The Argument From Volt
With due respect to Tom Laskewy, the notion that we need to bailout the big three for the sake of the Chevy Volt doesn’t really make sense to me. If the Volt project is genuinely promising, then liquidating General Motors wouldn’t lead to the Volt disappearing into the ether, it would result in the Volt project being sold to a non-bankrupt automaker. Arguably the Volt project would be helped by ending its association with the large, dysfunctional firm that is General Motors and instead becoming part of a more viable enterprise.
But more to the point, the whole “green” case for the bailout seems a bit grounded in fantasy. I don’t see either the executives or the legislators pushing this initiative getting religion on global warming where it counts — in the congress. We don’t need to use a divining rod to try to discern Detroit’s views, we can look at the Dingell-Waxman fight for control of the Energy & Commerce committee and we can compare the Dingell-Boucher climate bill to other alternatives.
46 Responses to “The Argument From Volt”
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November 17th, 2008 at 4:15 pm
Really? I really doubt that.
November 17th, 2008 at 4:20 pm
Obviously Matthew Yglesias has never worked in an actual firm, and doesn’t know how things like that work. The Volt project isn’t just a neet little box that you can package up and sell off, it most likely would die if GM were forced into Chapter 11. But hey, that is why this country has gone to heck in a handbasket, too many people running things who are like Yglesias – they have some good ideas about things, but who skip the step of logic required in transforming an idea into a reality.
November 17th, 2008 at 4:21 pm
I hate to be crass (okay, I don’t), but the Volt ain’t going to save shit. It’s a technologically fascinating experiment, but the end product could easily cost the consumer over $40,000 retail. I can buy a Lexus or Acura for less. Chevy will need face an uphill marketing battle making “green” the new “luxury.” Because that’s who they’ll be competing with at a price like that: People who buy Cadillac or BMW. It makes more sense economically and environmentally for me to suck up the loss in “stature” and go buy a conventional-engine Honda Civic. Hybrid technology just isn’t there yet, and no single automaker is going to revolutionize it on a large enough scale to make a difference.
As a society, step one isn’t so much the technology, it’s making the car less a status symbol and all about getting from point A to point B most efficiently.
November 17th, 2008 at 4:29 pm
I too think its wise to exacerbate the fissure between environmentalists and labor progressives. After 30+ years of regressive trade policy, let’s push the upper midwest into a massive depression and kill the UAW because the Big-3’s executives don’t sufficiently believe in man-made global climate change. Kudos.
The libertarian centrists are more obnoxious than they were before the election. Hopefully Obama’s more interested in social justice than the libertarian-centrist bloggers are, because even talking like this (allow the Big 3 to die for creative destruction, eliminate teacher tenure, etc.) is straight out of Jimmy Carter’s failed playbook, and its going to lead to a massive decrease in support and interest for the upcoming election cycles.
November 17th, 2008 at 4:30 pm
Similarly, if Apple had failed in 1996 – just as all bien pensant observers expected – I think we can all agree that someone – either Dell or Microsoft, I’m not sure which – would have introduced the iMac, iPod, and iPhone. It’s how Free Market Magic™ works! And Free Market Magic™ never fails!
November 17th, 2008 at 4:31 pm
Dude, if you’re going to respond to Ezra’s post, just f***ing respond to Ezra’s post. Don’t pretend to be responding to the linked post, since you obviously didn’t read it closely enough TO SPELL THE ORIGINAL BLOGGER’S NAME CORRECTLY (it’s Laskawy, not Laskewy). What you *did* do was replicate the misspelling that Ezra used in his post. Which is what you were responding to, if (for whatever reason) you don’t want to admit it.
Lazy, dude. And not up to your usual standards.
November 17th, 2008 at 4:33 pm
So there’s no way Toyota will come up with something Volt-ish, right?
I think the possibility of cheap gas for another five to ten years is a bigger threat to the Volt or any Volt-like project.
November 17th, 2008 at 4:34 pm
I hate to be crass (okay, I don’t), but the Volt ain’t going to save shit. It’s a technologically fascinating experiment, but the end product could easily cost the consumer over $40,000 retail.
GM hasn’t announced a price. Auto industry speculation suggests it will be in the $30,000-$40,000 range. The actual price to consumers will likely be lower, because of tax credits. Obama wants a $7,500 federal tax credit, and there will almost certainly be additional state credits. So we really don’t know what the vehicle will cost consumers initially, or how quickly the price will come down through economies of scale and further advances in technology and engineering. Even if the Volt itself is not a success (or even comes to market), the technology developed for it can be applied future PHEV models.
