It was former South Dakota Senator and Washington insider and power broker (that’s not a compliment) Tom Daschle (Democrat, of course) who said that to professionalize, we must federalize. He was speaking of the establishment of the Transportation Safety Administration in the aftermath of 9-11. And we now know that the ultra-professional TSA provides fast, courteous and outstanding service in America’s airports as it gropes terrified four year-old girls, and expertly probes the diapers of the wheelchair bound elderly, when it’s not stealing their consumer electronics or producing electronically scanned porn. So with our experience with the professionalism of the TSA firmly at the forefront of our minds, let’s consider the proposition that government involvement in business, particularly the car business, is a great benefit to mankind.
ITEM: Like many of you, after buying a brand new car, I’ve often misplaced and forgotten about it, only years later, when the warranty was nearly expired to one day wake up and ask myself: “Hey! Didn’t I buy a new car three years ago? Whatever did I do with that? Maybe the sock drawer…” Absurd? Not if you’re the government of Miami-Dade County that bought 298 brand new vehicles, most of them Toyota Prius hybrids between 2007 and 2008.
The county ‘discovered’ this fleet of no-mileage vehicles after reading about them in a Spanish-language newspaper… Most of the misplaced motorcade is made up of Toyota Prius hybrids whose warranties either expired with very few miles on the odo or will very soon.
Looking to save some face, the county has rushed at least 123 of the hybrids into service. The Toyota warranty covered the hybrid bits for eight years or 100,000 miles, but we’re not sure if that covers cars parked for five of those eight. We’re also not sure what that much time in Miami heat and humidity does to an unused hybrid powertrain, but it can’t be good.
The county, as you probably guessed, is looking into how it lost so many cars. The leading theory is that they might be part of Carlos Alvarez’s time as mayor. He was the mayor during the period the Toyotas were purchased, but a 2011 recall election successfully removed him from office. Apparently the voters ‘felt, among other reasons, that he had been behind multiple acts of misappropriation of funds.’
You don’t say.
ITEM: But let’s turn our attention to the continuing saga of our continuing ownership in General Motors, producer of the electric wonder car—which also happens to require premium fuel to obtain less mileage than many conventionally powered and far less expensive vehicles—the Chevy Volt.
From The Truth About Cars, Bertel Schmitt reports that GM’s CEO Dan Akerson jumped the shark. Akerson said:
we are not backing away from this product,
Akerson also promised more advertising and less volume. Unfortunately, Akerson apparently got caught up in the wonder of the Volt and said:
Toyota sold about the same amount of Prius in its first year as the Volt in its first year.
Schmitt sorted out the unicorns and fairy dust:
The Toyota Prius was launched in Japan in December 1997. In its first year, the Prius sold some 18,000 cars.
The Chevrolet Volt was launched in the U.S. in December 2010. In its first year, the Chevrolet Volt had sold some 8,000 cars. That would be less than half of what the Prius sold in 1998.
Ah, but fellow GM co-owners, it’s even worse than that!
The Prius was launched in Japan only and was not sold in other markets until the year 2000. In 1998, the market in Japan was 5.9 million cars.
The Chevrolet Volt was launched and sold in the U.S. In 2011, the size of the U.S. market was 12.8 million units.
In the first year, the Volt sold half of what the Prius had sold in the first year. And that in a market twice the size.
Oh dear. Unlike General Motors, Toyota appears to understand free market capitalism. Its various Prius models are doing well, and with no help from the Obama Administration. How is this possible? Does Julia know about this? Since he’s supporting her on the taxpayer dime from cradle to grave, won’t Mr. Obama give her a Volt at taxpayer expense?
ITEM: So, OK, the Volt is still a disaster and the head of General Motors doesn’t seem to understand economics or the auto business. What could possibly go wrong? I’m glad you asked.
Fox News’ Gary Gastelu recently published a review of the new Chevrolet Malibu Eco, which is not an acronym for “Environmental Corruption Option,” but the designation for the hybrid version of the Malibu that is powered by a 2.4-liter four-cylinder engine augmented by an electric motor and “smallish battery.”
