September 13, 2011

EV Update for Sept. 14, 2011

It seems that reality is catching up to the electric vehicle scam after all. Oh, it’s not catching up quite quickly enough to prevent the Federal government from wasting untold millions buying thousands of Chevy Volts and all of their related charging paraphernalia, which, post-Obama (if we are very, very lucky, in 2012) will be worth less than the salvage value of their respective parts. At least Mr. Obama will have established yet another first: instead of the government buying cheap, stripped down vehicles, it will be buying expensive vehicles that work poorly, don’t deliver more than a fraction of the mileage promised, cost two arms and two legs to repair, and have the trade-in value of a used hamburger.

The economics of EV ownership continue to be terrible: vehicles like the Volt—which isn’t a true electric car but a very complex pseudo hybrid—and the Nissan Leaf—which is a true electric car—easily cost up to twice as much as comparable conventional vehicles. In fact, one could easily buy the most luxurious conventional analog possible and still have from $10,000 to $20,000 left in their pocket compared to the cost of a Volt or Leaf. As I’ve reported in the recent past (here), because of the huge outlay in initial purchase price, even if a Volt or Leaf owner actually realizes the ridiculously optimistic mileage guesses of the EPA and GM and Nissan, they will never break even on fuel costs alone over a comparable conventionally powered vehicle. All of the promised savings on fuel are, in effect, fairy dust and unicorn horns: wonderful to tell, but never actually seen.

Additional Links For This Article:

(1) Go here for a story about Costco in California removing EV charging stations.

(2) Go here for a Patrick Michaels story in Forbes on the ever-unfortunate economic realities of the Volt and of Mr. Obama's meddling in GM.

(3) Go here for Allah Pundit's update on quickly diminishing public interest in the Volt.

(4) Go here for a Fox News story, which speculates that the Volt is already, so to speak, out of gas.

(5) Go here to PACNW Righty where Rob has a similar take on the never-improving fortunes of the Volt.

No doubt, there are some who still want to buy such vehicles. But once we eliminate people who gaze wistfully at posters of Al Gore, environmentalist basket cases who seek rolling greenie street cred and the wealthy who can buy and discard the latest four wheeled techno-toy the way they change Rolexes, the market outlook for EVs is grim indeed, particularly considering the probability that not only does GM make no money on every Volt it sells, it is likely losing money. In a free-market economy, the Volt would never have been given the production nod. Only the age of Obama has made it possible, but even the awesome power of hopenchange can never make it economically viable.

Ah, but the charging infrastructure necessary to make EVs viable is being installed all over the nation! Not quite. Let’s travel (under gas power) to California where Costco is, to abuse a metaphor, pulling the plug on EVs. Despite having chargers available to the public for many years, even in greenie paradise, economic reality still holds sway and Costco is removing all of their EV chargers.

“Please be advised that this electric charger will be removed on August 15th, 2011. Sorry for the inconvenience," a note at a CA Costco said.

“'We were early supporters of electric cars, going back as far as 15 years. But nobody ever uses them,' said Dennis Hoover, the general manager for Costco in northern California… 'At our Folsom store, the manager said he hadn’t seen anybody using the E.V. charging in a full year. At our store in Vacaville, where we had six chargers, one person plugged in once a week.'”

"Mr. Hoover said that E.V. charging was 'very inefficient and not productive' for the retailer. 'The bottom line is that there are a lot of other ways to be green,' he said. 'We have five million members in the region, and just a handful of people are using these devices.'”

And the bad news just keeps coming. Patrick Michaels at Forbes notes:

"President Obama recently reminded General Motors‘ stockholders, all 311 million of us, that he’s calling the shots at America’s largest automaker, when he told an audience in Cannon Falls, Minnesota, that freedom to market was the price for the bailout: 'If we are going to help you [GM], then you have also got to change your ways'” And then he stated the ways: electric cars, and isn’t it great that jillions of taxpayer dollars are being thrown at battery manufacturers?"

"Never mind that no one has figured out how to produce a comfortable electric car at an affordable (non-subsidized) price that has enough range to be practical for the most of us."

"Carrying a $41,000 base MSRP and a $7,500 tax break, the Volt is either going to be the biggest bust since the Edsel, or a niche car with very modest sales. It is not, repeat, not the wave of the future. It’s just too impractical for a large number of everyday drivers."

