Obama hikes subsidy to wealthy electric car buyers
The White House intends to boost government subsidies for wealthy buyers of the Chevy Volt and other new-technology vehicles — to $10,000 per buyer.
That mammoth subsidy would cost taxpayers $100 million each year if it is approved by Congress, presuming only 10,000 new-technology autos are sold each year.
But the administration wants to get 1 million new-tech autos on the road by 2015. The subsidy cost of that goal could reach $10 billion.
The planned giveaway will likely prompt populist protests from GOP legislators, but it will likely also will be welcomed by auto-industry workers in the critical swing state of Michigan.
That welcome is critical for President Barack Obama, who is touting his support for blue-collar manufacturing programs to help offset his low public approval ratings.
The new subsidy level represents a 33 percent jump from the current $7,500 government payout for each Volt buyer, even though the Volt’s buyers are already among the wealthiest Americans. It will be offered to buyers of any new-technology autos, including battery-powered autos and cars powered by natural gas, said a White House official.
The extra money for wealthy buyers will be borrowed funds, eventually paid off by future taxpayers in all income brackets.
Pennsylvania Republican Rep. Mike Kelly, who owns a Chevy dealership, has already introduced legislation to end the auto subsidies. “The nation is $15.2 trillion in debt and climbing, so we’ve got to be a lot more careful about how we spend the money,” he told The Daily Caller in January.
The bill, he said, will also help citizens recognize the money-losing crony-capitalist deals between Democratic legislators and business interests, such as Chevy, he said. “How do we get this crony capitalism across to the voters? We tell them, ‘Folks, this is your money, not the administration’s money. … It’s being thrown around by this president. … It’s not a good investment, and there’s no positive return on it.”
For example, even with the $7,500 rebate for each buyer, Chevy sold only 7,671 Volts in 2011, far below the target of 10,000 earlier touted by company officials. Last month Nissan made the 10,000th sale of its all-electric Leaf model.
The average income of the Chevy Volt’s buyers is $170,000 per year, according to General Motors CEO Dan Akerson. “Some of them — I think roughly half — are either [Toyota] Prius or BMW owners,” Akerson said in a Dec. 16 interview with the Associated Press.
That high income puts the Volt’s buyers in the top 7 percent of households, according to census data, and slightly above the rankings held by households with BMWs, Lexuses or Cadillacs.
The average income of BMW buyers is nearly $170,000, according to a May 2010 article in Bloomberg Business Week.
Cadillac buyers earn almost $130,000, and Lexus buyers take home an average of $141,000. Only Mercedes-Benz drivers earn more than Volt drivers, an average of $174,000 per year.
The extra subsidy is buried in President Barack Obama’s request for the 2013 budget, but was briefly described by White House economic chief Gene Sperling during a White House briefing today.
“We give consumers the incentive to buy these cars, he said, adding that the credit would be $10,000 per auto.
The budget document, titled “Investing in Our Future,” includes a goal of putting “One Million Advanced Technology Vehicles on the Road by 2015.”
To reach this goal, the budget “continues to support electric vehicle manufacturing and adoption in the United States through new consumer rebates, investments in R&D, and competitive programs to encourage investment in advanced vehicle infrastructure,” says the document.