Chevy Volt Leases Costing Taxpayers $10 per Gallon of Gas Saved
General Motors reported that it sold 2,851 Chevy Volts in September. The number is sure to be touted as a great success, even though the annualized rate of sale is still well below initial sales goals for the vehicle and nowhere near what conventionally-powered, mainstream cars sell. What is sure to be less publicized by the media is that the majority of the Volt "sales" were heavily subsidized leases that are costing taxpayers millions of dollars.
GM spokesman, Jim Cain, told me that a full two thirds of Volt sales were leases. Backing out leases and fleet sales, about 900 of September's sales were to retail customers with about a 100 going to fleets. As previously reported, many of the leases are for two year terms that can cost lessees as little as $4,000 to $5,000 out of pocket as taxpayers are on the hook for the federal subsidy of $7,500 per vehicle which goes to dealerships to lower the cost of the leases. So taxpayers are actually paying over 50% more than lessees in many instances. It is important to remember that the "cost" of a Volt does not come down because of subsidies; it is only borne by others who are paying for the subsidies.
Drivers of the Chevy Volt can expect to average about 30 to 35 miles on a charge before switching over to premium fuel. The vehicles also use a small amount of gas while in electric mode. Comparing the Volt to a fuel efficient, conventionally-powered car therefore gives evidence that the gas saved is about a gallon of gas a day under a scenario where the car is driven over 30 miles a day. So, under what would be near optimal conditions, the Volt will save under 750 gallons of gas over the span of a two year lease. That would save drivers up to almost $2,500 (at $4 a gallon for gas and 70 cents in electricity per charge) while costing taxpayers $7,500, or over $10 for every gallon of gas saved.
The approximate 1,850 September Volt leases will cost taxpayers about $14,000,000 in federal tax subsidies. It is hard to argue that the money is well-spent, given the limited benefits to gas consumption. But I'm sure Volt proponents will do their best to justify the wasteful spending of other people's money. It does not seem that logic has any place in a debate regarding the Volt and electric car subsidies; particularly with the presidential election so close and the incumbent campaigning on a green agenda and the perceived success of GM.
Mark Modica is an NLPC Associate Fellow.