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Posted at 2:47 PM ET, 11/16/2010

Can the government pick winners?

By Ezra Klein

Maybe.

By Ezra Klein  | November 16, 2010; 2:47 PM ET
 
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Comments

Ezra Klein, government car salesman.

Posted by: msoja | November 16, 2010 2:53 PM | Report abuse

Ezra, that was their car they were hoping for for the future when they went into bankruptcy.

Posted by: 4jkb4ia | November 16, 2010 3:21 PM | Report abuse

The Volt is an interesting technical achievement. But at $41K base price, minus a $7.5K subsidy, it doesn't really make economic sense. It's still $10.7K more than a Toyota Prius, for a rather marginal saving in fuel cost. And with a big question mark over the reliability and lifetime of the batteries and other novel technology.

I don't think it's going to sell in large numbers. Though by all accounts the Chevy Cruze - using some of the same technology, but without the electric drive - is going to be a competitive small car, and much better that GM's previous efforts.

Posted by: richardcownie | November 16, 2010 3:24 PM | Report abuse

Lets see, spend a extra 20K to save 5K in gas. If you don't drive it's a good deal.

Posted by: obrier2 | November 16, 2010 3:32 PM | Report abuse

The only thing wrong with the Volt is that it's expected to be a home run when really it will be a bunt single. Agree with the other posters that the price tage versus the Toyota, Honda and Ford hybrids will be insurmountable given GM's shaky reputation for quality.

Posted by: 54465446 | November 16, 2010 3:42 PM | Report abuse

--*Can the government pick winners?*--

In the case of GM, the answer is painfully obvious: The government purposely picked GM because if was such a raging loser.

Has Klein pre-ordered his Volt, yet, or is he just recommending that other people buy it? He'll continue to take the limo to the airport when he wants to dine out.

Posted by: msoja | November 16, 2010 3:58 PM | Report abuse

MT doing its bit for GM or coincidence? One of the K-cars that contributed to Chrysler's recovery after its gov't bailout post-Carter was Motor Trend Car of the Year. Any car enthusiasts remember which one?

The 1981 Motor Trend Car of the year was the Dodge Aries/Plymouth Reliant.

What was the 1980 Motor Trend Car of the Year? The
Chevy Citation (stifling a giggle)

Posted by: tuber | November 16, 2010 4:22 PM | Report abuse

It's certainly a winner - so much so that the government still feels the need to apply a $7,500 subsidy.

The Chevy Cruze can get up to 40mpg and is only half the price of the subsizided Volt.

It's nowhere near being an economical decision, even subsidized.

The RT article mentions an effective mpg of 72.9, vs. 40 for the Cruze.

Let's assume a driver is considering buying a stock Cruze or a stock Volt, a $17,225 price difference (abstracting out fees and the like). If this person drives 20,000 miles a year, that's 500 gallons for the Cruze, and 274.3 gallon-equivalents for the Volt. Let's price gasoline at $5/gallon.

It costs $2,500 to gas up the Cruze, $1,371.74 to power the Volt. Given that $1,128.26 differential, you have a payback time of... 15.27 years. It's much longer still if you require a new battery after the warranty expires.

Throw on a modest discount rate of 4%, and it makes financial sense to buy a Volt if you plan to keep your car for ~24 years, though only if the battery doesn't need replacing.

Posted by: justin84 | November 16, 2010 4:25 PM | Report abuse

"It's certainly a winner - so much so that the government still feels the need to apply a $7,500 subsidy."

Tax policy aside, it will be interesting to see which of the two early entrants - the GM Volt and the Nissan Leaf - does better over the next 2-3 years.

Posted by: tuber | November 16, 2010 4:47 PM | Report abuse

I hate the Volt!

Think of it this way, CA, particularly the Bay Area has this highest penetration of Hybrid cars. It will definitely lead the way in purchasing other alternatively powered cars.

CA also has this highest energy prices. Those energy prices are over 40 cents per kwH for top tier usage, which is very easy to get bumped into with a plug-in hybrid, which eliminates almost all cost savings over gasoline.

A Honda Civic is a better option than the Volt, both economically and environmentally.

Posted by: will12 | November 16, 2010 5:59 PM | Report abuse

Very insightful, Ezra. How about the fact that the government is sending nice fat checks to the rich people who buy it to show off how green they are to their rich friends?

Posted by: theo2709 | November 16, 2010 6:20 PM | Report abuse

"Ezra, that was their car they were hoping for for the future when they went into bankruptcy."

Actually, no. They were betting on the Delta II Platform and the J300 Cruze, having finally bitten the bullet and followed Ford in unifying their global development and production, and the cash crunch came at exactly the wrong time, during the transition to the Delta II rollout.

The Volt (also built on the Delta II) is a long-term bet. The Cruze is what gets them there.

Posted by: pseudonymousinnc | November 16, 2010 6:50 PM | Report abuse

From 2007:

"GM's global regions extensively modified models based on the existing Delta architecture. That made it impossible to assemble Delta-based Chevrolet and Opel models in the same plant — a stumble in GM's drive for truly global vehicle architectures."

http://www.autonews.com/apps/pbcs.dll/article?AID=/20071126/ANA03/711260314/1178

There's now continuity and flexibility in production that didn't exist three years ago, and the federal government, not being made up of dumb sloganeers, knew that would happen.

Posted by: pseudonymousinnc | November 16, 2010 6:57 PM | Report abuse

--*There's now continuity and flexibility in production that didn't exist three years ago*--

You can buy a certain amount of that with stolen dollars and arbitrary confiscation of assets (R.I.P. GM's creditors), but that's a long walk from bringing a sustainable business model to fruition in a cutthroat global economy.

My last two vehicles have been GMs, but no more.

Posted by: msoja | November 16, 2010 9:14 PM | Report abuse

More vacuous slogans from msoja. Yawn. Are you a bot?

Posted by: pseudonymousinnc | November 16, 2010 10:09 PM | Report abuse

--*Are you a bot?*--

Are you Mrs. Klein?

Posted by: msoja | November 16, 2010 10:55 PM | Report abuse

Not a bot, then. Just a mooching parasite.

Posted by: pseudonymousinnc | November 16, 2010 11:56 PM | Report abuse

--*Not a bot, then. Just a mooching parasite.*--

I'm not willing to leech off my fellow citizens, like you and Klein advocate, mousi.

What does that make you.

Posted by: msoja | November 17, 2010 12:29 AM | Report abuse

--*mooching*--

Ask Klein what portion of his salary is derived from money wrung out of taxpayers and laundered through the Kaplan group.

"Evidence is growing that Kaplan and similar schools have been misleading potential students about the employment prospects they face once they graduate, leaving them with mountains of debt and no job."

http://news.yahoo.com/s/ap/20101105/ap_on_bi_ge/us_earns_washington_post

Posted by: msoja | November 17, 2010 12:47 AM | Report abuse

"I'm not willing to leech off my fellow citizens"

And yet you do, telling yourself otherwise.

Liar, fraud, hypocrite, moocher.

Posted by: pseudonymousinnc | November 17, 2010 1:05 AM | Report abuse

"I'm not willing to leech off my fellow citizens"

--*And yet you do, telling yourself otherwise.*--

You are a thief, mousi. My disinclination to have you steal from me does not mean I am leeching from you.

Posted by: msoja | November 17, 2010 1:33 AM | Report abuse

ps. You are a liar and a dissembler, too. Do you work for Slate?

Posted by: msoja | November 17, 2010 1:35 AM | Report abuse

You have clear title over everything you claim as your own, soggy?

What a fraud and a moocher you are.

Posted by: pseudonymousinnc | November 17, 2010 2:53 AM | Report abuse

--*You have clear title over everything you claim as your own, soggy?*--

You're the one making stupid accusations, mousi. Let's see you announce the things that I have claimed that I have clear title to, but which I don't have clear title to.

Feel free to begin...

Posted by: msoja | November 17, 2010 10:26 AM | Report abuse

Anyone that says the Volt makes no economic sense clearly never ever studied economics, much less a 101 level course in it.


Perhaps these same people think borrowing from China and sending the money to the Middle East for oil is what makes sense.


Perhaps they think employing foreign auto-workers and foreign engineers who pay no American Taxes, and purchase very very few goods from Americans with their money makes sense.


Perhaps they think sending our boys day in and day out to go fight in wars


People that don't see the value in the Volt are either 1) short-sighted, 2) ignorant, or 3) traitorous sell-outs plain and simple. All 3 of these evils in government, politics, business, and the general civilian population are what've been failing this nation for the past 20-30 years.


WAKE UP AMERICA. The Volt may not suit you, but it does suit others, and there's nothing wrong with that. Given our economic, geopolitical, and unemployment problems, the technology deserves a chance. Period. There's a reason BMW, Japan, and China are all working feveroushly to catch up with Chevy and come out with similar cars in the next few years.

Posted by: roob7370-proctor | November 17, 2010 11:00 AM | Report abuse

Anyone that says the Volt makes no economic sense clearly never ever studied economics, much less a 101 level course in it.


Perhaps these same people think borrowing from China and sending the money to the Middle East for oil is what makes sense.


Perhaps they think employing foreign auto-workers and foreign engineers who pay no American Taxes, and purchase very very few goods from Americans with their money makes sense.


Perhaps they think sending our boys day in and day out to go fight in wars


People that don't see the value in the Volt are either 1) short-sighted, 2) ignorant, or 3) traitorous sell-outs plain and simple. All 3 of these evils in government, politics, business, and the general civilian population are what've been failing this nation for the past 20-30 years.


WAKE UP AMERICA. The Volt may not suit you, but it does suit others, and there's nothing wrong with that. Given our economic, geopolitical, and unemployment problems, the technology deserves a chance. Period. There's a reason BMW, Japan, and China are all working feveroushly to catch up with Chevy and come out with similar cars in the next few years.

Posted by: roob7370-proctor | November 17, 2010 11:02 AM | Report abuse

"Let's see you announce the things that I have claimed that I have clear title to, but which I don't have clear title to."

Usenet k00k and mooching fraud mslogan claims title (and whines about "theft") in such broad and sweeping terms that there's only one response necessary:

Audit the Soja.

Posted by: pseudonymousinnc | November 17, 2010 12:57 PM | Report abuse

There ya go. Make some comments on a public blog, and an anonymous retard threatens to bring the federal goons into the picture.

That's what Klein's moronic collectivism breeds.

Posted by: msoja | November 17, 2010 2:05 PM | Report abuse

"Anyone that says the Volt makes no economic sense clearly never ever studied economics, much less a 101 level course in it."

Would you be willing lend me $17,000 in exchange for 10 equal payments of $1,100?

That's the Volt vs. Cruze buy decision in an economic terms. That assumes the government subsidy, gasoline averaging $5/gallon, that the car is driven 20,000 miles/year for a decade and the battery doesn't die after the first 100,000 miles.

Assume the battery dies, no government subsidy and $3 gasoline and suddenly the trade is $30,000 for $700 annual payments.

Now, if you prefer the Volt over a comparable gasoline powered model for reasons other than the fuel savings, then that's something else, but that preference will cost you. Of course, there is nothing wrong with that - it doesn't make economic sense to drive a BMW 550i instead of a Chevy Malibu, but plenty of people do.

"The Volt may not suit you, but it does suit others, and there's nothing wrong with that."

Agreed, as long as the Volt enthusiasts keep their hands off my wallet when indulging.

Posted by: justin84 | November 17, 2010 5:43 PM | Report abuse

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