The GM Volt Revisited

Awhile back I wrote about GM's new hybrid, The Volt (here's my write up: http://daily-cynic.blogspot.com/2009/08/getting-away-from-politics-for-minute.html)

As those who know me personally know, I am a huge car guy and, more specifically, an avid Audi enthusiast (have been since I was 16 with my first A4 which was followed by my father's S6 and now my new S4). The reason I mention Audi in relation to GM's Volt is that Audi of America President Johan de Nysschen just came out with a prediction that the Volt will "fall flat" and "the federal government, having publicly forced GM to develop electric cars, will subsidize the Volt to save face and boost sales." See the entire article here: http://editorial.autos.msn.com/blogs/autosblogpost.aspx?post=1247701 .
You know what? He's 100% right. I pointed out in my article on the subject that the Volt had no advantage over existing hybrids like the Prius or Honda Insight. I didn't really go into why hybrids are terrible investments and not the best choice if you are a true environmentalist but de Nysschen goes as far as saying people who buy hybrids over more fuel efficient, practical, and powerful diesels are "the intellectual elite who want to show what enlightened souls they are" (as Jay Leno says "here in America, we like to make known the good deeds we are doing annonymously"). He hit the nail on the head again. The big draw to hybrids is PR. People value the appearance of being environmentally friendly over actually being environmentally friendly. Hypocrites, all of em.

The question for the Volt is are the faux environmentalists willing to pay up to $15k over the price of Japanese hybrids for an American product? My answer: No. Japanese cars usually have a higher snob appeal than American cars. The hierarchy of snob appeal for cars goes like this: Italian>German>British>Japanese>American, at least in my book. So I sincerely doubt the Volt will take any significant market share away from Toyota or Honda with the Volt. If there were charging a lower price than the Japs, then it might, but definitely not when GM is selling at a premium.

The final question brought up by de Nysschen is that of "the federal government, having publicly forced GM to develop electric cars, will subsidize the Volt to save face and boost sales." I think this will make or break the Volt because it will effectively price the Volt below its Japanese rivals and that is probably enough to shift sales to GM. Judging by our government's recent actions (and the fact that Boh'Rock feels he has the right to run GM), this subsidy is a pretty safe bet so you can expect to see some solid sales numbers as a result.

The Volt is already a failure in my book even if it does sell well as a result of government intervention.

Getting away from Politics for a Minute

Let's talk about GM. No, not the government's role in GM (no matter how misguided it is) but more along the lines of the latest to come out of GM. In the news this morning, it came out that GM's new electric car, the Volt, will receive a rating of 230 mile per gallon rating (how they give a mile per gallon rating to a car without any gallons to speak of is beyond me).

As a headline, I have to admit that my first thought was "Thank god someone is building a real electric car instead of a faux-environmental car like the hybrid". But if you actually read an article about the car, you find the Volt is limited to ~40 miles on a single charge and then a gasoline motor takes over. So this car is being marketed (rather well I may add) as a full blown electric car when it is, in fact, a hybrid. The only difference between the Volt and existing hybrids like the Prius and whatever the Honda rip off is called is the fact that the Volt uses only electricity for the first 40 miles then runs exclusively off gasoline after that (how much that matters depends on each person's driving habits).

In order to really adopt any sort of alternatively fueled vehicle (electric, hydrogen, or even nuclear powered), the performance measures (speed, range, cost, etc) must be on the same level as the petroleum powered cars we already base our lives around. An electric car that only has a 40 mile range will not fulfil our needs as a people. I can't even get from DC to Baltimore on that. Now if I could just pull over after those 40 miles and fill back up like I do with gasoline, that would work but that is not the case. You have to charge the car for hours to get the charge back to maximum. So sorry GM but your "electric car" ain't gonna cut it for (BTW what happened to your real electric car from the early 90s? The EV1 I believe? Bet you are regretting scrapping that about now. If you don't know what I'm talking about please watch Who Killed the Electric Car?)

