Taxpayers Prop Up Cars That Won’t Run on Their Own

2011 Nissan Leaf electric car at the 2011 Washington Auto Show

2011 Nissan Leaf electric car at the 2011 Washington Auto Show (Photo credit: Mario Roberto Duran Ortiz)

I was recently asked why I don’t like electric cars.

So, let me be clear, I love the concept of an electric car.

What I don’t like is the concept that the government is subsidizing the development and purchase of electric cars at the expense of the taxpayers and their competitors.

I hate that Obama’s 2013 budget would increase the tax credit for electric cars, like the Chevy Volt, Nissan Leaf, Tesla Roadster and Fiskar Karma from $7,500 to $10,000 per vehicle.  What’s more, this taxpayer subsidy would be an instant credit just like a manufacturer rebate.  Not shocking considering the U.S. government still owns more of the struggling Volt’s manufacturer, General Motors, than anyone else.

In the Ayn Rand classic Atlas Shrugged, there are two steel magnates – Hank Reardon and Orrin Boyle.  Reardon develops a new, lighter weight, stronger steel known as Reardon Metal, and Boyle uses the government to deny the introduction of the metal into the marketplace.  Boyle, the consummate D.C. corporate crony socialist, pulls all of his strings in a failed attempt to break Reardon.

In today’s world, Boyle would not only get favorable environmental, labor and location subsidies, he would be in the front of the line for a Department of Energy “loan” and the president would be announcing “instant rebate tax credits” to make his steel more competitive with the value offered by his competitors.

What I don’t like about the electric car boondoggle is that these are not entrepreneurs testing their wits to solve very hard problems, risking their time and fortune to create a better vehicle.  No, instead they are risk averse investors who are willing to spend taxpayers money to develop a product, making their fortunes by slicing off portions of the government propped up venture to sell to other risk averse investors.

In the world of Chevy Volt, Fiskar Motors and Tesla, the taxpayer takes the risk, and a few friends of Obama make fortunes greater than anything they previously imagined.  When reward is separated from risk, the entire incentive of the capitalist system gets thrown out of whack, to the detriment of each and every one of us.

Unfortunately for the president, he decided to announce this special $10,000 gift from taxpayers to electric car purchasers within the same seven day period that Chevy announced that they were shutting down the Volt line for five months due to abysmal sales.  To double his bad luck, Fiskar Motors had Consumer Reports conduct a test drive of their new Karma, and to say the results went badly would be generous.

Here is what msnbc.com reports happened, “On Wednesday, Consumer Reports engineers were just starting to calibrate the Karma’s speed by driving 65 miles per hour down the magazine’s test track in East Haddam, Connecticut, Champion said.

“During the gentle run down the track, a light on the dashboard came on,” he said, referring to the battery light.

The speed test was completed despite the light on the control panel, but after it was parked, officials were unable to get the car restarted.

A spokesman for A123 Systems, which makes the Karma batteries, could not be reached.

That’s right the $100,000 Karma couldn’t complete the Consumer Reports testing.  This is right up with the stories out of General Motors in the early 1970s when they were hurriedly developing the energy efficient Chevy Vega.  You see the hastily constructed Vega was scheduled to go to market, but it had a problem, the initial test vehicle broke apart on the track during initial testing – setting the ill-fated car back a year in production.  Of course, most people who remember the Vega associate it with another problem – its aluminum engine block melted at high temperatures – making the car one of the most ill-conceived in history.

Of course, the Chevy Vega failing cost GM stockholders money and probably some executives their jobs, but should Fiskar fail, it would cost U.S. taxpayers almost $200 million.  In addition, there would likely be a second taxpayer hit of $249 million due to Obama’s green loan/grant team’s “investment” in equally troubled Fiskar battery maker A123.

Apart from not working during its Consumer Reports test, Fiskar has played a great public relations game as Titannic star Leonardo DiCaprio was the first recipient of the car and Justin Bieber received one for his 18th birthday on the Ellen DeGeneres Show.

However, I just cannot root for a $100,000 car where the taxpayers take the up front development risks.   So, when I read about Fiskar’s failed Consumer Reports test, I couldn’t help think – “now that’s karma.”

Comments are closed.