December 27, 2011

Magnitudes of Bull****

Oh man! Or, as they say on ESPN, "C'mon Man!" I'll be the first to concede that the figure of 250,000-in-federal-jack-per-Volt is a salacious, audacious figure. It's a headline grabber, it's link bait. It's a bit high.

But now that I have read the defense, it's standing up firmly. Insty links to Sebastian Blanco at AutoBlogGreen. Blanco disputes the $250,000 figure, with a flourish:

Oh, how easy it is to go viral on the Internet. All you have to do is be really, really bad at math. Or have an agenda.

The folks propagating 250K had an agenda. But were they bad at math? They divided subsidies by the current production. Likely that is not fair. Investments -- coerced from the taxpayers or not -- should be amortized over a longer run or perhaps all of production,

The Street.com goes looking for the denominator:

Here is the point: Why divide whatever amount -- $1.5 billion or otherwise -- by the number of Chevrolet Volts sold to date? If he had done this study one year from now, when we could be looking at 60,000 Volts made, as GM repeatedly has promised, the headline number would be $25,000 per car -- not $250,000.
[...]
Thus, if you divide this $1.5 billion "investment" over 60 million cars over the next 25+ years instead of the 6,000 made over the last year, or the 60,000 to be made next year, the alleged government subsidy comes to $25 per car, or what you will pay for two movie tickets in Manhattan, popcorn excluded. That's very different from the nasty $250,000 per Volt headline floating all over the Internet in the last couple of days.

Less than two Manhattan movie tickets, you cheapskate! When you realize the government is designing the next 60 million cars! That's nuthin'!

I suggest the Street.com's stirring defense actually provides a realistic figure of $25,000 -- which I consider completely and totally insane. Twenty five K of tax money to build a $40,000 car for a buyer who makes (avg) $170,000 per annum. I trust ThreeSourcers would be upset at $25 (enumerated powers, anybody?) but the whole nation should be upset at $25,000.

Of course if you divide by everyone born in the next million years...

Oil and Energy Posted by John Kranz at December 27, 2011 4:33 PM

The fallacy is in the presuppositions. They presume GM will build, and sell, 60,000 Volts in the next year. Based on recent sales figures, that would be wildly optimistic, unless you presume that the guv'mint will either buy them all themselves, or put a gun to our heads and force us to buy them.

Which they might.

Posted by: Keith Arnold at December 27, 2011 5:24 PM

Agreed, ka. And that is to get to the only $25,000/car figure.

Full of Christmas generosity, call that a few years' production, which will be that most influenced by our [cough!] investment. That is what causes me to take the 25K figure as accurate.

That's about what I paid for my MR2 in 2004...

Posted by: jk at December 27, 2011 5:30 PM

Fans of government "investment" will retort, "$1.5B is far less than was spent on the moon program, and look at all the benefits that accrued humanity from that." But the real difference is not in the dollars, it's in the technology. NASA had to oversee the invention of hundreds of new technologies to go to the moon. Electric cars were invented in the 19th century.

Posted by: johngalt at December 28, 2011 2:17 PM

Plus, Tang®

Posted by: jk at December 28, 2011 2:30 PM | What do you think? [4]