GM gambling all on Chevy Volt, time for government subsidy?
By Matt Jansen
GM is taking the inexorable movement toward green, energy efficient, and sustainable technology dead serious — finally. And the Chevy Volt is the most obvious evidence of that. But, with sagging sales in North America and the company’s highest R&D budget in a decade, it’s ready to take some risks. But if the coffers run dry too soon, is it time for the government to subsidize those efforts?
“Even though the [GM] is burning through $1 billion in cash a month, the R&D budget is the biggest in a decade: $8.1 billion in 2007, up from $6.6 billion the previous year. ([Recently], however, GM said if the economy doesn’t improve, it could be forced to borrow or cut spending.)” according to BusinessWeek.
GM is focused on bringing a whole new family of hybrid cars to its customers, many of them based on the technology currently being developed for the Chevy Volt. It’s a high stakes game with GM desperate to leapfrog ahead of its competitors.
But with finite resources, GM is making a risky move with strong spending and a rigorous deadline: to release the Chevy Volt by 2010. Without cheap access to financing though, GM may be forced to charge even more for the Chevy Volt, pushing it out of reach for middle class America.
A cheap loan or a grant from Uncle Sam could remedy that.
With a reasonable price, consumers feeling guilty about owning a foreign car may rush back to GM, and economies of scale could make GM’s production cost per car more digestible.
Plus, it could act as a strong catalyst in an crawling economy because the Chevy Volt has the potential to create a whole new ecosystem of products.
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Stumble It!
May 20th, 2008
This is really disgusting, so the oil lobbies jack oil prices so we have to go hybrid and then the car lobbies get the government to give them money because they dragged asss going the hybird route. Truly pathetic.
Check out more of the story at http://www.chevy-volt.net
May 21st, 2008
No subsidy. We already subsidize wind power, solar, and ethanol way too much. Let the market decide the best product for the price. If plug-in-hybrid truly is the best option, then let them prove it to us. I would not own a Prius (unless given to me). I own a Chevy Aveo which gets 30mpg (it is a crappy little cheap car but it gets good mileage). To switch to a Prius would have taken me 30 years plus to pay back the difference with the cost savings from mileage. People who own a Prius want everyone to think they care about the “environment” and they want to feel good about driving and polluting a little less.
June 8th, 2008
I’d rather see the government loan GM $10 billion to recreate a domestic auto industry that won’t be dead by 2015, than fund the occupation in Iraq for another few weeks, but that’s just me.
I guess the ‘market’ likes to blow stuff up.
I think like guns, Americans would rather die than let foreigners pry their Adam Smith textbooks from their cold, dead fingers. China is just watching with amusement, waiting until they make their move in 2018.
I’ve owned a Prius since 2004, and don’t give a f**k what people think of that (when I’m driving). It’s a fun car, and gets 46 mpg total (not just highway, like a lot of people quote; and that 46 includes all the short hops to the store, when the engine is not fully warmed. If people actually *measured* mpg, they will find it much lower than expected). I’ve had people at gas stations say the ‘numbers’ don’t add up – they seemed to think that $2 gasoline in 2004 could be projected 15 years into the future.
Tom – wow, you can project gasoline prices *30* years into the future ? Most people can’t project one *month*.