We spoke earlier about GM trying to wrangle a $7k tax credit out of Uncle Sam so that (supposed? purported?) Volt buyers won't have to cough up so much green– about $40K at last count. If we look at the problem from General Motors' perspective, nothing could make more sense. But what about the other perspectives? Some will argue that the Japanese government pitched-in some research dollars for Prius R&D and all's fair in love, war and cars. Others will argue that the government has no business interfering with business, period. Still others will point out that the last time the Feds got involved with an automaker we wound up selling Jeep to the Germans. And then there are those who say, "What's the difference? Ever since we went off the gold standard everything (including money) is worthless." My opinion? We're spending a billion dollars a day in Iraq– what's the difference? You?
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When I hear “Government subsidized cars” I think of the Lada, the Trabant, and the Austin Allegro.
The U.S. government does subsidize cars, at least on the whole. What do we think roads are, exactly? Every dollar spent on roads is a direct subsidy to the automobile.
I laugh when people dismiss mass transit because ‘it will only work with government subsidies’.
Err…no. Americans show no shortage of desire to buy cars and most are willing to borrow more that they should for a new set of wheels so I can’t see any reason for government incentives. We are in enough debt as it is with our tragic misadventure in Iraq so lets keep it real.
Well, US gas prices are heavily subsidized, so why not help out with new car technologies – that makes even more sense.
Every dollar spent on roads is a direct subsidy to the automobile.
The cost to create and maintain the roads and highways of the nation are supposed to come from taxes on gasoline and diesel. I do not know if the tax is sufficient to cover the costs or not. One thing for sure however, the government has been building and maintaining bridges for a lot longer then the automobile has been around.
Pull out of Iraq and Volts for everyone!!!
My opinion is the same as JL’s. Subsidizing a limited-production American electric car to help it be competitive makes more sense than a lot of the things our governments splurges on, including spending any money on anything involving E85. (Koenigsegg’s CCXR being the only redeeming development to come out of E85)
The government would be better served through a graduated penalty tax on engine size like the rest of the world has. Consumer would have choice, they want the big v8, pay a huge tax, and the government would have people switching to smaller engined vehicles to avoid the taxes.
The United States government taxes gasoline and diesel fuel. That is different from subsidizing it.
The U.S. uses its military to ensure a stable oil supply for ALL countries that depend heavily on oil – which would include most of Europe, Japan, the rising Asian economies and Australia/New Zealand.
Given that most of the U.S. military presence is concentrated in the Middle East, and the U.S. only gets about 13-15 percent of its oil from there, and not all of that oil is used for transportation, I’d say that the drivers in other countries are getting a free ride courtesy of United States military spending…
In a perfect libertarian world no governments would distort market signals.
Lets not forget all the State and local subsidies and privileges that Hybrids get.
In CA early hybrid buyers get to roll the carpool lane solo. Early 2nd Gen Prii with access stickers sell for $5-10k ABOVE their new sticker.
The government would be better served through a graduated penalty tax on engine size like the rest of the world has. Consumer would have choice, they want the big v8, pay a huge tax, and the government would have people switching to smaller engined vehicles to avoid the taxes.
We already have a graduated penalty tax, our normal fuel tax. The worse mileage you get, the more you pay in taxes. What’s wrong with a having a big v8 if it gets better mileage then a 4 cylinder?
trk2: Exactly.
So, will the Prius get the 7k subsidy?
Otherwise, this is nothing else than a blatant cover-up of GM incompetence. The only reason for this rebate is that GM fucked up in its r&d concerning building a Volt on time and under budget. They blew it, they can take the heat.
Taxing engine size would also have the artificial side effect of bosting demand for tubros.
You can make a 2.0L behave like a fuel sucking V8 (Evo & WRX) with big turbos and lots of boost.
Subsidies don’t really work in the long term. If the Volt (or anything like it) is worth buying (performance, fuel economy, whatever the reason), people will buy it. If it isn’t, all that cash on the hood will snare a few extra people, but not enough to justify the enormous outlay. Don’t forget that many people will buy it without any subsidy as a “green image” status symbol. I don’t have as much of a problem will government grants for research, but an outright subsidy is bad policy. If you take it away, sales will tank.
And that’s another problem with subsidies: you can’t get rid of them! Trying to repeal subsidy spending is political suicide for anyone foolish enough to try. Why do you think we still pay farmers to not grow crops?
We have gas taxes now that punish those with bad fuel economy. This allows people to decide for themselves how much they want to pay for fuel in a year, and drive a car that will achieve that goal. And that’s just what the nanny-state types can’t stand! How dare they make their own choices! How dare they not listen to us, their more-enlightened betters!
Bah.
