September 20, 2011

General Motors: American Jobs--For China?

The convoluted story of the Chevy Volt took another bizarre twist today with the publication of an Associated Press article detailing "cooperation" between General Motors and the Chinese government on electric vehicle technology, which inescapably means the Chevy Volt. It is, of course, the only electric vehicle (actually a ridiculously complex and expensive pseudo-hybrid) currently manufactured by GM, though an even more expensive version of the Volt is reportedly on Cadillac's drawing board and on the fast track for production.

The Volt's MSRP is approximately $41,000 and individual Volts have sold for up to $65,000. It's virtually certain that even fewer Volts would have sold without the $7500 government subsidy. Even with that generous subsidy—it's about double the cost of comparable conventional, high-mileage conventionally fueled compacts that actually get better mileage than the Volt—Volt sales have been abysmal (302 in August). But of course, the Volt isn't a product meant to survive in the free market, nor is it meant to turn a profit (GM probably loses money on every vehicle): it's an entirely political animal. It's difficult to imagine how much a Voltilac (Cadiolt?) will cost or precisely where the market for such a vehicle is. These days, Cadillac has become a brand built upon high performance, luxury and perceived prestige, none of which an even more ridiculously expensive Volt can possibly provide.

The AP story, as we’ll explore, dances around the reasons for this "cooperation." A Green Auto Blog story is more to the point, but for the moment, let's focus on the AP, which titled its story: "GM to Build Electric Cars in China, Protect Chevy Volt Technology."

The AP continues:

"General Motors Co. agreed Tuesday to deepen cooperation with its flagship
Chinese partner on development of electric vehicle knowhow amid pressure from
Beijing to hand over proprietary technology.

Investments and other details of the plan were not provided, and it was unclear if the agreement was the result of a renewed push by China to acquire advanced technology its own automakers still lack."

Right. It's unclear. But all is not smiles and fortune cookies:

"U.S. lawmakers have complained that China is shaking down GM to get the technology that drives the Chevrolet Volt electric car. GM plans to start selling the Volt in China by the end of the year, but its prospects are iffy because it doesn't qualify for a Chinese government subsidy that amounts to $19,000 per car. The government offers the subsidy only to electric cars made in China.

Lawmakers contend such requirements are unfair and may violate world trade rules."

Oh no! The Chinese Communists aren't playing fair! Who could possibly have imagined that? GM provides an unintentionally informative tidbit:

"But GM spokesman Jay Cooney in Detroit said the company has not been pressured by the Chinese government to share the Volt technology and has no plans to share it. He said GM is working with the Chinese government in an effort to get the subsidy for the Volt because it helps reach a government goal of getting more electric vehicles on the road.

The cooperation agreement was signed during a meeting of the U.S. automaker's board in Shanghai — a visit underscoring China's importance to the company's future. It was the GM board's first meeting outside of the U.S."

Hey, didn't the GM spokesman just say they have no plans to share Volt technology?

"'We can accomplish far more by working together than we can by working separately,' Tim Lee, president of GM International Operations, said as GM and state-owned partner Shanghai Automotive Industrial Corp. signed an agreement on developing a next-generation electric vehicle platform.

The agreement 'to co-develop electric vehicle architecture is further proof of GM's and SAIC's plan to lead the auto industry in new energy vehicle technology," he said, describing the plan as a "very aggressive and challenging project.'

Cooney said the companies will work together to develop a new fully electric car. The Volt can travel about 35 miles on battery power, and a gas-powered generator kicks in to run the car when the batteries are depleted. The generator technology eliminates anxiety over whether a driver will run out of electricity."

Let's review:

(1) GM is going to "deepen cooperation with its flagship Chinese partner."

(2) GM's "flagship partner" is, in fact, the belligerent communist government of China, our undeclared enemy, the ally of our declared enemies (such as North Korea), a nation that reflexively works against American interests and is currently producing a massive military buildup obviously aimed at directly challenging American interests in Asia and the Pacific, and a nation whose generals and politicians often rattle their collective sabers at us. You know, those guys, our pals who flood our market with children's toys virtually dripping in lead-based paints.

(3) GM spokesman say they're not going to share EV technology with the Chinese.

(4) The Chinese are demanding that GM share EV technology or they'll do something absolutely horrible and unfair: Make Chinese peasants pay the full MSRP for Chevy Volts. Good grief! Even the evil running dog American capitalists don't do that! They're proletarian enough to provide a $7500 people's subsidy, and they're not even Marxists! OK, so having a Marxist president and government doesn't count.

(5) So GM is not going to share EV technology with the Chinese, except they're going "'to co-develop electric vehicle architecture," which is " further proof of GM's and SAIC's plan to lead the auto industry in new energy vehicle technology," all of which lack of cooperation and sharing with the Chinese will be a "very aggressive and challenging project."

(6) The primary method American diplomats use in negotiating with the Chinese, particularly under Democrat administrations, consists of the Chinese making outrageous, bellicose demands to which our diplomats respond by saying "OK."

