As regular readers know, from time to time I provide the most recent information in the ongoing slow-rolling electric vehicle debacle. This particular boondoggle provides elements of all great theater: drama, comedy, pathos, and of course, farce. Today’s installment continues in that grand theatrical tradition, so let’s pull the curtain and begin.
While sales of the Chevy Volt have improved over its dismal first year, they remain far below what any rational, ongoing business could possibly sustain. We know from past articles in this series that GM loses huge amounts of money on every Volt in the manufacturing process alone, yet they keep producing the vehicle.
“Sales of plug-in electric cars fell slightly in November, with continued steady sales of the Nissan Leaf not enough to make up for a decline in Chevy Volt numbers.
This month’s total may not quite equal last month’s plug-in sales of 6,784. The big unknown, however, is deliveries of the Tesla Model S–which Tesla won’t discuss.
With just a month left in the year, up to 50,000 electric cars are likely to find buyers during 2012–almost triple the 2011 total of about 17,500.
This year’s sales leader, the Chevy Volt range-extended electric car, logged 1,519 sales.
That brings the Volt’s total so far this year to 20,828, though the November number is barely more than half the October total of 2,961–a number helped by now-expired sales incentives.
‘Volt sales were modest in November due to availability in most key markets including California, our largest market,’ said GM spokesperson Michele Malcho.
‘We had a really low daily stock for most of the month,’ she continued, ‘and expect to have more Volts available in December.”
What GM is not saying is the number of corporate sales versus private sales that make up the increase in sales in 2012. As I’ve noted in past articles, General Electric and the Federal Government have promised to buy thousands of Volts, but no one seems to be talking about how many, how much they cost, and when they’ve been purchased.
One of the downsides of EV ownership that will not be going away is charging time, and in the case of the interruption of electric service, a lack of electricity itself. Fox News reports:
“The debate about the value of electric cars just got another jolt.
In the aftermath of superstorm Sandy, unprepared electic vehicle owners in the Northeast were out of luck. With power grids and public charging stations down there was, and in some places still is no way to get energy into their cars.
According to automotive analyst Thilo Koslowski, the storm has revealed the one major vulnerability with electric cars: that a backup infrastructure is almost non-existent.
‘If the outages continue, this will negatively impact consumer interest,’ he told FoxNews.com. ‘We will need to address the issue of electricity shortages if we want to have a growing share of EVs.”
The entire article is worth reading, but consider two things: Mr. Obama has made clear–before his first election and thereafter by closing as many coal-fired power plants as possible, his desire to see electric costs “skyrocket.” Consider too this bit of common sense from the EV experience in Spain:
“The technology surrounding EVs is said to have failed and enthusiasm wanes from consumers, but in reality it’s just easier to fill up on gas. There has to be infrastructure, incentives and benefits to change the mindset of an entire society,’ says Manuel España, a telecom director at Neoris.”
Cold weather makes EV’s all but useless, and electrical outages useless indeed. But not to worry; the Obama Administration is riding–electrically, of course–to the rescue. That is, if by “rescue” you mean wasting huge sums of taxpayer dollars on yet another green debacle. Fox News reports:
“Whether you like it or not, you are an investor in the electric vehicle (EV) battery of tomorrow.
Late last week, the Department of Energy announced plans to spend $120 million to establish a major battery research center at the Argonne National Lab outside of Chicago. The stated goal: to create a new “Manhattan Project” that will develop an EV battery in the next five years that lasts five times as long and costs one-fifth as much as current EV batteries.
And they say it’s all in the interest of national security.”
National security. Right. But this is actually a good thing–isn’t it?
“The taxpayer is an investor, so what can we do that pays the investor back? The answer is security – to do our best to use energy inside the boundaries on our soil,’ says Jeff Chamberlain, the deputy for development and demonstration at JCESR [the Joint Center For Energy Storage Research, the new battery lab]. Chamberlain says the U.S. imports a billion gallons of oil per day. But if even 5 percent of drivers switched to EVs, that could mean $100 billion in battery purchases that would be powered largely by domestically produced energy.”
Hmm. Don’t we currently have sufficient energy reserves to make all but superfluous the importation of oil, and isn’t Mr. Obama refusing to allow the development of those reserves…Wait a minute: the new lab is in Illinois, outside Chicago? You don’t suppose there is any crony capitalism involved? Nah! Barack Obama would never stand for it, particularly in Illinois!
“The Chevy Volt sticker price is $40,000. If we can have a battery with five times as much energy [as the one in the Volt] at even a third of the cost, then those vehicles become cost competitive with gas vehicles. If they are competitive on the lot, and they can save on costs to drive, people will buy them,’ says Chamberlain.”
