We’re Paying for Other People’s Cars

Thomas Edison tried his hand at building an electric car, as did other inventors. Electric cars initially had some advantages over the internal combustion engine variety. They were easier to start and drive, there was no need for shifting gears, they ran cleaner, and were quieter.

So why did the internal combustion engine design prevail? They had a longer range, were price competitive, became easier to drive, and developed more horse power. Of course, price had a lot to do with decision making. Electric cars were more expensive and the batteries were unreliable.

In the end, the market determined what types of cars would prevail.

There was a similar battle in the video market with the introduction of Betamax and VHS (Video Home System) formats. In terms of picture quality, Betamax was superior. But in the end, the VHS format prevailed. Why? Again, market forces — people making buying decisions — determined what format would prevail. From the consumer perspective, buying a single 10-hour VHS tape was cheaper than buying two 5-hour Betamax tapes.

The government was not involved.

In time, the VHS was replaced by plastic discs called DVDs. With better televisions, people demanded better quality viewing fare. A battle ensued between HD DVD and Blu-ray Disc formats. Blu-ray won out because of the intricacies of the market.

The government was not involved.

The same is true in the highly competitive computer industry. Prices have dropped across the board as quality and features have increased.

Market interventionists know the history of the success and failure of these products, but they believe that they can direct the market by offering incentives. Of course, those incentives are being paid by you and me and every other tax payer.

Case in point — the Chevy Volt:

Each Chevy Volt sold thus far may have as much as $250,000 in state and federal dollars in incentives behind it – a total of $3 billion altogether, according to an analysis by James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy.

Hohman looked at total state and federal assistance offered for the development and production of the Chevy Volt, General Motors’ plug-in hybrid electric vehicle. His analysis included 18 government deals that included loans, rebates, grants and tax credits. The amount of government assistance does not include the fact that General Motors is currently 26 percent owned by the federal government.

Nearly every car manufacturer is making electric cars. That includes Ford, Chrysler, Toyota, and Honda, not to mention luxury automakers like BMW and Daimler. As far as I know, Ford’s electric car entry is not being subsidized. I can’t say what foreign automakers are doing.

One day a viable electric car may roll off the assembly line that people want to buy. The only way it will be a success if it is economically viable and competitive with what’s already being produced. Let consumers decide with their own pocketbooks and not with mine.

Until then, I resent any of my money going to pay for someone else’s car, especially when the people who purchase a Chevy Volt probably make more money than I do.

Additionally, the Chevy Volt isn’t even a completely electric car. It has two sources of energy, an electric source – a battery – that allows you to drive gas-free for an EPA-estimated 35 miles. There is also an onboard gas generator that produces electricity so you can go up to a total of 375 additional miles on a full tank of gas.

GM has estimated they’ve sold 6,000 Volts. Given the amount of the subsidy, that means that each of the Volts sold has been subsidized between $50,000 and $250,000.

The Obama administration doesn’t see this as a problem because it’s not their money!