Editor’s note: John Ransom, against the advice of those close to him, saw fit to escape for a brief vacation. As you are reading this, John is trying his best to enjoy a cruise on the now infamous Carnival Cruise Lines. Below is what can best be described as a “Best of” article. (Although, that description is only being used for the sake of brevity.)
Once our illustrious Townhall Finance Editor has his cruise ship towed into the harbor, he will be back with fresh content and mildly intriguing articles. In the meantime, check out our other top-notch contributors such as Daniel J Mitchell, Mike Shedlock, or – if you can bear it – feel free to read my commentary. Thanks for reading! And let not your heart be troubled, John will be back shortly. (We wouldn’t allow him to leave for any extended period of time.)
- Michael Schaus, Associate Editor for Townhall Finance
The good news for GM these days is that no one has been consumed in a fiery death due to engine compartment fires since the Chevy Volt was discovered to spontaneous combust after accidents shortly after production began.
The bad news for the company is that while Chevy Volt sales in June set a record, prior to June their sales for 2013 sucked despite general auto sales setting post-crash records.
“With signs that sales of its Chevrolet Volt battery car could be coming unplugged,” reported NBC News in June, “General Motors is offering potential buyers as much as $5,000 in incentives – making it the latest maker to try to cut prices in a bid to boost lagging demand for electric vehicles.”
In June the company reported 2,698 Volts sold thanks to those drastic discounts by GM. In fact, all battery-powered cars have seen deep price cuts due to disappointing sales.
“For the first five months of this year,” said NBC News, “GM has sold only 7,157 of what it prefers to call an extended-range electric vehicle, or E-REV. May sales, in particular, fell 4.3 percent, to 1,607. By comparison, the overall U.S. automotive market was up 8.2 percent for the month. According to a report by Inside EVs, Chevy dealers have more than 9,000 Volts clogging inventories, vehicles they need to clear out before the 2014 models start rolling in.”
That makes 6,302 excess Volts just weeks before the 2014 models are supposed to come off the assembly line. Or, to calculate another way, that’s 2 1/3 months of inventory assuming all the suckers haven’t already purchased Volts in the new and reduced “free” lunch program run by General Motors.
The ridiculous list price for the Volt started out at $46,000. Since then it’s been lowered to $39,995. The price is still ridiculous because the Volt is basically the Chevy Cruze with a big battery.
The Cruze by contrast has an MSRP of between $17,000-$23,000.
To lull consumers, the federal government gives a credit to Volt buyers of $7,500, plus GM, starting in June, discounted the price by another $4,000-$5,000 depending on the model year.
That means a buyer can pay around $28,000 for the privilege of buying a car that goes 38 miles on a full battery charge and has all the amenities of car that costs $5k less even after Volt discounts, subsidies, giveaways.
Boosters of the car will bombard me with email bragging about the cost savings with the Chevy Volt because they never have to buy gasoline, but they too often overlook the true cost of an electric vehicle.
First, electricity is not a free power source, despite what liberals believe. Electricity doesn’t just magically come from a wall plug.
Volt owners are SHOCKED…SHOCKED… when employers, HOAs and others third parties object to being asked to pay $1.50 per day to fully charge the car’s battery at public electrical outlets. It’s a phenomenon that’s becoming more common.
‘‘This isn’t some evil electric car that consumes a ton of electricity. It’s just a drop in the pond compared to what the whole building pays,’’ Mike Nemat told CBC News when trying justify using his condo’s public power source to fuel his vehicle.
It maybe a drop in the pond, but the pond isn’t Nemat’s to take from.
$1.50 per day to charge a Volt battery times 365 days is $547.50 per year. If “everyone” did it at a 50 unit condo, that would be $27,375 per year for “free” electricity.
And despite what liberals think, someone still has to pay the bill.
“This is ridiculous. It's approximately $1.50 per day (based on the average electricity price in the U.S.) to fully charge a Volt,” wrote reader Corey on the article about Nemat’s condo subsidies. “That's less than the price of a cup of coffee. When taken into consideration that it's split between several tenants... they should be proud that they're not only helping to save the environment but also lowering the nation's dependence on foreign oil for pennies out of their pockets.”
I’m sure they are proud. But they just aren’t $27,375 proud. Or $7,500 worth of federal tax subsidies proud.
Nor am I. I’m “I’d rather you not take my tax money or HOA dues” proud. Do what you like, buy what you want, but don’t ask me to pay for it.
If Volt owners were really proud they’d pay for the “drop in the pond” themselves.
In finding out the true cost of ownership, the Volt’s battery should be depreciated across the life of the battery as well.
The battery costs about $8,000 to replace and lasts- in principle- about eight years. According to snopes.com the Volt costs a 7 cents a mile to operate on all-electric (EV) versus all-gasoline power of about 11 cents per mile. But those calculations ignore the battery costs, which add another 10 cents per mile to the electric option for a total of 17 cents per mile.
And that’s what’s really driving the poor sales of the Volt. Battery costs jack up the price of the Volt- and EV’s- versus gasoline vehicles. Chevy made a strategic mistake when it attempted to put the Volt’s costly powertrain into Chevy’s discount model- the Cruze. Instead GM should have followed competitor Tesla’s strategy of making an EV that appeals to rich, privileged, metro-sexual types plagued by White Guilt, which often also comes out sideways as Carbon Envy.
There’s money to be made on folks like that.
Just don’t use my money in doing it.
Because the scheme will likely end in a fiery crash, which, for the Volt, would be fitting since that’s how it started.
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for July 31st, 2014 | John Ransom
In Other News: Pro-Palestinian Rally in Tel Aviv Broken Up by Rocket Fire from Palestine | Michael Schaus