Time to Pull the Plug on the Chevy Volt

A September 10, 2012 Reuters’ article reported that, “Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds… There are some Americans paying just $5,050 to drive around for two years in a vehicle that cost as much as $89,000 to produce.”  These figures add a whole new batch of concerns and questions about the effectiveness of the Obama administration’s green energy crusade.

In looking at these numbers it’s natural to ask, how on earth would any company continue to produce cars that are falling far below projected sales and cost so much to make.  It is easy to do when you’re backed by the full faith and credit of the U.S. government.  The trouble is that this one meaningful and reassuring phrase doesn’t carry close to the amount of weight it once did.  In part this can be attributed to the current administration and its derelict actions like the decision to bailout General Motors (GM), which has put the government, and taxpayers, in a precarious position.

Compounding the problem further is that even with the government’s generous bailout to keep GM afloat and a hefty tax credit to encourage purchase of a Chevy Volt, consumers still aren’t biting.  In fact, Volt sales have once again fallen woefully short of their projected sales, and Chevy is finally getting the idea.  This is why Chevy has recently halted production of the Volt for the second time this year.  On the other hand, the government hasn’t given up – and is only strengthening its resolve – to throw good money after bad.  All at the expense of taxpayers. Far too much of our money has gone not only to promote and encourage purchasing of the Volts, but as well to its parent company, General Motors, also known as Government Motors.

In 2009 Obama administration put up $50 billion of your money to bail out the auto industry.  Recently an NRO piece reminded that “tens of billions of dollars will be lost on GM. The federal government put up more for a 60 percent interest in the firm than GM is worth today.”  What this demonstrates is that if left to fend for itself not only the Volt, but the entire company of GM likely would not have survived.

Despite the government’s endless attempts to make the Volt an enticing option, consumers have responded with little interest because they see the car for what it really is: cost-prohibitive.

It’s no wonder then that the Volt’s sales for 2012 are at “13,500, well below the 40,000 cars that GM originally had hoped to sell in 2012.”  This isn’t the first time the Volt has failed to meet its target sales.  Last year it also came in woefully under the 10,000 projected sales of 2011 too. Never one to be deterred by reality, Government Motors has begun “offering the vehicle for as low as $169 per month, a financing deal that is generally reserved for $15,000 cars—a price so low that GM is reportedly losing nearly $50,000 per vehicle.”  Despite poor sales overall, the Volt can count on the federal government to believe in its potential and purchase more than its fair share.  The Department of Defense began purchasing Volts this summer with a plan to purchase 1,500 total.

In an interview with Reuters, Doug Parks, GM’s vice president of global product programs and the former Volt development chief, freely admitted “It [the Volt] wasn’t conceived as a way to make tons of money.”  If that’s the goal then the Volt and GM are well on their way to achieving exactly what they intended.  It’s difficult to believe that GM was willing to pour $1.2 billion into what they knew was a money pit that was never intended to turn a profit.  Perhaps GM has the luxury of taking on a project like this one because they didn’t care if they made or lost money on it— since it wasn’t their money funding it in the first place.  GM is clearly on the same page as the Obama administration that has “provided more than $5 billion in subsidies for green-car development, praised the Volt as an example of the country’s commitment to building more fuel-efficient cars.”

Taxpayers have had enough and it is time to pull the plug on the Chevy Volt.