Since the government takeover of General Motors, the Obama Administration has pumped billions of taxpayer dollars into the failed auto company, in hopes that it will revitalize its green initiatives.  Recently, they have doubled down on their efforts to interfere with free market economics by subsidizing the research, design, and sales of Chevrolet’s new electric car, affectionately known as the Volt.

President Obama testing out a new Chevy Volt

The Chevrolet Volt carries a sticker price in excess of $40,000. However, with some nifty Obama subsidies, the price has been brought down into the low $30,000’s.  With these tax credits, a Volt purchaser still buys a $40,000 car, but allows the American taxpayer to foot the bill for the remainder of the cost.  Failed logic exists in abundance.

Let’s just say that I’m going car shopping and I have $40,000 to spend.  If I purchase the new, “highly efficient” Chevy Volt, I can look forward to dismal electric-only ranges, a puny 34 MPG gas-only mileage, and a high possibility of spontaneous combustion in the event of a collision.  Or…I could buy a brand new BMW 3 Series.  One could also argue that this sort of tactic drives business away from American vehicle manufacturers. With that said, the average American, in the current economy, cannot afford a new BMW, so it stands to reason that they shouldn’t be able to afford a Chevy Volt.  So what is really going on here? Are we, the taxpayers, subsidizing the price of cars for the so-called “rich?”  And furthermore, why is GM producing far more of these cars than the market demands?

With Obama in the back pocket of the “green” industry, it is not surprising to hear that the government has pumped over $400 million into the design and production of the Chevy Volt.  Historically speaking, “green” industries have not fared so well in the past. The solar company Solyndra was loaned half a billion dollars by the Obama Administration, just in time for them to file for bankruptcy. If this isn’t overwhelming proof of crony capitalism, then I don’t know what is.

The proponents of these hybrid cars argue that they eliminate the need to purchase gasoline, therefore saving the consumer money in the long run. But, while Chevrolet originally claimed that the Volt could travel up to 40 miles on its electric motor alone, many early purchasers have found that claim to be inaccurate. Some owners have reported that they can only travel between 23 and 28 miles before the gasoline engine kicks in.  And once the gasoline engine kicks in, they are only able to achieve roughly 34 miles per gallon. This is disgusting when you consider that Chevrolet also produces an all-gasoline car called the Cruze that is capable of 42 miles per gallon and costs about half as much. So, as is often the case with these “green” projects, the fuel economy estimates were highly inflated.

In addition to less-than-desired mileage, there is also the hidden electricity cost associated with powering these cars. The Volt is a true plug-in vehicle, which means you can plug it into an outlet in your garage.  The electricity from your home will charge the massive lithium-ion batteries that run down the center of the Volt.  These batteries must be replaced every 8 years, and the cost is estimated to be somewhere in the range of $3,000 to $12,000.  In addition to any maintenance costs that the vehicle would incur, charging the Volt also increases the utility bill at home. When Obama praised his cap-and-trade policy, he promised that “electricity rates would necessarily skyrocket.” If this is the case, why would anyone want an electric car?

It doesn’t make any sense to continually waste taxpayer money to fund technology that nobody wants. Furthermore, Chevrolet has openly admitted that they expect to lose money on the Volt, so it is expected that more subsidies are imminent in order to keep production afloat.

As a free market advocate, I believe that we need to eliminate these government subsidies that are clearly more politically driven than performance driven.  General Motors is owned by the government, so through subsidies, they are discounting the price of their own vehicle, which is unfair to every other vehicle manufacturer.  Without subsidies, the green energy industry will almost certainly collapse.  The opportunity cost of these subsidies is too great to continue down this path.

Jeffrey Max // Texas Wesleyan University // @Jeffrey_Max