And if my grandmother had wheels, she could be a wagon. Why can’t private industry do this? After all, if the technology was feasible, wouldn’t there be real profit involved? A battery with five times as much energy at a third the cost? That would be a Nobel Prize accomplishment and a financial windfall. What private company wouldn’t want to pursue that it if was even remotely possible? Silly readers. Government is our mother and father. It nurtures and protects us:
“Batteries have made their way into every form of our life,’ adds Amy Francetic, an executive director of the Clean Energy Trust based in Chicago [another amazing coincidence!], a business accelerator that helps transfer government research to industry. ‘Any time [something] is critical to our way of life, or an advancement of industry, it should be the role of the US government. It is hard to make those advancements without the US government.”
I had no idea there was any such thing as a “business accelerator.” I wonder if amphetamines are involved? And now for a brief message from obviously crazy people who don’t appreciate the wonders of government:
“This is the definition of a money hole,’ says Rob Enderle, an analyst who has studied battery innovations. ‘They aren’t going to the Moon, they are just making something that exists better and setting goals that can’t be achieved in a reasonable time.’
Enderle says a better plan would be to focus on a specific goal, such as figuring out how to improve the energy grid for charging a growing number of EVs, or to invent a new wireless charging technology so the electric cars of the future don’t have to literally plug-in.
Ozzie Zehner, a visiting scholar at UC Berkeley STSC and the author of ‘Green Illusions,’ says the main problem with funding government labs for electric car research is that the U.S. should look for entirely different green initiatives to fund, and to stay out of the EV market.
‘Both the National Academies and, more recently, the Congressional Budget Office, have found no benefit to the environment from subsidizing electric cars,’ Zehner says, arguing that taxpayer money could be wasted.”
Hmm. So the National Academies and the CBO find no benefit from subsidizing EVs? Aww, what do they know? With such exciting EV news, surely dealers are clamoring for every EV they can get their hands on? Not so much. Autoblog.com reports:
“Automotive dealerships are accustomed to training sales and service professionals when new models arrive, but the plug-in hybrid Chevrolet Volt – and its pricey additional tool and equipment costs – is frustrating some low-volume retailers to the point of dropping the model from the showroom. A recent report says that a few discontented dealers have stopped carrying the innovative sedan because General Motors is requiring a more significant investment in the near future, and the specialized costs (in excess of $5,000) aren’t offset by the model’s slow sales at those establishments.”
But with “skyrocketing” sales in 2012, aren’t dealers responding? Again, not so much. It seems capitalism and actual economics, as opposed to Obamanomics, still have some application in the real world:
“This time last year, Chevrolet had 2,614 stores certified to sell its Volt (out of 3,079 dealerships). A full 70 percent of the sales were generated by the 300 highest-volume dealers – leaving 2,314 dealerships to fight for the remaining 30 percent. Some of those non-metro stores, like Jim Barnard Chevrolet in Churchville, NY, have sold just five units in the past two years (they are understandably opting out).”
And speaking of economic reality, how are the finances of the auto bailout going? About as well as you’d expect, unless you’ve swallowed a whole pitcher of Obama Kool Aid. Real Clear Politics reports:
“You may recall that during the presidential election, the Treasury Department refused requests by General Motors to unload the government’s stake in the giant automaker.
Taxpayers had sunk $50 billion into a union bailout in 2009 and were now proud owners of 26.5 percent of the struggling company. Reportedly, GM had growing concerns that the stigma of ‘Government Motors’ was hurting sales in the United States. At the time, any transaction would have come at a steep loss to taxpayers and undermined the president’s questionable campaign assertions that the auto union rescue had been a huge success.”
What?! The auto bailout has not been a huge success? But Mr. Obama said it was! How can this be possible? Read on:
“Well, now that the election is over and the Treasury Department is freed of political considerations, it plans to sell its 500 million shares of stock over the next 12-15 months and ease its way out of the company. GM will buy around 200 million shares at $27.50 per share by the end of the year. GM’s buy brings taxpayers back to around $5.5 billion of the $27 billion the company still owes. The Special inspector general for TARP estimated in October that the Treasury would need to sell the remaining 500 million shares at $53.98 a share just to break even on its investment.”
And how are GM shares doing these days? In December, 2012, about $27 per share. But that’s not so bad–is it?
“That, in the Obama era, is considered a successful transaction between the state and private industry. So successful that you’ll also remember that during the campaign, Obama maintained that ‘what we did with the auto industry, we can do in manufacturing across America.”
So Mr. Obama can lose billions in other manufacturing industries too? And he thinks that’s a good thing? That explains quite a bit, including the fact that the auto bailout was more a union bailout than a bailout of independent, private manufacturers.
“The Treasury Department has just revised its estimate upward to $25 billion in losses, and it will probably be more than that when it’s all said and done. Taxpayers suffered a $2.9 billion loss in Chrysler (the carmaker had received #12.5 billion through TARP programs) in 2011.”
But other than all that, government involvement in picking winners and losers–actually, as Mitt Romney said, in picking losers–is a great idea.
