The Chevy Volt was recently named European Car of the Year. But, while the Volt is receiving accolades in Europe, it is being bashed in its home country. Republican politicians and conservative pundits have turned a “Made-in-the-USA” success story into a political punching bag.
Fellow PolicyMic Pundit Christine Harbin has recently joined Rush Limbaugh in the beat down. In her article she proclaims, “When the government picks winners and losers in the market, it almost always picks losers.” The Volt, in her mind, is the latest example of a government-picked loser. The truth is that the U.S. government picked electric vehicles and the tax subsidy is achieving its intended effect. General Motors was the one who picked the Volt and it is by no means a clear loser.
There is no official award for “U.S. Tax Subsidy of the Year,” but according to the Citizens for Tax Justice, 56% of recent U.S. tax subsidies went to those who need it the least; companies in the financial, utilities, telecommunications, and oil & gas sectors. All four of these sectors are highly profitable, yet they received $123 billion in tax subsidies from 2008-2011. The government may not always pick winners, but winners always pick (i.e. lobby) the government.
The American Recovery and Reinvestment Act of 2009 contained a tax credit for the purchase of any new electric-drive vehicle. The subsidy encourages consumers to purchase EV’s that they may otherwise pass up due to cost concerns. If EV’s sales are not spurred by this credit then the government loses very little in tax revenues. Hybrid vehicle subsidies, beginning in 2005, were successful at establishing U.S. demand. Tax breaks for electric vehicles represent the shift to the next frontier of automotive innovation. So far, sales of the Chevy Volt and the Nissan Leaf are up dramatically over last year. In addition, many new models are slated to be introduced this year with notable entries by Ford and Toyota. Technology research juggernaut Gartner is forecasting 100,000 U.S. electric car sales in 2012; an 82% increase over 2011. More EV’s on U.S. highways means reduced gasoline consumption. Reduced gasoline consumption helps reduce the price of oil, our dependence on foreign oil, and our carbon footprint. In addition to energy security, increased demand for EV’s also spurs innovation in areas like battery technology. American innovation in physical technologies not only improves our competitiveness overseas but also creates high value-add manufacturing jobs that can’t be “traded” to low-wage countries.
Despite one bad press release, the Chevy Volt should not be misrepresented as a commercial loser. Sales are up dramatically over last year and the Volt has made a big splash on the European market. It has the longest electric range of any car in the world and is the most fuel-efficient compact car sold in the U.S. The three core technologies of the Volt: electric motors, complex electronic controls, and power storage devices are being sought after by Chinese automakers in return for $19,300 per vehicle in government subsidies. The Volt, as with electric vehicles overall, shows impressive potential. This is not to ignore the widely publicized problems to date. The introduction of new technology is messy and disjointed. Bumps in the road should be expected. That being said, as a taxpayer, I’d much rather support U.S. innovation then waste my money lining the pockets of well-established industries like oil & gas.
Photo Credit: Wikimedia Commons