What they should get away from is targeting rebates at specific technology/implementation. There never should be a “Hybrid credit”, or worse yet, a “Volt credit”
If you want to have a tax credit, it should be technology neutral. It should be an efficiency credit, targeting results. That way you get more solutions to the problem like clean diesel, hybrid, ultra efficient direct inject turbo gas, etc…
If subsidizing cars will encourage people to give up their SUV’s for something smaller and less thirsty on fuel, then why not?
Everybody’s focused on sticks (i.e. proposing vehicle taxes based on engine displacement, carbon tax, raising fuel taxes), why not carrots? Subsidies (tax credits, whatever you want to call them) did wonders for kick-starting the hybrid presence in the US.
NO!
Here’s a novel idea, everybody in the country could get of their butts and buy their own cars with their own money, stay the heck out of the HOV lane unless there are three or more people, and stop trying to dip into working folks’ pockets to pay for their luxuries.
Crazy, I know. Americans are more and more stuck to the teet of government gimmes. It’s like a nation of Homers in a doughnut shop.
You know what I like?
I like the fact that we have what will someday be a text-book lesson in market economics sitting on dealer lots right now and people are arguing about how we can lower fuel use and whether or not we should subsidize electric cars.
I like how folks are ready to tax people six ways to Hades to get them out of one type of vehicle, but are steadfast in their refusal to go the opposite way to get them into another type of vehicle.
Subsidies are too prone to bad signals. Do you subsidize by gasoline mileage? By carbon emissions? By mpg-equivalent? by technology? (NO TO THE LATTER!) Too much opportunity for politics to subvert policy.
Hell no!!! This is but one more example of congress not being able to help themselves at deigning to play God in an election year. The market will sort this out on its own without congressional largess. Congress can/will only screw it up.
Is there any more deliciously misleading term than “government subsidies”? “Government subsidies” sounds so appealing – no cost to me, the government is paying for it!
They don’t sound nearly as enticing when you call them “taxpayer subsidies”.
NO! The government should not subsidize anything. Manipulating markets to meet someone’s agenda that the people don’t actually believe is worth paying for with their own money only creates wasteful artificial markets.
“# dwford :
May 27th, 2008 at 3:31 pm
The government would be better served through a graduated penalty tax on engine size like the rest of the world has. Consumer would have choice, they want the big v8, pay a huge tax, and the government would have people switching to smaller engined vehicles to avoid the taxes.”
The displacement of the engine is only weakly associated with the mileage and depends heavily on the driving habits of the operator. Even if you thought taxing mileage or CO2 emissions or whatever was a good idea, wouldn’t it make sense to tax that, rather than some arbitrary physical characteristic of the engine? A 2.4 liter jeep gets much worse gas mileage than a 3.0 liter camry or even a 3.8 liter buick, and a 6.0 liter ‘Vette can do better then a lot of four-bangers if it’s not caned.
if we subsidize farmers..why not GM
It used to be that poor people were thin, and rich people were fat. Cheap food turned that upside down. The trend to 4 buck gas may result in only poor obese people driving poor mileage, obese trucks and SUVs.
As to subsidies, so many throw this word around. Everything the government does is subsidized, vitiating any meaning of the word. There are only a few user fee taxes – including the gas tax – whether or not you believe its set high enough.
No, I don’t want to subsidize the Volt. But the tax credit subsidy of the Prius and Hondas set a bad precedent, didn’t it? AutoblogGreen has news on a $12k tax credit for a hybrid. Bad news is that its for a hybrid Peterbilt…..
The only fair and equitable solution is for the government to tax YOU and give the money to ME.
This is news? The IRS has subsidized cars in the US directly for years. A great many sales and service reps, as well as countless small business owners have been writing off cars and trucks used in business. One loophole, large enough to drive a Suburban through, gave generous tax credits to business users for vehicles over 6,000 lbs. Both the Prius and Civic Hybrids came with nice tax credits. (a tax credit, for anyone unfamiliar with the term, offsets the taxpayer’s tax due, as opposed to merely being a deduction from gross income – a HUGE difference).
Before we subsidize cars, We should subsidize in order of least amount of gas used:
1) Walking (shoe subsidization?)
2) Public transport
3) Bicycling/rollerblading
4) Motorcycling
If you want to confine it to mpg period, Do subsidies for motorized vehicles which start at infinity mpg (totally electric?) and work down.
Start at 100mpg, then 90mpg, then 80mpg….
What? The government gives money away? Now you tell me! :)
Uh, isn’t this supposed to be capitalism? Shouldn’t people have the freedom to buy what they want, and not be forced to finance (via taxes) other people’s choices? If hybrids are so beneficial, the market will bear that out. A 600cc sports motorcycle gets similar mileage too. Where’s my $7k to buy one of those?