One would think, considering the fact that the hybrid market is well-populated with established vehicles from other manufacturers, that Chevy would design a competitive vehicle. If you would think that, you’re not thinking about the federally owned and controlled GM.
Gastelu likes the interior of the vehicle, and thinks the overall appearance to be “a much more interesting look than the car it replaces…” However, as with the Volt, the proof is in the pricing:
The Malibu Eco has a base price of $25,995 and a fuel economy rating of 25 mpg city and 37 mpg highway. Good by conventional car standards, but the $26,660 Toyota Camry Hybrid gets 43 mpg city and 39 mpg highway, so game over there. Further complicating Chevy’s marketing position is the $21,570 Hyundai Sonata that delivers 24 mpg city, and 35 mpg highway without any sort of hybridization whatsoever.
My conventionally fueled 2011 Ford Fiesta beats both of those mileage figures by considerable margins and costs far, far less. Gastelu suggests that the vehicle was rushed to market before the engine planned for it was ready so as to capitalize on the “momentum” Chevrolet has lately been enjoying [Momentum? I wasn’t aware Chevy was experiencing any “momentum.”] so it could compete with new hybrids soon to be introduced by Ford and Honda. So Chevy has marketed a new car that doesn’t compete effectively in any particular way. Uh-huh. Sounds like a government run operation.
ITEM: But wait a minute: Isn’t Mr. Obama talking about killing Bin Ladin himself with a rusty can opener, and single-handedly saving the American automobile industry? Indeed he is, but Investor’s Business Daily has a somewhat different take. According to IBD:
Bank of America, Citigroup, Chrysler and Chrysler Financial all have paid off their debt and left the TARP program. Even AIG has paid back more than 75% of what it owes taxpayers.
GM, however, is not quite so solvent. Let’s not mention—as I did in my last Volt article —that GM recently bought a substantial stake in Peugot with taxpayer money, which is rather like buying shares in Solyndra—today. IBD notes that GM:
‘…still owes more than half the $50 billion in federal funds it received when the combination of the recession and its costly union contracts drove it into bankruptcy. And its lending arm, GMAC (now Ally Financial), still owes $14.5 billion.
What’s worse, it’s not clear that GM actually repaid what it’s gotten credit for repaying. Check out this note buried in the inspector’s report: ‘As part of a credit agreement with Treasury, $16.4 billion in TARP funds were placed in an escrow account that GM could access only with Treasury’s permission.’
As it turns out, GM got Treasury’s OK to ‘repay’ more than $6.7 billion ‘using a portion of the escrow account that had been funded with TARP funds.’ So GM is merely paying the government back with government money, not money GM is earning selling cars, as the administration has claimed.
Worse, GM in effect is still borrowing money. Consider this item from the report: ‘What remained in escrow was released to GM.’ Bottom line: Taxpayers have not been paid back and are still on the hook as GM continues to require government help. Yet Obama has hailed the GM bailout as the signature achievement of his big government programs.’
But GM is the #1 auto manufacturer in the world, right? Thanks to Mr. Obama, right? Not quite.
GM edged tsunami-crippled Toyota by counting sales at its joint ventures in China, which aren’t wholly owned subsidiaries. And the government is directly subsidizing new GM auto lines like the star-crossed Chevy Volt.
Ford, which didn’t take TARP funds, grabbed market share from GM and is now more profitable. Ironically, Ford for the first time in years has outsold GM in the number of cars bought by the federal government – although Washington still owns a huge stake in GM. Not exactly a vote of confidence.
In North America, Ford just recorded its highest quarterly profit since 2000. GM missed profit estimates in the fourth quarter. And analysts are not sanguine about its first-quarter results due Thursday.
Hmm. So what I’m trying to say is that Mr. Obama is trying to take credit due others and claiming success that doesn’t exist? Why yes, I do believe that’s what I am trying to say. And I’m also trying to say that GM is a government-sponsored mess? Why, yes, I’m trying to say that too.
