The View From 1776

Government Motors’s new battery-powered automobile sells for an unrealistic$41,000, compared to other automobiles. Even to sell a hoped-for 10,000 units, the Federal government is having to give every buyer a $7,500 tax credit.

Based on its projected initial sales of 10,000 units, Government Motors’s investment to produce this green icon is approximately $1.4 billion per car. And that doesn’t include the $7,500 tax credit Obama’s green giants are giving each buyer, or the $50 billion spent by the government to bail out Government Motors and deliver control of the company to extortionate, socialist labor unions.

Nor does it include the approximately $751 million annual interest costs that must be imputed to the total investment at present corporate bond interest rates of 5.22%.  Add that into the picture and, if there were no costs to produce each unit (i.e. assuming that the total sale price of $41,000 would flow to the bottom line), at the initially projected sales rate of 10,000 unit sales per year, 59 years would be required just to recoup invested dollars, with no allowance for profit.  Even at the more ambitious goal of 45,000 unit sales per year, 13 years will be required to recoup investment costs, with no profit.

The net revenue after all production cots, of course, will be much less than $41,000 per unit and the number of years to recoup initial investment becomes ridiculous.

No sane businessman would undertake such a speculative investment with no real prospect of making a profit within a reasonable time period.  The Chevy Volt amounts to an American transplant of the East German socialist government’s Trabant.

Such fantastic numbers illustrate the gulf between economic reality and the Keynesian economists structuring Obama’s green energy programs.  Ivory tower theorists and Congressional politicians should have a severely limited role in determining the nation’s future.