Low Chevy Voltage


Like many other business ventures, Chevy finds sales of its Volt falling in the moribund Obama economy.  Specifically, they went from selling 281 Volts in February to only 125 units in July.

Jonathan Last of the Weekly Standard pokes holes in the pitiful spin attempts of Volt defenders:

GM says they’re going to increase production to 5,000 Volts per month in order to keep up with demand. You see, they claim that the reason the Volt isn’t selling is that they can’t keep enough cars on the lot. A GM spokeswoman recently claimed that they are “virtually sold out.” Which is virtually true. Mark Modica called around his local Chevy dealers and found plenty of Volts waiting for an environmentally conscious driver to bring them home.

The Volt is actually leading the pack among electric cars, selling a total of 2,029 units since launch, compared to 1,044 units for the Nissan Leaf.

The Volt was developed with almost four hundred million dollars in federal subsidies, plus millions more in subsidies offered to purchasers by both federal and state governments.  All for a car that sold 2,029 units in two years.  That works out to over $197,000 in taxpayer subsidies for each unit sold thus far.

You might be tempted to view this as an example of the business acumen that drove General Motors bankrupt, and turned them into a corporate welfare basket case that cost taxpayers ten billion dollars, but that’s unfair to GM executives.  I doubt any of them would have honestly looked at a free automobile market and seen enough Volt demand to justify a $400 million project. 

They believed the government would create demand for the Volt through compulsive force… by penalizing everybody who doesn’t buy one (the correct way to view a point-of-purchase subsidy), advertising electric cars through official propaganda, and driving up the price of gasoline.  You may recall General Motors CEO Dan Akerson recently stating, for the record, that he believes “a government-imposed tax hike will prompt more people to buy small cars and do more good for the environment than forcing automakers to comply with higher gas-mileage standards.”

Complex market analysis to judge consumer demand, and allocate scarce resources to meet those demands, is hard.  Doing what politicians want is much easier.  There’s obviously no significant free-market demand for the Volt at its current price point, never mind the real price obscured by all those compulsory taxpayer subsidies, but perhaps the all-powerful federal government can use its fresh trillions in deficit money to hammer out a world where more than 125 electric cars can be sold in a month.