, March 19 to April 23, to align production levels with the admittedly disappointing sales, 7600 instead of the 10,000 initially projected by this time. The battery fire story that broke last November hurt sales. The NHTSA finding that “no discernable defect trend exists” in the battery, and revisions made by GM which “reduce the potential for battery intrusion resulting from side impacts” in January came too late to rescue sagging sales and wasn’t as widely reported as the more sensationalistic “fire” story. With that episode in the past GM doesn’t anticipate another temporary plant shutdown.

The bailout may or may not fit a person’s ideological inclinations but it worked if you measure success by profits, jobs and the national economy which could have only fared far worse if GM had died. Mitt Romney said “the companies would have been even more competitive if the private sector rather than the Treasury Department had funded the reorganization.” That is a big “if,” Mitt.

There were no private sector interests, singly or collectively, that could gamble tens of billions in the midst of the Great Recession. It was the Federal Government or not at all. Taxpayers are probably not going to get all their money back on this deal, at least anytime soon, but the approximately $15 billion that could remain unpaid is well worth the country’s investment. Consider the 1.5 million job losses to the present economy, the end of GM and Chrysler and their suppliers. Those cars would now be built overseas if the U.S. auto giants failed.

Rick Santorum said the bailouts were “injurious to capitalism” immediately following news that GM made a record $7.6 billion profit last year while grossing $105 billion, both company records in its century long history. In addition, GM sold 640,000 more total autos than in 2011. All capitalistic endeavors should be so injured. Yes, it’s possible that Obama was just handing out welfare to auto workers for political gains as the most cynical right wing pundits still maintain but with success like this, who really cares?

The Volt has lowered its base price to about $39,000. It cantravel 35-40 miles on battery power alone then an additional 300 miles at 50 MPG on electric power generated via a small gasoline motor.

Tags: , ,