Thursday, November 25, 2010

Taxpayers Bolster U.S. Hybrid Automobile Sales in Waning Consumer Market

Obviously the technology is currently not even close to being cost effective and the product is, at best,  suitable only to urban driving.  Obama doesn't know that there is a vast country out there that needs transportation that goes more than 50 miles without a charge.  Most people also know that these batteries will not last and will have to be replaced at significant cost.  Again, the technology is not ready.

The following part of the article, after acknowledging that the demand is declining, shows some interesting cost factors that the taxpayers should be aware of.  Obama wants 1 million plug ins by 2015 and has committed $11 billion of your children's money for the research to do this.  That comes to about $11,000 per vehicle.  That, together with the $7,500 tax incentive per vehicle sold, gives you $18,500 per vehicle sold that you, the taxpayer, are paying.  That, in itself, is enough to buy a small, economical, fuel efficient automobile that didn't need government funding to develop.

About the only thing good about this boondoggle is that Obama is keeping his main political base, the unions, employed.

Now is the time for the government to stop meddling with the economy and free enterprise and let the people determine how this whole thing transpires.

"Obama has set a goal of 1 million plug-in vehicles on the road by 2015 and has committed more than $11 billion in taxpayer funding to help support the technology.

Hybrid and electric vehicles can be $3,000 to $20,000 more expensive than gasoline models, Smith said. The U.S. offers as much as $7,500 in tax credits for the purchase of plug-in vehicles and about a dozen U.S. states offer additional incentives."

The U.S. General Services Administration, which runs the government fleet, bought at least 14,584 hybrid vehicles in the past two fiscal years, or about 10 percent of 145,473 vehicles the agency purchased in that period, according to sales data obtained by Bloomberg under a Freedom of Information Act request. In fiscal 2008, hybrids accounted for less than 1 percent of government purchases, the data showed.

The government is boosting investment in a technology that has failed to win broad acceptance after more than a decade in the marketplace. Consumer sales of hybrids are headed for their third consecutive yearly decline. Government agencies and businesses have said they also will purchase all-electric models being introduced by automakers including GM.

“At some point, the reality is that for this technology to be accepted, it needs to be done without a government crutch,” said Jeff Schuster, director of forecasting at J.D. Power & Associates in Troy, Michigan. “But without a huge gas-price increase or further government demand, the natural demand just isn’t to be there.”

Stimulus Money Used

About 3,100 of the hybrids purchased by GSA were paid for out of $300 million that the agency received from the 2009 economic stimulus package.

Read full Bloomberg article here.

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