But wait another minute! Hasn’t Mr. Obama denied that he or his administration have any hand in the day-to-day operations of GM? He has indeed. However, there is reason to believe that the best way to determine that Mr. Obama is lying is when his lips are moving, and so it would seem in this case.
ITEM: At PJ Media, Stephen Green reports:
Seton [Motley]‘s piece looks at Chevy’s decision to kill the Avalanche for poor sales performance (but not the Volt), correctly pointing out how insane this is:
A Volt which the American people don’t want to own. Made by General Motors, of which the American people are still forced to own 33%. As the result of the $83 billion auto bailout–on which we’re poised to lose more than $30 billion.
He provides additional illumination:
’In his recent book, Car Guys vs. Bean Counters’, former GM Vice Chairman Bob Lutz claimed: ‘There were rumblings from prominent Democrats that ‘if they get our money, they’re going to produce the kind of vehicles we want them to produce.’
You don’t say. Greene notes that the Obama Administration (according to a DOE report), expected GM to sell 10,000 Volts a month, and GM expected 5000. In reality, the Volt’s biggest month was March of 2012 at about 2000 Volts, and considering last year’s total was around 8000, GM’s average monthly Volt sales have been abysmal, and the factory is currently shut down because GM has nearly its first year of production merely sitting around waiting for sufficient dealers willing to stock them.
But that’s not all:
If you want to pretty-up the P&L of a car company, there are two quick fixes: You cut marketing expenses, or you cut R&D. A cut of R&D expenses won’t show up negatively for three to five years, when you suddenly lack new cars to sell. In the meantime, you look like a hero. General Motors plans to cut about a quarter of the workers at its R&D facility at the Warren Technical Center in suburban Detroit.
Kaus asks, ‘Why would GM cut R&D so profits look good in the short term? Is something happening in November?’
And that’s the problem with crony capitalism. Let’s pretend for a moment GM is making the right move here. But it would still appear that GM has made a political decision for Obama’s political gain.
ITEM: And in other EV news, we learn that things aren’t electrifying for China either. Joe McDonald for the AP notes:
In 2009, they [the Chinese] announced bold plans to cash in on demand for clean vehicles by making China a global power in electric car manufacturing. They pledged billions of dollars for research and called for annual sales of 500,000 cars by 2015.
Today, Beijing is scaling back its ambitions, chastened by technological hurdles and lack of buyer interest. Developers have yet to achieve breakthroughs and will be lucky to sell 2,000 cars this year, mostly taxis. The government has hedged its bets by broadening the industry’s official goals to include cleaner gasoline engines.
Amazingly, the laws of physics seem to be the same on the opposite of the world:
China has run up against the same technical obstacles as anyone else,” said Michael Dunne, president of Dunne & Co. Ltd., a Hong Kong-based industry researcher.
Wary consumers have been put off by news reports of batteries in Chinese-made cars catching fire. A lack of charging stations is causing ‘range anxiety’ — fears a car might run out of power, leaving the driver stranded.
U.S. sales of electric cars have also been disappointing. After a year on the market, electric cars still make up less than 1 percent of total U.S. sales. General Motors Co. fell short of its goal of selling 10,000 Chevrolet Volt electric cars in 2011, ending up with sales just over 7,500. Nissan sold 9,674 Leaf electric cars, also short of its goal of 10,000.
As in China, the lack of a recharging infrastructure and anxiety about the range of electric cars are big barriers for consumers. Cost is another issue. The Chevrolet Volt, for example, costs nearly $8,000 more than the similarly sized gas-powered Chevrolet Cruze. Auto shopping site Edmunds.com estimates it would take a Volt owner six years of gas savings to pay off that premium.
And as in America, Chinese government leaders think it’s just a matter of better rhetoric:
’We’ve only just begun in electric car development,’ the premier wrote. Wen said Chinese leaders shared in the blame: ‘We have not set clear enough goals of which way to go.’
