Tesla Motors recently reported that it has received close to 400,000 orders for its yet to be released, $35,000 Model 3. Most of the pre-ordered vehicles are not even expected to be delivered until after 2018. While congratulations may be in order to Tesla for seemingly developing a mainstream electric vehicle (EV) that has so much consumer interest that demand is far outpacing supply, one question must be asked. Why the hell is the vehicle being subsidized to the tune of $1.5 billion in future tax credits?
General Motors recently reported lackluster sales results for the month of March. GM share price took a hit on the news, but there is one fast-growing area of sales for the company that is outperforming other segments. Government sales for GM rose 55% in March and capped off a first quarter that saw government sales increase 23% over the prior year.
The Wall Street Journal recently reported that General Motors has paid over a billion dollars in cash and stock to acquire Cruise Automation, a San Francisco startup company that designs self-driving software. The technological and regulatory obstacles facing autonomous driving development are huge, but don’t expect that to stop GM from throwing billions of shareholder dollars at the latest hyped wonder-technology.
“Fool me once, shame on you; fool me twice shame on me.” That is a cliché that investors should keep in mind if they are considering buying into General Motors’ latest debt offering. In fact, holders of GM common stock should also assess the growing similarity that New GM has with the bankrupted Old GM.
It has now been more than three months since news broke that General Motors, once again, failed to properly protect owners of its vehicles from risks resulting from shoddy quality control. The latest incident involves about 1.4 million GM vehicles that were at risk of erupting into flames due to engine oil seepage. The at-risk vehicles were previously recalled by GM years ago, but the quick-fix remedy offered by GM did not solve the underlying problem.
The Obama Administration’s Justice Department is now suing Volkswagen for “up to $90 billion for allegedly violating environmental law.” Politically-favored General Motors was fined $900 million, or 1% of that amount, for covering up an ignition switch defect that led to the deaths of at least 124 people. At last count, the number of people who lost their lives as a result of emissions' tampering by VW stood at zero.
Meanwhile, the GM board unanimously elected CEO Mary Barra as its Chairman, demonstrating that it is still not independent of political influences, even years after the 2009 bankruptcy process.
When Bob Lutz speaks, automotive journalists listen. Well, at least they usually do. When a recent Automotive News roundtable discussion showed Lutz blasting General Motors’ Chevy Bolt (and electric vehicles like it), mainstream journalists failed to pick up on the story. Lutz was right on the money when he exposed the EV folly, which is costing automakers billions of dollars and driving up prices of conventional, gas-powered vehicles.