Volt and Leaf sales remain at levels that would give rational auto executives heart attacks, and it is becoming apparent that the Volt can't even meet Mr. Obama's new CAFÉ standards. Michaels continues:

"Outside of that electric range, the Volt gets significantly worse gas mileage than a host of cars costing a lot less. Recently, Consumer Reports stated that the average mpg with the internal combustion engine on was a mere 29. Factor in that GM recommends high-test gas, and the effective mileage is down to 27. This will never sell a lot of Volts, especially as MPGs are increasing in conventional vehicles, but that’s the price of lugging around 400 pounds of batteries and multiple electric motors. Put another way, unless it is only used as a short-range commuter, the Volt will never meet the Obama Administration’s fuel economy standard of 54.5mpg in 2025."

Micheals concludes:

"GM’s CEO Dan Akerson has famously stated that the Volt “could be the future of GM”. Those of us with a stake in GM, and that’s all of us, should hope that the operative word is “could” –and that Akerson’s statement was just political dues required for GIC membership, where the Volt is the flagship."

Let's hope indeed, fellow shareholders in GM, that Mr. Obama's vaunted business sense and intellectual brilliance doesn't produce the same results produced with our collective investment in solar panel maker Solyndra. Allah Pundit at Hot Air outlined the badly flagging interest in the Volt:

"[A] new study by CNW marketing raises a red flag, finding that the potential buyers GM is most counting on are rapidly losing interest in the Volt. In March, 21% of so-called Early Adapters said they were “very likely” to consider buying a Volt, while 38.1% said they were 'likely' to do the same. That slipped to 14.6% saying 'very likely' in July, and 31.1% 'likely.' Among EV Enthusiasts, reports the CNW study, the number of those likely or very likely to consider Volt fell from a combined 71% to 51% during the same four-month period."

“'It’s way too early to tell, but the signs aren’t encouraging,' said CNW’s chief analyst Art Spinella. When it comes to mainstream consumers Volt has all but slipped off the radar screen, only about 3% of new car buyers likely to consider the Chevrolet Volt, the analyst added. The big problem is the plug-in’s price, CNW data indicate."

It's good to see that others are finally noticing what I've been writing for a very long time: The Volt makes no economic sense. Fox News is also concerned about the Volt's abysmal sales:

"Only 302 of the plug-in hybrids were delivered to customers [in August], up from 125 in July."

"Of the 2,395 cars that were produced in August, a GM spokesman tells that a third are in transit and another 700 or so earmarked for dealers for use as demos as new markets for the car are added across the country. So, even with production up to steam, the supply chain isn’t quite at full speed.

Nevertheless, GM has repeatedly said that it will sell 10,000 Volts by the end of 2011, and reconfirmed that goal for this report. The total stands at approximately 3,772.
With over 7,500 built since production began in late 2010, many of which are tied up as demos, and production currently running at 150 cars a day, GM is certainly on track to build more than 10,000 cars by Christmas break, but are the customers there to buy them?"

Rob at PACNW Righty and I have been writing about this issue for some time, and I don't think there is any doubt that the customers are not and will not be there to buy them. The Volt is a creation of the Obama Administration's irrational policy preferences, preferences that have nothing whatever to do with the reality of the free market, and are, in fact, diametrically opposed to the dynamics of the free market.

Obamites start with what they believe everyone ought to drive and then try to mandate their policy into existence regardless of whether the technology exists or whether a market exists. In the case of the Chevy Volt and the Nissan Leaf, the technology and the market do not exist. Isn't it ironic that Mr. Obama so browbeats the wealthy, yet they're essentially the only people what can support his EV pipe dreams? Absent breakthroughs in technology on the order of the Manhattan Project, both vehicles will almost certainly remain the four-wheeled techno-playthings of those whose pockets Mr. Obama lives to empty.

Posted by MikeM at September 13, 2011 09:48 PM

At least Mr. Obama will have established yet another first: instead of the government buying cheap, stripped down vehicles, it will be buying expensive vehicles that work poorly, don’t deliver more than a fraction of the mileage promised, cost two arms and two legs to repair, and have the trade-in value of a used hamburger.

Mutatis mutandis that's also a description of most Gummint workers. Given Obama's background, he's using well-established standards. He doesn't KNOW any better.

Posted by: dad29 at September 14, 2011 10:14 AM

I've heard that several large companies who donated to Obama are going to buy quantities for their fleets. I wonder if they'll follow through. Particularly publicly-held companies since their CEOs have a legal fidicary duty to the stockholders to make decisions in the best financial interest of the company. I don't see how these would make any more financial sense as a fleet vehicle for corporation than as a family vehicle.

Posted by: styrgwillidar at September 14, 2011 10:58 AM