American Elephants

Adventures in Venture Capitalism by The Elephant's Child

Consumer Reports buys the automobiles it tests anonymously, so there can be no question that it was not just an ordinary car off the dealer’s lot; tests automobiles before they report on them, and the reputation of the magazine rests on their expertise in testing.

The Fisker Karma luxury car retails for over $100,000 (at that point do you still bargain to get it down from $103,000 to $102,000?) And as has been widely reported it ran for 180 miles and quit.  They had to come and take it away. Fisker dispatched two engineers to examine the car.

This is more bad news for a company that already had recalled some Karmas. They also changed their CEO and halted production over the past month as it seeks to renegotiate the terms of their $529 million loan from the U.S. Department of Energy. In November, A123 reduced its full-year revenue outlook after Fisker unexpectedly cut orders. Then in December, they recalled 239 Karmas due to a possible defect in batteries made by supplier A123 Systems that could cause a coolant fluid leak and electrical short-circuit. In January , Fisker halted sales for four days to fix a software malfunction that at times triggered warning lights while temporarily freezing navigation systems.

The car, everyone agrees, is absolutely gorgeous. The price tag is something else again, even with a government subsidy — and Obama wants to raise the subsidy from a $7,000 tax credit to $10,000 and perhaps change it from a tax credit to something more immediate.

Problems with new technologies can be expected, and they are all having them. The Tesla roadster turns into an immovable brick if the battery runs down. The Chevy Volt had some incidents of the battery catching on fire.  Federal safety officials opened an investigation last November into the safety of the battery pack. Nevertheless, the electric cars are remarkable examples of new technology.

It is beyond unfortunate that at a time when the economy is in the tank, with no real signs of recovery; when the auto bailout has been shown to be so full of fraud; when, although Obama brags that GM is now once again the world’s top car company, there are no signs of the stock recovering enough to pay the taxpayers back for the loans; with all that going on — the president decided that the federal government should become a venture capitalist to decide what technologies to support.

Real venture capitalists do very hard-nosed investigations of the real prospects of a company and look for proof that at some point the investment will actually pay off. The administration substituted hopes and rainbows for investigation, and after all, it’s just taxpayer money—there’s more where that comes from. Venture capitalists have some resounding successes, and those help pay for the mistakes —but it is their own money on the line along with their shareholders so they are pretty careful with it.

I do not pretend to be anything other than a real ignoramus when it comes to cars, but I have read the history of electric cars — they are hardly a new idea. And always, success was just around the corner, the next big thing, for over 100 years. One engineer whose comments I read, said that they had exhausted the periodic table of elements in battery technology, and a breakthrough would have to include something presently unknown to science or engineering. There’s a lot of technology that says as soon as we can figure out a solution to this very particular problem we will succeed, and it will happen, we’re working on it.  The problem of electric batteries, he said, was of a different nature — something unknown.

So what Obama has to show for the massive investment are some very good-looking cars that are way too expensive for most people. They say the Fisker Karma has 400 cars sold.

On the other hand, there is the Chevy Volt. Climatologist Patrick Michaels knows a thing or two about CO2 emissions. He claims that it should be called the Chevy Vote — to remind voters of the funding invested by the Obama administration and how very, very wrong it has all been. Buying votes in a state vital to the president’s reelection, subsidizing “rich” taxpayers, corporate cronyism and coercion. GM says there are 3,600 unsold Volts. The Wall Street Journal and Autoweek say there are 6,300.

Ooops! General Motors Lays Off 1,300 Volt Workers by The Elephant's Child
March 2, 2012, 3:32 pm
Filed under: Capitalism, Democrat Corruption, Economy, Election 2012, Energy | Tags: ,

General Motors has temporarily suspended production of the Chevy Volt, troubled electric car, the company announced on Friday. They are halting production for five weeks, presumably to allow demand to catch up with inventory.  This means laying off, temporarily, 1,300 employees.

A GM spokesman said that production will resume on April 23. “We needed to maintain proper inventory and make sure that we continued to meet market demand.”

They’re getting lots of help. President Obama wants to raise the subsidy to $10,000 per car and make it an immediate price reduction instead of a tax credit of $7,000. President Obama also gave the Volt a vote of confidence in a speech to the UAW this week, and promised to buy a Volt “five years from now, when I’m not president anymore.”

California decided to allow the Volt to qualify for High Occupancy Vehicle (HOV) lanes, which also should help a little.And of course the price of gas should help.

If you remember, back when Obama was bailing-out the car companies instead of allowing the normal bankruptcy laws to operate, GM did not want to produce the Chevy Volt. They didn’t think it was ready for prime time, but marketing expert Obama insisted.

Sales in February were up a little from January. I’m not sure what the sales figures mean — are those the cars GM has sold to dealers, or are they the cars that have been purchased by consumers? Dealers have cut way back on their allotments, and are not seeing much enthusiasm in the marketplace.

GM has argued that the debate about the Volt has become too political. GM CEO Daniel Akerson told Congress “We did not develop the Chevy Volt to be a political punching bag, We engineered the Volt to be a technological wonder.”

The odds of the taxpayers being paid back for the bailout have not increased, but then you didn’t really expect that they would, did you.

Barack Obama, Engineering Genius, Outstanding Businessman! by The Elephant's Child

Jonathan Last says that he has a Volt in his neighborhood, and there’s a Volt that parks in his garage at work, so he sees almost 0.1 percent of all the Volts in America on a daily basis.

Chevy sold 281 Volts in February, but that was a good month. They sold 125 in July. Nationwide!  All together they have sold close to 2,700 Volts. GM claims that the reason the Volt isn’t selling is that they can’t keep enough cars on the lot, so they are going to increase production to 5,000 Volts per month  to keep up with the raging demand. Obama has ordered the government to buy lots of Volts for government fleets, so perhaps that’s where the increased production is going. You thought that when you didn’t buy one, you wouldn’t have the pay for one. Surprise! You get to pay for a very large fleet.

Obama’s environmental allies, in this case Ceres — a collection of public employee pension plans, green activists, churches, green investors and government officials—is running a radio ad that claims that a 60 mpg EPA vehicle mandate will actually make the auto industry more profitable.

“A recent study found that under strong fuel efficiency standards, the auto industry would see increased profits — most of which would go to Big Three automakers,” intones the ad, timed to coincide with Obama’s introduction of new mpg rules this morning.

In 2007, Candidate Obama, a Harvard Law trained social activist, came to Detroit to lecture automakers on how, if elected, he would change their “failed” business model:

For years . . . whenever an attempt was made to raise our fuel efficiency standards, the auto companies would lobby furiously against it, spending millions to prevent the very reform that could’ve saved their industry,” he lectured. “Automakers still refuse to make the transition to fuel-efficient production because they say it’s too expensive. The auto industry is on a path that is unacceptable and unsustainable – for their business, for their workers, and for America. And America must take action to make it right. That’s why my first proposal will require automakers to meet higher fuel standards.

“The facts are clear, a 60 mpg standard will restore American automakers to a place of global leadership” says the Ceres ad.

The theory is that engineers have the battery technology to make a 60 mpg SUV — but Big Auto hides it in a back room to favor the oil companies over their customers.

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