But how about high-end companies like Fisker, the manufacturer of EVs costing more than $100,000 and the recipient of federal largess in several forms? Aren’t they prospering? Not so much, and they’re soaking Delaware too. Fox News reports:
“Delaware taxpayers appear to be getting soaked twice under a deal in which the Democratic governor loaned $21.5 million to a hybrid electric carmaker to set up shop in the state. The company has yet to produce a car in Delaware, and taxpayers are footing the electric bill for the idle plant.
The deal was enthusiastically announced in 2009 by Gov. Jack Markell and Vice President Biden — formerly Delaware’s senior senator — as a way to bring as many as 2,500 green jobs to the state. But California-based Fisker Automotive Inc. has since suffered a series of setbacks that have compounded its shaky financial situation.
‘It has not worked out the way he had envisioned,’ Markell spokeswoman Cathy Rossi acknowledged Monday in a statement to FoxNews.com. ‘We didn’t know and couldn’t have known about the underlying technical and financial problems.’
Delaware reportedly has paid at least $400,000 in utility bills since about April, when Fisker halted operations and laid off dozens of workers at the 142-acre, Wilmington-area facility. Markell staffers told The News Journal the payments are part of the grant deal and necessary to at least keep Fisker’s small-scale operation on life support.”
Wait a minute: Delaware? Right! That’s VP Biden’s old stomping grounds. You don’t suppose there’s any crony capitalism going on here too? Nah. Joe “The Sheriff” Biden wouldn’t stand for it. Remember when Mr. Obama said:
“To you, he’s Mr. Vice President, but around the White House, we call him the Sheriff,’ Obama warned government employees. ‘Because if you’re misusing taxpayer money, you’ll have to answer to him.”
So there! But back to Fisker:
“…in February the U.S. Energy Department stopped disbursements on Fisker’s $529 million loan because the company purportedly failed to meet production and sales goals on its electric plug-in sedan, the Karma.
The lack of funds was followed by the company halting operations at the Delaware facility, a formerly abandoned General Motors plant.
Later that year, Fisker battery supplier A123 Systems filed for bankruptcy and the company lost a reported $30 million worth of cars when Hurricane Sandy floodwaters swamped a port in Newark, N.J.”
But isn’t Fisker still a good bet? And isn’t government involvement in private firms a wise investment?
“This is never a good roll for the government — corporate welfare,’ said Paul Chesser, an associate fellow at the conservative-leaning National Legal and Policy Center. ‘Let the market put up the money, not the taxpayer.’
Chesser also points out the similarities of California-based solar company Solyndra going bankrupt after receiving nearly $530 million in federal loan money from the Obama administration.
‘There’s a trend of companies with no track record — or in this case failure — being worthy of government investment,’ he said.”
Despite Sheriff Joe, Delaware Republicans are not impressed:
“John C. Sigler, chairman of the Republican State Committee of Delaware, said he never liked the deal and even more so upon learning the state ‘stands third in line to get back its money.”’
‘The taxpayers will take a bath,’ he said. ‘Never gamble with taxpayers’ money. It belongs to them, not the government.”
Good advice, Mr. Sigler. But is EV news all bad? Well, pretty much…
“A roundtable interview today at the North American International Auto Show, Nissan CEO Carlos Ghosn announced a $6,400 price drop for the base-model 2013 Nissan Leaf. Last year’s base model was $35,200, while the new base-level 2013 Leaf S starts at $28,800. Ghosn says the new prices make the Leaf the least expensive five-seater electric for sale in the US.”
Right. What that actually means is a drop from $35,200 to $31,820 for the Leaf SV, and for the high-end Leaf SL, $34,840, as compared to the former $37,250. Oh yes, and there will be a $850 destination charge added to all 2013 Leafs, so that’s $32,670 and $35,690 as long as no other charges, such as accessories, etc., apply.
And that remains the primary limiting factor for EVs. If we subtract the $7500 government EV subsidy the cheapest Leaf still costs $25,170 and the most expensive, $29,190. And for that the consumer gets a subcompact car with serious range limitations. The prices on Chevy Volts have dropped a tiny amount, but that’s paper shuffling. Volts, even though they are not true EVs and thus do not suffer from the severe range limitations of the Leaf, are still far too expensive for the majority of consumers.
Despite the price drops, the Leaf remains a curiosity, a car affordable only by the well off who can afford a second or third car for short hops around town while still keeping fully useful conventional vehicles. This may provide green cred for a small segment of the population, but it remains entirely impractical for most Americans. Even the increased sales figures of the Volt for 2012 as compared with its disastrous first year indicate nothing less than a car that makes no financial sense for the manufacturer, as GM continues to lose thousands, perhaps as much as hundreds of thousands, on every Volt that leaves the plant–when it’s actually operating.
EVs remain a money hole for taxpayer dollars and a continuing contributing factor to our national and state economic woes. But other than that, everyone should be driving one. Just ask Mr. Obama or Mr. Biden.