GM Continues Chevy Volt Folly at Taxpayers’ Expense

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Akerson and VoltAugust sales figures for General Motors' much-hyped Chevy Volt came in at a paltry 302 units. While evidence mounts that consumer demand for the Volt is not what it was projected to be, GM continues to blame supply rather than demand for the dismal sales performance. Could the fact that billions of taxpayer dollars are being funneled to GM for production of green vehicles be behind the continued misrepresentation of the Chevy Volt sales performance?

I tuned in to GM's August sales conference call yesterday. Beyond the standard optimistic views given (which must not have impressed Wall Street, since shares fell over 4% on the day), I heard an interesting exchange during the media questions segment towards the end of the call. When James Amend from Wards questioned the amount of salable Volts, GM responded that it would take another month or two to fill retail inventory and that it would not be known where ultimate demand for the vehicle would be until the second quarter of 2012. The GM response actually drew laughs from Amend!

The lack of demand for the Chevy Volt is not a well kept secret. The all-electric Nissan Leaf outsold the Volt by a margin of over 4-1 as it appears that GM overestimated the importance of curing "range anxiety." Reports are surfacing that confirm the fact that the Volt is not going over well with the average consumer. This has not influenced the tone of GM's rhetoric. It seems that the philosophy of the leaders at GM is to fool the majority of Americans, which are not paying attention, into believing that the Chevy Volt is a huge success. If they can do this, friends at the Obama Administration can benefit politically and taxpayer funds can continue to be used to produce so-called green vehicles. The situation would be laughable if billions of taxpayer dollars were not being wasted to support an unwanted, over-priced vehicle that has no measurable benefit to the environment or foreign fuel dependence.

GM has not only denied the weakness of demand for the Volt, they now have decided to proceed with plans to make gourmet lemonade out of the lemons they were handed. The plans for a Cadillac version of the Volt have been given the go-ahead. What makes GM want to offer a more expensive version of a vehicle that has little demand as it is? More importantly, how much more taxpayer money is going to be plundered by GM to produce the new version?

GM was given billions of dollars in low-interest government loans to produce the Chevy Volt. Plans were also in place to produce the Cadillac version for years. Hundreds of millions more were given in the form of grants. Add another $7,500 per vehicle sold in the form of tax subsidies.

It is time to ask what the taxpayers are getting in return for their money. It is hard to justify the continued expenditures given the non-existent benefits of the Chevy Volt. One would also have to assume, given the fact that GM (i.e. the taxpayer) is losing money on the Volt, that the development of the Cadillac version is motivated by something other than expectations of profits from sales of the vehicle. Besides benefiting cronies at companies like GE that will gain from the taxpayer bilking by selling charging stations, there is little reason to pursue production of a cloned Volt in its current form. The only other reason would be to continue to receive taxpayer funds from a government that has a vested interest in presenting GM as a success story.

Future Chevy Volt sales should be closely watched to determine the truth about demand for the vehicle. The argument that low sales are a result of low supply will be easy to disprove by searches on sites like cars.com, which currently shows 1,287 new Volts available compared to less than 500 last month. More importantly, government supported sales, like the Volts sold to utility companies under a federal grant, need to be watched. Watchdogs should dissuade the Obama Administration from propping up Volt (as well as other GM vehicles) sales at the continued expense of the American taxpayer.

I expect that the next play in the Chevy Volt fiasco will be to push through the sales of Volts to GE and other entities that have a vested interest in fooling the American people about the desirability of a vehicle that has no appeal to the average consumer. GM and the Obama Administration can then proclaim that the naysayers were wrong about the Volt. Let's be sure to see how many of these vehicles are actually sold to individual retail consumers before buying into the hype that is sure to come at a cost to taxpayers. And let's hope that there are more than just a few bloggers that latch on to a huge story that has been under-covered by the mainstream media and largely ignored by those in political power that are doing nothing to safeguard taxpayer money.

Mark Modica is an NLPC Associate Fellow.