Now let's shift gears in regards to GM. My next issue with GM comes from the following text from the same Volt article:

Plans also include doubling the current size of Buick's showroom from three vehicles to six within 24 months. In addition to an SUV crossover hybrid announced last week, GM is preparing a small crossover SUV and midsize and compact sedans.

Buick?!?! This is the same brand that sells 36 cars per year per dealer (or 3 cars per month per dealer). The only brands that have lower figures are Rolls Royce, Isuzu, and Ferrari which are MUCH smaller operations). Buick has been a dying/dead brand in the US for quite some time now for their market segment is the AARP crowd who are either losing their driver's licenses or their lives entirely (not exactly an ideal target market).

Now I have to admit that Buick is setting records in China in terms of sales numbers but that doesn't mean diddly here in the US. Buick dealers are dying in this country, why not make Buick a China only brand like with Opel in Europe? Eliminate the costs to keep US dealers going but keep the huge sales numbers in China.

So, let's back up and take a look at the bigger picture. GM is back to making bad choices after coming out of bankruptcy. No matter how rosy of a picture their marketers paint, the company is still making downright stupid choices and producing crap cars, this time with the government's (aka our) money.

Update: It was just published that the Volt will cost ~$40,000. Who is going to pay that for a poorly equipped, semi-electric American car?

Whoring of The Public Sector

So it just came out this morning that Steven Rattner is stepping down as Advisor to the US Treasury (aka Car Czar) (link here: http://www.washingtonexaminer.com/economy/Rattner-leaving-auto-task-force_07_14-50679542.html). He took this job on February 23rd of this year after coming from Quadrangle Group (where he was one of 4 founders. The group apparently has about $2.5B invested). So, more or less, he left a position in the private financial industry where I'm sure he was making a healthy salary (and don't forget about his investments in Cerberus Capital Management) for a government posting which I'm sure resulted in a significant step down salarywise.

Apparently no one saw a problem with hiring a guy from the private financial sector to drag GM and Chrysler out of bankruptcy. Generalization warning: the private financial sector (while may not being the cause of) made this economic downturn much worse than it should have been so why would we (the taxpayers) hire someone in the private financial sector for this job? I have no idea. But that is neither here nor there (that decision was made without consulting me back in February).


The issue at hand is why is Rattner stepping down days after bringing GM out of bankruptcy? There could be many reasons (and I'm speculating here). Maybe he just wanted to gain some notoriety by being 'the car czar' for a few months and leverage that in the private sector afterwards. Maybe he realized there is NO money in working for the federal government, especially with Obama's policies (except if you are a senator apparently). Maybe he rushed GM through the bankruptcy process and doesn't want to stick around to be responsible for GM going down in flames (again, which it most likely will). According to Rattner, he is leaving in order to return to private life and his family in New York City. This probably means that he will be returning to Quadrangle Group in the near future but that is just my own speculation. I'm guessing the answer to this question will come out in the near future and I will be watching the news closely for it.




So this going-on raises a few bones that I have to pick. The first being, if the Obama administration wants (more like they NEED) executive level talent like Rattner, they need to pay accordingly. You can NOT cap pay at $150,000 per year. Someone who is making 3 or 4 times that amount will not leave their cushy private sector job for a federal posting with heavy public scrutiny for less pay (someone who does make that decision should be required to undergo extensive psychological testing). If you want the best people in the country working for you, pay accordingly.





Another issue is that of private industry goons using the government as a tool of publicity. I have a feeling that not many people, apart from financial insiders, knew who Rattner was before he started working for the Treasury (I know I didn't). After working for the government for 5 months, he now enjoys top of the mind awareness and is a household name (even the best PR firms can't bring that kind of notoriety). So this guy is more or less going to make more money in the coming months because he working for the government (going along with the Obama theme, shouldn't he be taxed on the difference between his pay before working for the Treasury and after citing that his brief foray into government work is responsible for this increase in pay? Doesn't Democrat logic suck when turned on those who constantly spew it?)

That's all I've got for this morning, I may have an afternoon rant in me later on. Enjoy some satire below for the time being: