Politics

Volt drains power from economy, Obama’s 2012 campaign

Photo of Neil Munro
Neil Munro
White House Correspondent

The White House’s green technology revolution is sitting in an auto lot in Butler, Pa., and nobody is buying.

“Nobody comes in to ask, nobody comes in to look … The American people are smarter than the government — they’re not buying that car,” said Republican Rep. Mike Kelly, who owns the auto lot where one of General Motors’ combined electric-and-gasoline powered Volt autos sits unwanted, unsold and unused.

The Chevy Volt would cost its buyer almost $40,000 — even after a $7,500 federal check — and that’s more than twice the price of a comparable Chevy Cruze, Kelly told The Daily Caller. “I just pay interest on it, insure it, and in another week or month, we’ll scrape snow off it.” (SEE ALSO: Obama to go around Congress on ‘regular basis’ to ‘heal the economy’)

His lonely Volt, however, isn’t truly alone. There are 3,370 Volts sitting in auto lots around the country, up from 2,600 on Oct. 3, according to cars.com, one of the nation’s largest automotive classified sites.

The Chevy Volt was to be a centerpiece of President Barack Obama’s green technology industrial revolution, and of his 2012 re-election campaign.

It, and similar green technology products, were expected to employ up to two million people by 2010, according to Obama’s economic advisers. The electric car boosters at the Department of Energy, for example, predicted production of up to 120,000 Volts per year from 2012 onwards, according to a Feb. 2011 update of the DOE’s ambitious report, “One Million Electric Vehicles By 2015.”

The car is the “flagship model of the government-industrial complex,” said Patrick Michaels, a senior research fellow at the libertarian Cato Institute. But sales data shows “this thing is not selling like they thought it would.”

Grandiose plans for Volt production are being quietly reduced, as sales lag and reports proliferate of manipulated sales figures.

The car is now being promoted by GM as a ‘loss-leader,’ an experiment that will goose future sales of other cars by boosting the brand. “It is an assertion of leadership — there is nothing else like it on the road,” said company spokesman Greg Martin. By pushing ahead with the car, and using it to help develop a wide variety of alternative power plants, “we’re exercising some vision and leadership that people have accused of of not exercising in the past,” he told TheDC. (RELATED: 115-year-old electric car gets same 40 miles to the charge as Chevy Volt)

But that’s not what company officials said earlier. In May, GM CEO Dan Akerson envisaged production of 25,000 Volts this year, and 100,000 per year afterwards. These days, cautious company officials talk of 16,000 Volt sales this year, and 60,000 new Volts next year, for U.S. and overseas markets.

Volts aren’t selling today in significant numbers, and stock is piling up in auto lots around the country. On Oct. 24, for example, there were 49 unsold Volts within 50 miles of Obama’s White House, and 145 within 50 miles of Beverly Hills, L.A., according to cars.com.

Those are two of the wealthiest districts in the country. Plato, Mo. is at the geographic center of the U.S. population, and it has four Volts within 50 miles of the town. There are 45 unsold Volts within 50 miles of Mike Kelly’s dealership, says cars.com.

Dealers are desperate to get the Volts off their lots, partly because GM makes them buy the autos from the factory up front. The dealers can only get their money back if they sell the cars, and so some have taken to desperate practices. According to various media reports, they’re discounting them to local governments, and selling them in bulk to companies that want to stay on the administration’s good side.

General Electric, for example, announced in November 2010 that it would buy up 12,000 Volts by 2015. Coincidence or not, GE CEO Jeff Immelt also heads Obama’s Council on Jobs and Competitiveness, and works hard to extract favors — and avoid pain — from Obama’s far-reaching regulatory agencies.

The federal government is already providing a $7,500 check to every person who buy a Volt or another electric cars, such as the Nissan Leaf, now being built in Japan. A U.S. production plant for the Leaf is slated to open in Tennessee next year.

State governments are also kicking in subsidies. For example, Pennsylvania would pay someone up to $3,500 to buy Kelly’s Volt. California allows Volts to bypass crowded freeways by giving them free access to high-occupancy lanes. Local governments and power companies also subsidize the installation of high-capacity battery charging wires for Californian’s houses. These wires will help home owners to charge their electric cars.

These various subsidies were enough to win 723 sales in September. By December, said Michaels, “they’re going to try to give away this car” to reach the year-end sales goals, adding that “this whole thing reeks of cronyism and corporatism.”

The value of the Volt’s subsidies is impossible to precisely total. But likely financial costs are easy to predict. If GM loses only $10,000 for every one of the 60,000 Volts to be built in 2012, “that’s $600 million … a Solyndra loan per year,” said Michaels.

The Volt shows “where people [in government] who don’t know how to run their own business are telling other people how to run their businesses,” said Kelly. “It is insane.”

Yet the Volt covers only a small fraction of federal subsidies for green technology. The 2009 stimulus, for example, including $38.6 billion in green tech loans. By this fall, $17 billion had been distributed, creating only 3,545 new jobs according to a September calculation by the Washington Post. That amounts to $4.8 million per new job.

It’s also a far cry from Obama’s pre-election ambitions. In an August 2008 meeting described in Ron Suskind’s new book “Confidence Men,” Obama’s economic advisers envisioned that up to two million green energy jobs by 2010 would offset the expected real estate bust.

But Obama is keeping the green dream alive, at least until November 2012. In July, he visited a government-funded, 300-employee battery plant in Holland, Mich., where he declared that, “This is about more than just building a new factory, It’s about building a better future for this city, for this state, and for this country.”

Out in Butler, Pa., Kelly’s lone Volt is still sitting in the lot. “Hopefully, someone will come along and say, ‘That’s exactly what I’m looking for,’” Kelly said. “But I don’t know anyone like that in Western Pennsylvania.”

Follow Neil on Twitter