Trap of the Day: Green Cars

In my business experience, I recognize at least one basic truth: If a consumer or business identifies a need, trust that an entrepreneur will quickly recognize the opportunity, and just as quickly figure out how to fulfill that need with a specific product or service. The case for electric cars is not driven by a specific consumer need, but rather by a larger, well organized global initiative to reduce dependency on fossil fuels.

As a replacement for actual consumer demand, federal and state governments have stepped up to offer would be buyers – and manufacturers – incentives to make sure electric cars are getting due consideration in the competitive market for automobiles.

Consider the 2012 Nissan Leaf, which has a sticker price of $37,250 but qualifies for a federal taxpayer-funded rebate of $7,500. Meanwhile BIG subsidies are saved for those who manufacture electric vehicles. The Tesla Roaster, for example, has received over $500,000 in federal grants and loans to produce their $120,000+ playthings for the Hollywood rich and frivolous. Meanwhile, GM has received hundreds-of-millions in federal grants to produce the controversial Chevy Volt, an electric-gas hybrid most famous for battery explosions.

According to GM’s CEO, the average family income of the Chevy Volt buyer is $170,000 – which is a mere pittance compared to the buyer of the taxpayer-subsidized Tesla Motos, whose average family income exceeds $250,000. One may wonder, if EVs are so desirable, why the average working family of four should be contributing hundreds of dollars per year to make sure that billionaire Elon Musk can build hot rods for those that certainly can afford to buy them without help.

James Holman, an economist for The Mackinac Center for Public Policy, claims that when all government subsidies paid to GM and its suppliers to produce the Chevy Volt are considered, each Volt sold in 2011 cost us – the American taxpayer – about $250,000. Now, critics of Holman point out, with merit, that this calculation considers only the Volt’s first year sales – which GM admits were disappointing and far below projections. So I guess we should be happy – if Volt sales take off, our relative tax burden may fall precipitously – perhaps even less than $100,000 per car sold!

But hey, let’s forget about the economics – it’s the Earth that matters, right? According to the 2011 Annual Greenhouse Gas Report, 14% of all emissions originate at the exhaust pipes of vehicles used for transportation. In contrast, 21% of these emissions are belched from power stations, which are still dependent on – you guessed it – fossil fuels. In the US today, there are about 300M cars registered. By 2020, JD Powers and Associates estimates 100,000 of these will be electric, requiring those same fossil-fueled power stations to charge their Lithium Ion batteries. A good trade off for the billions spent in taxpayer money? You do the math.


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