GM debuts new taxpayer subsidized mini-electric car

Michael Bastasch | Contributor

General Motors is set to debut its new all-electric version of its mini vehicle at the Los Angeles Auto Show this week and is set to go on sale this summer in California, Oregon, Canada, Europe and South Korea — where the vehicle is made, reports The Associated Press.

GM is unleashing the new Chevy Spark EV as part of an effort to produce 500,000 battery propulsion vehicles a year by 2017. The company previously failed to meet their sales goals this year for their hybrid Chevy Volt.

The Spark EV is set to cost under $25,000 after a $7500 tax credit is applied, making it less expensive than the Volt at $31,645 after a $7500 tax credit, according to Bloomberg.

The all-electric Nissan Leaf starts at $27,700 after the tax credit.

Despite a generous tax credit, the Volt lagged well behind GM’s sales goals this year, only selling 19,309 through October, well short of their total initial sales goal of 45,000 sold in the U.S. this year. Recently, Reuters reported that GM lost up to $49,000 on each Volt it builds, an estimate GM has disputed.

In September, GM announced a temporary suspension of Volt production following weaker than expected annual sales.

All-electric cars have also been falling short of their sales goals this year as well. Only 6,791 Nissan Leafs were sold this year, well short of Nissan’s goal of 20,000, but also a 16 percent decline in sales from the first ten months of last year, according to Car and Driver.

The Leaf is the top-selling  pure electric vehicle, with no other model breaking 1,000 sales so far this year, reports Car and Driver.

The Congressional Budget Office said that the tax credits for electric cars is not enough to make them competitive with conventional cars. For example, the current maximum $7,500 subsidy would need to be increased by 60 percent to make a plug-in hybrid car, like the Chevy Volt, competitive with an average fuel economy — 25 miles per gallon — conventional gas-powered car. That means a $12,000 subsidy for new plug-in hybrids.

An all-electric vehicle, like the Spark EV, comes closer to being cost competitive with conventional vehicles than plug-in hybrids, but limits on how far these cars can go before needing a recharge means they would require a 50 percent higher subsidy to make them cost competitive.

The Spark EV is also much more costly than its gas-powered alternative which starts at $12,245, gets an estimated 38 highway miles per gallon, and has sold more than 8,400 cars through October.

GM has said that the Spark EV has one of the best battery ranges of any vehicle in its class, but hasn’t specified how far it can go without being recharged. Rebecca Lindland, an IHS Automotive analyst who test-drove the Spark EV, estimated that the car had a range of 55 to 75 miles.

According to the CBO, electric vehicle tax credits will cost $7.5 billion through 2019 and will have little to no effect on reducing gasoline consumption and lowering greenhouse gas emissions, at least in the short run — the ultimate goal of the tax credit.

“That was not hyper-mile usage so I’m thinking they will push for the 100-mile-range mark,” she told Bloomberg.

The Leaf, averages 73 miles on a charge and the electric Ford Focus sedan has a range of 76 miles on a charge.

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