ICYMI: Rep. Kelly: ‘Pull plug on electric vehicle subsidies’

Dec 1, 2011


Contact: Julia Thornton

December 1, 2011



ICYMI: Rep. Kelly: ‘Pull plug on electric vehicle subsidies’

USA Today

By Mike Kelly

U.S. Representative for the Third District of Pennsylvania

On Thanksgiving Day, a Chevrolet Volt battery pack that had been recently crash-tested at a defense facility in Virginia caught on fire.

It wasn’t the first time this happened, which is why the very next day, the National Highway Traffic Safety Administration (NHTSA) launched an investigation into the safety of the Chevy Volt, General Motors Co.’s signature plug-in electric car, and the risk its lithium-ion battery pack poses after a serious crash.

To quiet the fears of the roughly 5,000 Volt owners on the road today, General Motors announced it will loan cars to Volt drivers who are worried that their battery could set fire in the event of a crash.

The NHTSA investigation is just one of several setbacks experienced by the Volt, which, along with every other subsidized electric vehicle, has become the poster child of President Obama’s failed green agenda.

Like many green initiatives promoted by this administration and bankrolled by the American taxpayer, the electric car is better in theory than in practice; has limited consumer demand; is heavily subsidized; and has fallen short of reaching its targeted goals.

All the while, the American people are getting a lousy return on their investment.

Tens of millions of taxpayer dollars have been spent on tax breaks for people who’ve bought an electric car, which comes with a $7,500 federal tax credit, along with additional state tax credits.

Despite the fact that the federal government has no business subsidizing a product that a manufacturer could just as easily promote through rebates and other buyer incentives, the tax subsidies are largely going to the affluent few who can actually afford to buy an electric car, which costs anywhere between $40,000 (Chevy Volt) to $97,000 (Fisker’s Karma).

In fact, the average income of Chevy Volt buyers is $175,000 a year, a large percentage of whom are disproportionately concentrated throughout Southern California.

GM has made some of the finest automobiles known to man. They are master marketers and every product researched, designed, and developed was done through rigorous market research and analysis. It’s what their shareholders insist upon, and it’s what the free market dictates.  And it’s why I’ve proudly sold Chevys throughout my entire career.

However, when the model changes, when a manufacturer puts politics ahead of market demand, when the return on investment is measured in terms of political gain rather than financial gain, the results vary drastically.

To put the lack of mainstream market demand for the Volt in perspective, in the month of September, GM sold just 723 Volts. By comparison, 18,097 Chevy Cruzes, 5,246 Chevy Suburbans, and 2,171 Chevy Colorado Pickups were sold in the same time span.

This is not to say I don’t support the development of electric cars. I do, but not at taxpayer expense.

As MIT professors Thomas H. Lee, Ben Ball, Jr., and Richard Tabors have noted with regard to government investment in energy, “the experience of the 1970s and 1980s taught us that if a technology is commercially viable, then government support is not needed, and if a technology is not commercially viable, no amount of government support will make it so.”

The misuse of taxpayer dollars to promote the electric vehicle is emblematic of the Obama Administration’s overall misunderstanding, and ultimate manipulation, of the free market principles that undergird our economy.

Take, for example, Solyndra. The heavily-subsidized solar panel manufacturer received $535 million in federal loan guarantees from the U.S. Department of Energy before it was forced to file for bankruptcy at the end of August.

Despite assurances by President Obama that “companies like Solyndra are leading the way toward a brighter, more prosperous future,” Solyndra’s business model could not compete in the solar panel market, either here or abroad.

As a result, taxpayers lost hundreds of millions of dollars and more than 1,000 workers lost their jobs.

Instead of letting Solyndra compete on its own, the government stepped in; and instead of picking a winner on behalf of the American people, it doubled down on a business that had well-documented financial difficulties.

President Obama has become the “Venture Capitalist in Chief,” gambling hard-earned taxpayer dollars in green projects and industries that are more politically than performance driven. It’s part of the administration’s upside down model that wouldn’t pass the scrutiny of a well-appointed board of directors, nor would it meet the expectations of its shareholders, which, in this case, are the American taxpayers.

Government-imposed green energy mandates and subsidies represent a fundamental departure from the way our economy has functioned since the industrial revolution.

If there is a green energy revolution in America, it won’t be led by bureaucrats in Washington. It will be market-driven, which in the automotive industry means that, unlike the Volt, the car actually gets driven off the lot.