Government Motors Lives Up to its Name

Government Motors Lives Up to its Name

Saved by the government during the last economic crash, GM again turns to the government for help.

This time they want to saddle the public with a National Zero Emissions Vehicle (NZEV) program to support expensive battery-powered vehicles (BEVs).

Until now, Mary Barra, GM’s CEO, has done a credible job of guiding GM from its tenuous situation after the government bailout to what, until now, has been steady progress.

She guided the company through a devastating ignition key problem, sold its money-losing German subsidiary Opel, and introduced a very good BEV, the Chevy Bolt.

This latest move by government motors will anger its customers by eliciting the government to provide more taxpayer money, i.e., subsidies for BEVs, to support the company.

Under the proposed program, automakers must sell a specific percentage of their cars as BEVs going forward. The mandated zero-emission sales mix would rise 2% each year, reaching 15% in 2025 and 25% in 2030. 

Some quick calculations based on the GM press release, which is quoted toward the end of this article:

Existing BEVs represent 1% of total light vehicle sales, while 15% would require the sale of 2 million BEVs in 2025, six years from now, a 50% annual increase in sales.

The proposal to have 7 million BEVs and plugins by 2030 results in an accompanying payment of over $27 billion taxpayer dollars, assuming an extension of the current $7,500 subsidy for BEVs and $3,500 for other plug-in vehicles.

And in an attempt to achieve their profit objectives, the automobile companies will have to raise prices on all their ICE-powered vehicles … A hidden tax on all their other customers.

Presumably, if the system works as it does in California, a few car companies will earn Zero Emission Credits they can sell to company’s who don’t meet the proposed sales targets. 

Who ultimately pays for those credits? Taxpayers.

However, in spite of higher prices for pickup trucks and SUVs, and perhaps from selling ZEV credits, profits will go down because the price increases won’t be enough to cover the losses incurred by BEVs for the next decade.

Just as a reminder, a replacement battery for the Chevy Bolt, after its 8-year useful life, is advertised to cost over $15,000.

Perhaps government motors (GM) doesn’t realize that many Americans don’t want to wait an hour to charge their BEV while away from home. Or that they don’t want to pay twice as much for the family car.

Who will benefit from this program? 

Wealthy customers in California and the other ten states who have a Zero Emissions program. Who will lose? Middle-class Americans living in the Midwest who buy SUVs and pickup trucks.

This is the wrong move.

BEVs are just beginning to demonstrate they have the potential to transform the transportation segment. BEVs have a potential value proposition that could result in BEVs replacing ICE vehicles without government intervention, after the problems, such as an hour to charge the BEV, are taken care of. See, The Future of Battery Powered Vehicles 

So what is the motivation for this proposal by Government Motors?

It’s the same as it is in California, i.e., to cut CO2 emissions.

But, as has been repeatedly pointed out: Trying to cut CO2 emissions is a fool’s errand. No matter what we do, China’s CO2 emissions will be 2.5 to 3 times the CO2 emissions of the US by 2030, which will make the trivial 375 million tons of CO2 cut by the GM proposal a useless, futile exercise. See, Carbon Folly

Quoting from GM’s press release:

  • [The NZEV program] will place more than 7 million long-range EVs on the road by 2030, yielding a cumulative incremental reduction of 375 million tons of CO2 emissions between 2021 and 2030 over the existing ZEV program. 
  • Use of a crediting system modeled on the current ZEV program: credits per vehicle, based on EV range, as well as averaging, banking and trading.
  • [The proposal calls for] Establishment of a Zero Emissions Task Force to promote complementary policies. 
Chart showing China’s CO2 emissions 2000 – 2030, from Watts Up With That by Hoskins.

So, Government Motors (GM) is seeking government intervention, not only for an NZEV program but also for the government to establish more bureaucracy to generate more government proposals for how the automobile industry should be run. 

What are the “complementary policies” the Zero Emissions Task Force will propose? More, and bigger government?

This clearly demonstrates that government motors is seeking government intervention in the free market.

Chevy Bolt. Photo by D. Dears

It’s Socialism and another nail in the coffin of free markets. This time, Socialism is sponsored by industry leaders, not Bernie Sanders.

The AGW crowd will love this proposal, while Americans will pay … not only with their pocketbooks but also with their freedom and more government intervention in their lives.

The GM proposal also tries to address a “50 state solution”, but the next article will show that a “50 state” solution” is no longer necessary.

Manufacturers no longer need to be concerned about making different models for different markets.

. . .


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6 Replies to “Government Motors Lives Up to its Name”

    • The electric utility industry is bowing, weak-kneed, to the politicians who are pushing the AGW issue. In addition, regulators are allowing the RTO/ISOs to force utilities to bend to their wishes.

  1. What nobody talks about is the hidden cost of electricity charging stations road taxes and the like.

    Gasoline stations are paid for by the motorist every time he fills up. As it should be.

    A large charging station with, say, 50 -120 kW chargers might be equivalent to a 8 or 10 pump petrol station. But will be hugely more expensive. With a peak demand of more than three or four MW, it will probably have to have a dedicated high-voltage feeder. Who will pay for that? If the motorists pay, it would probably double the electricity price.

    Then there are road taxes, petrol taxefaces and the like that electric cars seem to evade. So the ordinary motorist will cease increased taxes to subsidise electric car owners. If these costs are charged to the electric cars as they should be, the fuel cost difference will be quite small.

    Everyone who buys an electric car is being subsidised by poor people. All they do, is transfer wealth from the poor to those rich enough to buy an expensive electric car so they can show off their green credentials to their friends.

    What will happen to all these green dreams if people stop buying them? Billions of dollars of investment will bite the dust.

    • Great comments. The charging stations are going to cost a lot of money, and will probably require a new feeder and substation if they install chargers large enough to charge the vehicle in less than an hour.
      Gasoline taxes are used predominately for road maintenance, and they will disappear when BEVs replace ICE vehicles. This will require alternate funding for road maintenance and could result in a tax associated with charging or a new tax on everyone.
      The cost of installing charging stations is an important issue that’s generally ignored and could affect the value proposition for BEVs. I suspect tier cost will be included in the price for the electricity, which is the only fair way to pay for the investment … Though there may be alternatives. Their cost, however, shouldn’t be subsidized.

  2. Electric utilities are giddy with anticipation about increasing electricity sales and rate-base from battery charging.

    In KCPL’s case, the MIssouri PSC denied recovery but it was appealed :

    On appeal, KCPL won and electric utilities through the US took notice:

    Here is the situation for Ameren:

    I could go on with more examples, but I think I made my point.

    • Thanks for the additional information.
      Charging, and the cost of installing charging stations is an issue that will have to be resolved over time.
      Fast charging stations cost about $50,000 ( I have also seen costs as high as $150,000). The wide variation in costs is often attributed to whether a new feeder and substation need to be installed.
      The investment needs to be recovered unless the installation is subsidized by taxpayer money.
      I personally would prefer that the cost of electricity at the charging station include enough to recover the charging stations cost. Without doing a study, but just a quick back of the envelope calculation, the cost of charging at a charging station should probably cost two to three times the cost of electricity for residential use.
      In other words 30 cents per kWh rather than 12 cents per kWh.
      I don’t like the Kansas City Power and Light approach of recovering the cost by increasing everyone’s rate. But this will have to be worked out over time.