The Absurd Economics Of The Chevrolet Volt Have Now Been Addressed By Carnegie Mellon’s Professors: When Will GM’s Management Do The Same?

by Jack Lifton on March 6, 2009

in Hybrids & EVs, News Analysis

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For the US Federal Government to bailout GM’s current business model is a futile exercise in welfare state economics. There is no hope of success if GM’s flawed “public relations” driven business model is not terminated and replaced.

The Chevrolet Volt is nothing more than an attempt to bring a concept car, as such fantasies are known in the OEM automotive industry, into production for the sole purpose of vindicating the leadership of an out-of-touch imperial management, which has destroyed General Motors ability not only to compete but to continue.

In a recent article in which GM defended itself against criticism by a Carnegie Mellon University study of the Volt plug-in hybrid, the GM spokesman claims that the cost of the lithium-ion battery is so overstated by the analysts at Carnegie Mellon, that it vitiates their arguments against the economic practicality of the Chevrolet Volt.

Yet then the same spokesman turns around and states that government subsidies applied to the purchase price of a Volt, also vitiate the argument that it is not too expensive to be practical or profitable.

This kind of stupid attitude and belief that a taxpayer subsidy can be counted and counted upon, as a positive contribution towards reducing the cost of a product, is the reason that General Motors has failed as a business. If GM’s spokesman believes that the company is entitled to a permanent subsidy by all taxpayers for its products he is sadly mistaken. His salary as well as the salary of all those who believe his childish nonsense, is a waste of already given taxpayer-derived subsidies.

Every day that GM remains in business while totally dependent on government subsidies and “loan” guarantees, is another day of the waste of precious American wealth on a failed business model.

General Motors’ management should have said at the beginning that it could not, as time has proven, develop a profitable electrified car on its own, and ask for a subsidy then. The United States’ Federal government is not competent either to develop an electrified car, or to judge the ability of any business to do so. These are the functions of a free market.

The free market has now passed its judgement: GM cannot develop a profitable electrified car. Time’s up. Game over.

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