The Volt is the wrong instance of the technology to subsidize. I’d rather see the Feds subsidize the R&D budgets of the battery companies who are making real-but-insufficient progress in return for lower battery prices at launch. Then we can get more effective EVs, serial hybrids, electric mowers, etc. at moderated prices potentially sooner.
In general, there should be enough sufficient-income early-adopters who can afford a Volt to fuel its market-entry and escort it into volume, just like there have been for $1500 DVD players, $2,000 Blu-Ray players, $20,000 plasma flat panel TVs, etc. The key for GM is to make sure that if the initial instances of a Volt drivetrain in an automobile come in at $40,000+, the car has enough drama to excite, and enough quality in its human touch points, to be satisfying. If GM can then prove that it has cash bottlenecks to scaling production to demand, then it can make its case for Federal help. Besides, taking some of the health care burden off GM is a potentially much better way for Federal dollars to help them.
If Americans aren’t sophisticated enough to see their intrinsic self-interest in buying a Volt over an imported alternative, subsidies won’t help there. The earlier hybrid subsidy disproportionately benefited Prius over other alternatives like Ford Escape Hybrid and equal-mileage ICE cars. All that subsidy did at the market level was to amplify already extant (and distorted) perceptions.
I’d like to see near-term mass subsidy of rooftop solar for residences and business, and if the double-speaking Gore-ites actually believe the doom they are pushing, then also financing for large-scale fixed-location power generation carbon sequestering.
But what I’d REALLY like is for the real crisis to get some attention: Water. Oil we can deal with. We need a continental water storage, transport and management system, and we need aggressive deployment of reverse-osmosis seawater desalination in water-short regions. We need extensive maintenance on our water delivery systems. This is all going to cost. We can deal with $200 oil — a lot of new sources of energy including unconventional oils become economic at that point. Cars are going to become more efficient regardless of subsidies. It’s on water that we need a helping hand from Mr. Big.
Phil
Wouldn’t the easiest way out be to tax gas-guzzling suv:s, and use that money to subsidise more envorinmentally friendly transports? Wouldn’t that be a good incentive for GM et al?
The government should definitely subsidize my car. I just need a few more grand to put in a turbo system and I think the racing I’m going to do this summer is gonna cost big $$. How about returning the excess tax (over and above my normal rate) charged on the overtime I worked?
They are proposing to subsidize batteries, not vehicles. The formula for calculating the amount, is based on battery capacity not manufacturer of the vehicle.
Perhaps the government should provide tax incentives to states and local governments to pay for the installation of some amount of quick charging stations for electric cars. Additional charging stations could be installed on interstate highways.
We also need other infrastructure, such as recycling, exchange, and disposal facilities for the batteries. There could be incentives in the form of research grants to create batteries with greater range, longer life, greater capacity, greater portability.
After all, we do subsidize the coal, gas and oil industries by granting them tax incentives for drilling new wells, and we defer or excuse charges for extracting on public lands. We also pay for roads into extraction areas, wildlife management plans, and environmental enforcement.
The bottom line is that we can also use battery storage technology to save energy in other ways. For example, using solar panels or concentrated solar power to recharge batteries used to power a home air conditioner, or to run a home generator.
Cars need to be considered as part of the holistic solution that addresses our energy consumption problems. Otherwise, we will free ourselves from the oil companies and run into the arms of the coal industry.
“The U.S. government does subsidize cars, at least on the whole. What do we think roads are, exactly? Every dollar spent on roads is a direct subsidy to the automobile.”
Which is paid for mostly with the gas tax. I’m all for setting the sum of fuel taxes and registration fees at whatever level is required to take care of the roads. Most analysis shows that spending on roads is in total less than is collected in fuel taxes and other user fees. Unfortunately, governments large and small like to slice, dice and co-mingle money to the point that it is very hard to sort out what is being used for what. At the moment, road user fees are being used to subsidize mass transit projects, not the other way around.
I not sure how this may affect things for me. Laws seem to favor big businesses anyhow and the rich. That effects things for me a bit. Making this personal is like making the weather personal. Of course I wan’t things to always work well, but whatever. I feel angry enough thinking about the way the Government operates anyhow. I say fuck it, I have bigger fish to fry. I think the Government needs to be studied closer and notes taken. I want a limit on the wealth of the riches. Once a person has a billion dollars, what else do they need? Again, other fish to fry.
Government support for fuel efficient technologies is a good thing. It helps get the new stuff going in volume.
It should be budget neutral: tax gas guzzlers to subsidize fuel sippers, I say.
It should be non-discriminatory: not just a subsidy for GM’s Volt, but for hybrids in general and all other fuel sippers.
By the way, we do have CAFE standards that already take care of fuel economy, but, hey, why not shoot OPEC with multiple bullets?
subsidize what you want more of
tax what you want less of
want less pollution and gasoline consumption? Tax cars and gasoline.
Want more hybrid cars? Subsidize them.