Localities Get Up to $33,000 in Subsidies per Chevy Volt

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A Jacksonville.com report gives a good explanation for why some Florida localities are purchasing Chevy Volts. When Jacksonville's chief of fleet management, Karim Kurji, was asked what the advantage of going green by purchasing Volts was he hit the nail on the head when he replied, "Federal money."  The story goes on to reveal that the total federal taxpayer money used to subsidize one Chevy Volt purchased by Atlantic Beach was over $33,000. It now appears obvious that the Obama Administration and General Motors are willing to pay just about any price, even if the taxpayers are footing the bill, to see the Chevy Volt "succeed."

Two more Volts were purchased by the city of Jacksonville with taxpayers subsidizing about $26,500 each. Using the Atlantic Beach example, here is how taxpayers are getting bilked; the US Department of Energy gives a $25,600 grant to the locality to purchase a Volt. In return the township must keep logs. As stated in the article, "Federal grant requirements mandate that logs be kept of the Volts' mileage, fuel use and how far they go on battery power." The taxpayer giveaway doesn't stop there. The dealership that sells the Volt gets the federal tax credit of $7,500 and reduces the price of the Volt (which usually sells for over $40,000) to $38,600. So, for a net cost of $13,000 the locality gets a new Volt. I guess the government has finally figured out how to sell the car that President Obama uses to pitch his green energy policies as he campaigns for reelection.

In the Jacksonville cases, the two Volt purchases were subsidized directly with about $38,000 in grants and another $15,000 in dealership subsidies. What are the gas savings for Jacksonville to justify the spending of $53,000 in subsidies for the purchase of two Volts? Kurji states, "We are getting 56 mpg for that." How absurd has this whole Chevy Volt and green energy thing gotten? Is it any wonder America has such debt problems with such wasteful spending habits?

Of course, proponents of the Chevy Volt and Big Government will point out the small percentage of vehicles purchased in this fashion. We don't really know the true figures, but GM claims that about 9% of Volt sales are fleet purchases. The same defense will be used as the one used when I uncovered that dealerships were selling Volts to each other and claiming the tax credits. It doesn't happen that often, so it's not a problem. After all, it's "only" a few million dollars in taxpayer waste. Just add it to the multi-billion dollar tab for promoting electric vehicle development and subsidizing wealthy purchasers of the cars.

There are still important unanswered questions regarding the Volt and electric cars in general. Regarding Volt fleet sales, where are all the General Electric purchases? The company has committed to buying 25,000 of the vehicles, an amount that is double the number for all of the Chevy Volt sales for the entire year and a half it has been on the market. If GE already started the crony purchases, the 9% fleet number given by GM doesn't make sense. If they have waited to purchase the cars until we are closer to presidential election time, the motivation becomes suspect.

GM has also not come clean on why they are spending what appears to be tens of millions of dollars each month promoting a car that is not profitable and sells in such limited numbers. The advertising cost per vehicle is ridiculously high, yet analysts and journalists do not question the strategy. It certainly can not be to benefit shareholders. My rough estimate would be that GM has been spending about $10 million more per month hyping the Volt compared to the marketing cost for the new Ford Fusion or Nissan Leaf electric cars. This, along with crony purchases, contributes to about a thousand more Volts being sold per month than the competitors. If my estimates are correct, the additional marketing cost per each additional Volt sold is about $10,000. That is how much the bragging rights are worth to GM, or perhaps to its government owners.

The most important question for those that support spending billions of dollars to subsidize plug-in vehicles like the Chevy Volt is this. What, exactly, are taxpayers getting for the money? Up to now we get generalities of how the Volt and cars like it will free America from foreign oil dependence. How so?

I have stated before what projected hypothetical oil consumption reductions would result from the attempted electrification of America's auto fleet. Since the shrill proponents of the Volt refuse to speak about specifics as they continue to only condemn critics of the car as having a right wing agenda, I will repeat the math. There are about 250 million passenger vehicles registered in America that account for less than 50% of  US oil consumption. Obama's goal of a million EVs on the roads in a few years does practically nothing to justify his attempts to raise federal subsidies to the rich buyers of the cars, many of whom would still purchase the vehicles without the subsidies.

Let's take it out even further, with specifics. Assuming 10 million EVs on US roads in ten years with the proposed $10,000 federal subsidy, we will have sacrificed up to $100 billion in federal tax receipts. That's $100,000,000,000. This figure neglects state subsidies and grants like the ones to the Florida localities, as well as the money granted for initial production. The net reduction for America's oil consumption (assuming no gas used by EVs, unlike the Volt) would be less than 2%.

Our government spends money so wastefully that a potential $100 billion dollar cost to save less than 2% in oil consumption in 10 years is considered a wise investment. This from the folks who spent the last few years saying that drilling for oil won't help contribute to our energy needs soon enough. Consider that many of the wealthy purchasers of EVs would buy the cars without the subsidies and the waste becomes even more egregious.

Republicans and Democrats alike should rethink how they squander taxpayer money. The nonsensical and inaccurate assertions, like how we can end terrorism by selling 30 million Chevy Volts in 10 years, should be replaced by an honest debate with taxpayers' best interests in mind. We should also question the arrogant assumption that we will all eventually be driving plug-in electric vehicles. The ludicrous Florida locality examples give further evidence as to the extent of the waste. "We have to do something" is not a valid defense for Obama's costly, failing green energy policy.

Mark Modica is an NLPC Associate Fellow.