ITEM: The National Fire Protection Association is now providing training for firefighters in a seldom seen, but deadly hazard: dealing with Volt batteries:
Safely disabling the batteries tops the list. High-voltage batteries that operate the vehicle systems carry enough juice to kill or severely injure a rescuer who incorrectly cuts a cable.
So that explains why the NHTSA didn’t force GM to make substantial safety upgrades to each Volt. There’s no danger to the public; nothing to see here, move along, move along. The Feds will trust GM to do it on their own.
And we now discover that at least six Volts have experienced spontaneous combustion.
Three of these were at the hands of the government during the course of crash testing. The feds waited about six months to tell the public. The other three involved Volts in private hands; those Volts were not involved in accidents; they simply burst into flame for no particular reason.
…Joan Claybrook, a former administrator at NHTSA believes part of the reason for the delay was the ‘fragility of Volt sales.’ Yet she also believes that ‘NHTSA could have put out a consumer alert, not to tell them [customers] for six months makes no sense to me.’
The three non-crash involved fires remain unexplained. The likely cause, of course, is the very nature of lithium-ion batteries, which contain volatile substances that must be kept separate. If they combine through so much as a pinhole, fire, even explosion, is the rapid and inevitable result.
Thanks goodness the Obama Administration has declared the Volt to be completely safe while GM is quietly encouraging Volt owners to get their vehicles to dealers for all manner of enhancements, no doubt, to make them even more safe than completely safe.
ITEM: But before we go, let’s stop by an article by the Instapundit, Glenn Reynolds, first published back in 2011.
Reynolds managed to wangle a Nissan Leaf for several days for a test drive. Read the entire article, but Reynolds does confirm the insurmountable difficulties of the breed:
First, what about range anxiety? I can attest that it’s a real phenomenon. Part of that is the “miles remaining” display on the dash. When I picked the car up it wasn’t fully charged. The range display showed 83 miles, and the time-to-full-charge, even on the dealership’s 240v charger (which takes 6-8 hours for a full charge from empty) was about an hour. I didn’t have time to hang around that long, so I drove it to the Law School on Alcoa Highway, going about 55 mph. The distance is about 9 miles, and the display — which is based on a moving average of consumption — only dropped to 77. Driving home on back roads took it down to a further 67, but then driving around later, with headlights and climate control on, quickly dropped it to about 44.
And what about power-robbing accessories like air conditioning or heating?
Of course, the weather was perfect for maximum range as I didn’t have to make much use of the air conditioner or heat, both of which are (naturally) electric. Just turning on the A/C immediately drops the indicated range by over ten miles.
Reynolds also notes the price, which is high, but figured he might be able to do about 90% of his normal, daily driving with the Leaf.
On one hand we have the Leaf, which is a pretty nifty vehicle in some ways, but is electric only. When you’re out of juice, you have an enormous paperweight that’s not moving until it’s been charged 6-8 hours. It’s also far more expensive than a great many conventional, high-mileage vehicles. The Leaf is a car for people who can afford a second car that is functional only as a short-range commuter that requires substantial advance planning before every trip: How much is it charged? Will I need to use the A/C, heater, lights, radio, run indicators, etc.? It says I have 46 miles of range, but what do I have really? Am I sure the round trip to the grocery store is 28.3 miles, or might it actually be—horrors!—28.6 and leave me stranded? For such people, it might be a reasonable choice, but it simply cannot function as the only car for a family, and of course, in truly cold climates, it would be all but useless. Talk about range anxiety.
On the other, we have the Volt, which is specifically built to address the electric range issue, but because it must have two complete sets of propulsion gear—electric and gasoline—and because both sets must seamlessly interface, it is far heavier than comparable vehicles. Like the Leaf, cold weather is its electric Kryptonite. But the largest problem is its sky-high price. Produce a Volt selling for around $26,000, and it could reasonably compete with at least some other compacts—if the potential of its battery to burst into flame or its charging cable to melt can be safely ignored—but absent that, the Volt remains what it always has been: an engineering exercise that should never have left the lab, particularly on the taxpayer’s dime.