Obama's Auto Industry Handouts Are Nothing to Brag About

Government bailouts to the auto industry have fallen flat.

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Tom Pyle is the president of the Institute for Energy Research.

In 1999, an 89-year-old grandmother named of Doris Haddock set out to walk from California to Washington, D.C. Fourteen months later, she arrived at the nation's capital. If only Ms. Haddock had a Chevy Volt, she could have trimmed her travel time down to just over one month. Back to that in a moment.

This week, the Walter E. Washington Convention Center in historic Mount Vernon Square hosts the annual D.C. Auto Show, where more than 700 new cars and trucks from both domestic and import manufacturers fill 750,000 square feet of showroom floor. On hand to tout his administration's bailout of the auto industry, President Obama took time from the campaign trail to tour the showroom with executives from the U.S. auto industry.

Winding his way among the polished, plug-in electric hybrids, the president announced boldly, "The U.S. auto industry is back." What isn't back, of course, is the $85 billion of taxpayer money that the federal government has pumped into the U.S. auto industry to keep it afloat. And just what has Government Motors done with the money?

[Rick Newman: Why GM Is a Lousy Model for Economic Revival.]

Prominently displayed near the entryway to the convention hall is GM's much-hyped but little-purchased Chevy Volt, with a price tag of more than $40K and a curb weight of nearly 2 tons once you add hundreds of pounds of ion-lithium batteries along the drive train. Around the car are hosts of young, stylish showroom staff to explain the virtues—and reluctantly, some of the vices—of the Chevy Volt.

Indeed, consumers should consider the efficiency that driving a Chevy Volt will offer. For instance, the distance a person can travel on a fully-charged Volt battery is approximately 35 miles, according to the Environmental Protection Agency. That means that if a person wanted to drive on battery power alone, it would take around 851 hours at an average speed of 60 mph to travel from Washington, D.C., to San Francisco, a distance of 2,815 miles. So if a driver left the Walter E. Washington Convention Center today in the new Chevy Volt, he would arrive on the West Coast by the middle of next month.

[See a collection of political cartoons on energy policy.]

Yesterday, the Institute for Energy Research decided to follow President Obama's example and stop by to check on the status of the now taxpayer-owned auto industry. With the assistance of friendly and courteous General Motors personnel, we learned a great deal about the company's billion-dollar investment in electric cars. Indeed, the Obama administration has a huge investment in electric cars too, as the president recently assured Continental Resources' owner Harold Hamm that the United States would "have a battery developed that will make a car within the equivalent of 130 miles per gallon."

Mr. Hamm, by the way, is the leading producer of oil in North Dakota's Bakken Oil Field, where an economic miracle is taking place and unemployment has dropped to zero in some counties. But back to the Volt.

Don't worry about the Volt's price tag, we were told at the auto show. The federal government will give consumers a $7,500 tax credit for purchasing the car. That brings the purchase price down under $35K—or about $8K more than the average American made last year.

[Dustin Stockton: Barack Obama's Green Energy House of Cards]

Even more interesting is the fact that GM sold only 7,671 Volts in 2011, well below Chevy's sales target of 10,000 for the year. In 2012, Chevy plans to sell 45,000 Volts, but the January sales figures are in—and they don't look good. Only 603 Chevy Volts left the salesroom floor.

Given the fact that only the rich seem to be able to afford a Chevy Volt—or pay to charge the car's batteries with the way electricity prices are skyrocketing—it's curious why President Obama wants to continue this "welfare for the wealthy" electric car agenda. If the administration ended the tax credit for the Chevy Volt, taxpayers would save about $1.5 billion that could be used to recover some of the losses they've suffered because of the president's cash handouts to bankrupt green energy companies like Solyndra.

[Read the U.S. News debate: Should the Government Invest in Green Energy?]

Americans may well want electric cars at some point in the future, and the technology may well develop so that production and sales of these cars make good economic sense. But if this is the best the auto companies can do—even with tens of billions of dollars of taxpayer money and tax credits for a car that only the rich can afford—then there's no reason to believe America's future for powering our transportation will rely on anything other than gasoline.

Or we could go even greener than electric cars, and start pounding the pavement on foot like Ms. Haddock did more than 10 years ago. But that's not likely either, unless the Obama administration announces walking mandates like it has all for other sorts of "renewable" energy.

  • See an opinion slide show of 10 wasteful stimulus projects.
  • See a collection of political cartoons on the budget and deficit.
  • Read Mort Zuckerman on America's Energy Future.