More Waste in Pursuit of Electric Car Nirvana

Right From the Start

President Barack Obama, the self-described smartest-man-in-the-room on any given subject, continues to display that sort of stubborn ignorance usually reserved for the truly stupid when it comes to the economy.  Despite the fact that Keynesian economics has failed to perform as promised anywhere in the world, and centralized planning has faired even worse, Mr. Obama clings to both like Sunset Boulevard’s Norma Desmond to her fading glory on the silent screen.

In a Wall Street Journal article, Mike Ramsey details another $1 Billion boondoggle at the expense of American taxpayers.  So sure was Mr. Obama that the federal government could invigorate a third-rate electric car industry, that he awarded over $1 Billion in grants to build factories and produce batteries for the soon to be burgeoning electric car business – led by the then government owned General Motors.

But it is the nature of free markets to upend centralized planning – particularly if the centralized planning is based on a political agenda rather than any reflection of economic reality.  And here is the crux of the matter as described by Mr. Ramsey:

“Since 2009, The Obama administration has awarded more that $1 Billion to American companies to make advanced batteries for electric vehicles.  Halfway to a six year goal of producing one million electric and plug-in hybrid vehicles, auto makers are barely at 50,000 cars.”

It’s not that the American automotive industry lacks the capacity to produce the million cars that Mr. Obama envisioned, it is the consuming public that has turned its collective back on Mr. Obama and his expensive toys that have, to date, failed to perform at any satisfactory level.  The idea of paying $45,000 for a $17,000 Chevrolet Cruz that has been retrofitted to drive 40 miles on a battery powered electric engine has predictably been rejected by American consumers.

So what is the source of this prediction of demand for 1 Million electric powered vehicles in six years?  Was it based on some marketing survey?  Was there demonstrable evidence of a pent up market demand by 1 Million consumers for an electric powered vehicle?  No, there was none of that.  In fact, every marketing survey of any credibility has indicated that car buyers will accept electric cars if, and when, they perform comparably to current gas powered vehicles, when the operational cost approximates current gas powered vehicle operating costs and when the cost of production approximates the cost of current alternative gas powered vehicles.

Have we suddenly run out of fossil fuel that currently powers automobiles?  No.  In fact, new discoveries like the Bakken field, ANWAR in Alaska, and deep water drilling in the Gulf of Mexico, coupled with improved recovery techniques like fracking, tend to indicate that fossil fuels remain in abundance in North America at very reasonable prices.

So what is the source of the requirement for 1 Million electric cars.  It lies solely in the whim and caprice of Mr. Obama and members of his administration.  It represents a conscientious decision to force an unproven technology on to an unwilling public.

In pursuit of this outrageous abuse of executive power, Mr. Obama and his administration have thrown billions of dollars in grants and subsidies at manufacturers in order to make something that is not profitable appear to be so.  They have consistently sought to reduce the availability of fossil fuels but have failed because technological advances have made fossil fuels abundant under private lands.  And they have created tax credits designed to overcome resistance to costly, but poorly performing, vehicles.  In that they have also failed.  A $7,500 tax credit for a $17,000 car priced at $45,000 is hardly sufficient to encourage people to buy a vehicle that delivers, at best, 40 miles to a charge.

And what is the result.  Well, according to the Wall Street Journal, it has been disastrous.  At A123 Systems, whose opening was attended by Mr. Obama, Mr. Ramsey notes:

“Getting to that electric-car nirvana is proving more difficult.  A123 is scrambling to staunch losses and raise new money to stabilize its finances.  Rival Johnson Controls Inc, used government grant to build a battery plant in Holland, Mich., but that facility is nearly idled now after its main customer went bankrupt.  Korea’s LG Chem built a plant in Michigan to supply General Motors, but that plant, which employs 220 people, hasn’t yet begun production, a company spokesman confirmed.”

Another beneficiary of Mr. Obama’s largesse, Enerl, filed for bankruptcy and the combined beneficiaries who promised to create over six thousand jobs have instead created about two thousand jobs, including those at the plants that remain virtually idle.

A billion dollars gone here, $50 Billion to General Motors, and millions more in tax credits and still no significant market for electric cars.  But that doesn’t deter Mr. Obama or his administration who recently granted Nissan Motors $1.3 Billion to build a plant to produce batteries for 100,000 electric cars a year – that despite no demonstrable evidence that a market exists for such production and that no private financial institution would be willing to undertake such a fool’s errand.

This kind of stubborn stupidity is reminiscent of the fat boy with the pig eyes in the bar who continued to shout “DID TO” ever louder when informed that Al Gore did not win the presidency.  And this kind of stubborn stupidity is made all the worse given that neither Mr. Obama nor any of his hallelujah chorus are investing any of their own money in this disaster.  But like every good liberal they are more than willing to spend your money on their great ideas.