What is the most unintentionally revealing part of the story? The Obama Administration, including Mr. Obama himself, has repeatedly said that they have no role, none whatsoever, in the day to day operation of General Motors, despite the taxpayer's continuing ownership of GM and GM's continuing loss of taxpayer money, the Volt being an excellent case in point.

As Americans have learned whenever Mr. Obama says "let me be clear," or in any way suggests that he's going to tell the truth, he's about to obfuscate and lie on a cosmic scale. While GM has, in recent years, demonstrated some familiarity with political lying –most notably it's "we paid off our government loans early by taking money from another government loan" ploy--Mr. Cooney does not seem to play in mendacity's big leagues.

Mr. Cooney's statement has an unclear pronoun antecedent. Does he mean to say that putting more EVs on the road is a goal of the American government or of the Chinese government? I suspect it's a Freudian slip. We know beyond any doubt that putting immature EV technology on American roads, regardless of whether Americans want it, is one of the foremost goals of the Obama Administration, which has made no secret of it. Mr. Cooney is merely confirming what those who have been paying attention to this debacle have long known: The Volt exists at the demand of the Obamites and their greenie bundlers and they will stop at nothing to promote it even if it again bankrupts GM, for real this time.

Green Auto Blog suggests a somewhat more pedestrian motivation for GM:

"As General Motors seeks to introduce the Chevrolet Volt to the Chinese market, it's counting on these subsidies to help make the car attractive to potential buyers. It could work, too, since the Chinese subsidies are large enough to essentially slice the Volt's MSRP in half."

Notice that if GM can get the communists to agree to extend their $19,300 per vehicle subsidy to the Volt, it would actually be affordable to American consumers, who, of course, won't be able to take advantage of it because, well, they're seriously disadvantaged by not being Chinese and living in America. It's difficult to believe that GM is making this deal—you know, the deal they're not making--for financial reasons. After all, no matter how large the government subsidy or which government pays it, GM is almost certainly losing money on each and every Volt that rolls out of the factory. There must be more pressing reasons for this non-agreement agreement. What could they be?

Mr. Cooney has provided the answer: The Obamites wants to put more electric vehicles on the road. Their green purity keeps them from realizing—or caring—about whether their EV flagship actually works, will sell in anything approaching fiscally rational numbers, or whether those EVs are on the road in America or China. The environmentalist virtue of displacing vehicles powered by evil carbon based fuels takes precedence over reality, politics, national security and certainly common sense. Let's not even try to bring rational business practices into this infernal mixture.

There is no doubt that GM will give away the EV technological farm to the Chinese—or the Chinese will steal it if they haven't already. There is also no doubt that whatever electronic technology they glean from this venture will be used to the maximum degree possible in military applications. Perhaps the Obamites have forgotten that the Chinese Military has its hand in every state-run business venture, and certainly controls all exchanges of technology with foreign states, particularly the United States. And have I mentioned that the Chinese are almost certainly behind a massive and ongoing cyber espionage and sabotage program against America?

On the other hand, the Obamites probably know all about it. No wonder they're behind this "very aggressive and challenging project."

I've long thought that if Mr. Obama loses his bid for office in 2012 that GM, which will almost certainly be thrown out into the cold, hard reality of existence in the free market, will dump the Volt like the economic albatross it is. The only way that the Volt could ever be profitable in America—absent unbelievable leaps in technology which could greatly extend its range and lower the price—is if manufacturing costs could be drastically lowered, and by drastically, I mean essentially cut in half. But of course, the only way to do that would be to outsource the production of the Volt, to move it to a country with very cheap labor costs, a country like—no! You don't suppose they're thinking about moving Volt production to China, do you?

A $20,000 Volt just might be at least marginally economically viable in the American market. But wouldn't that be a complete repudiation of Mr. Obama's serial promises to make American job creation his first priority? Wouldn't shipping the production of an entire model line of American vehicles to China be counterproductive to job creation in America? Wouldn't it in fact be strengthening an avowed, if not specifically declared, mortal enemy of America? OK, OK, maybe I'm exaggerating. After all, they probably only have several thousand nuclear warheads aimed at us. What's a few nucs between friends?

Surely Barack Obama wouldn't be un-American enough to benefit the Chinese communists at the expense not only of American labor, but national security, and all in the name of putting more EVs on the road? Why, that would be—unimaginable.

Posted by MikeM at September 20, 2011 10:46 PM

in your second paragraph you state:

it's about half the cost of comparable conventional, high-mileage conventionally fueled compacts that actually get better mileage than the Volt

is this correct?
am i reading this wrong?
it's about twice the cost of comparable ......?

Posted by: louielouie at September 21, 2011 01:19 AM

Dear Louielouie:

Indeed, you're correct; thanks for the catch! When I was writing that line, I was thinking ahead to the $19,300 subsidy given EVs by the Chinese, which would reduce the price of a Volt by about half. I suppose the lesson is not to think while writing.

Thanks again!

Posted by: Mike Mc at September 21, 2011 11:18 AM

Now, if they could just create a vehicle that, while rolling, the motor pushes not only the car but a generator to refill the batteries, there'd BE no need for gasoline. When they develop THAT technology, I'll buy one.

Posted by: cmblake6 at September 24, 2011 07:34 PM