That being said, the Volt may be just a bit ahead of its time. Toyota is apparently aiming for a more modest improvement in fuel efficieny with its first PHEV model, the PHEV Prius. The goal for the Prius is apparently around 70-90 mpg equivalent, rather than the 100-150 mpg equivalent of the Volt, and a shorter battery-power-only range. That means the Prius can use less advanced and less costly batteries than the Volt.
November 17th, 2008 at 4:34 pm
Too true. I could be that the Volt will fail because it was 2 years too late. A pity.
November 17th, 2008 at 4:39 pm
What makes the Volt exciting isn’t that GM will be the first company with the technology – it’s that GM will be dumping a lot of money into new technologies and perfecting them here in the US. If GM goes under and is liquidated the Volt gets bought by the Chinese and they get the battery technology that a US company developed. Want to wager any guesses where those new batteries will be built if the Chinese own the technology?
November 17th, 2008 at 4:39 pm
Oh, and this:
Arguably the Volt project would be helped by ending its association with the large, dysfunctional firm that is General Motors and instead becoming part of a more viable enterprise.
just shows how ignorant Matt is on this subject, and why he should STFU about it. The reason that Volt provides an opportunity for GM to transform itself and the market is that its competitors don’t believe in it. Toyota and Honda execs openly mock it. Why? Because they think their established, incremental route is the right one. The Europeans are wedded to diesel, for a variety of reasons. Which means that Volt – in any form – will not exist without GM.
Now, there’s no way to know if it will succeed. I think that, if it does what they are designing it to do, it will in fact be a game-changer, both for the industry and GM. Even if it fails, the end product will advance the ball. But if the plug is pulled now, very little of its innovation will go anywhere – the battery stuff may live on, but, as I said*, none of the drivetrain, electronics, and body-forming stuff will be picked up by anyone else (individual engineers will be picked up by other companies who will put them to work doing different things).
* utilizing this magic trick of knowing what the fuck I’m talking about before expressing my opinions on the internet
November 17th, 2008 at 4:44 pm
That’s right — to save the Volt, we must save the Escalade.
There are a lot of good ways you could help the environment for $25 billion. A separate, government-funded, government owned Electric car project, for instance.
Of all the ways to spend a large fortune to help the environment, bailing out GM is the stupidest.
It really is the Iraq war for progressives.
November 17th, 2008 at 4:46 pm
“…the notion that we need to bailout the big three for the sake of the Chevy Volt doesn’t really make sense to me”
Me neither. The Chevy Volt at this point is more a concept than a reality. It’s success depends on improved electrical storage technology like better batteries or ultracapacitors. When and if these become available, GM won’t have a monopoly on them.
November 17th, 2008 at 4:48 pm
Given the track records of the companies you’re talking about, I’d bet that Honda and Toyota are right and GM is wrong.
November 17th, 2008 at 4:52 pm
Guys guys guys, don’t take the word of people who have worked in the auto-industry or Nobel Prizewinners, take the words of a kid who went into writing directly out of college and has never had any experience in dealing with real world firms that make things. Yup, just go with what Matthew Yglesias learned about in his classes at Harvard and now thinks he can apply to this problem.
November 17th, 2008 at 5:36 pm
It really is the Iraq war for progressives.
And it only costs 1/400 the price! Plus, it might actually produce some tangible domestic benefits.
I don’t want to get in the habit of slagging other commenters, but really, I can’t believe someone actually made that analogy.
November 17th, 2008 at 5:38 pm
Also: There must be a Congressman Berry out there who can co-sponsor a bill with Mr. Dingell. I don’t even care what the bill is about.
November 17th, 2008 at 5:42 pm
James Gary: Believe it, especially since our distinguished host devoted an entire post to that analogy.
November 17th, 2008 at 6:10 pm
Why don’t we spend 5 billion to outright buy the Volt project, have the rest of the company fail, and have the government be in the car business to retail and market the electric car. Sure it sounds like socialism – but it’s 80% cheaper than “capitalism” and a lot more effective.
November 17th, 2008 at 6:27 pm
MAX HATS: One of the main arguments for bailing out GM is that it’ll prevent hugely massive layoffs and other bad macroeconomic things, and I doubt that the Volt project can employ enough people (even if it gets turned into a blatant make-work project with the incidental side-goal of creating an electric car) to perform that task.
November 17th, 2008 at 7:22 pm
I’m aware of the arguments for keeping GM afloat, I just don’t buy it. I don’t think throwing free money at failing businesses is ever a good strategy. We have a policy of encouraging businesses to consolidate to the point where they become “too large to fail,” at which point the incentive system that is supposed to drive capitalism goes away. We have capitalism with none of the perks, and it just takes one visit to a local GM dealership to see its fruits. Bad cars, poorly made, nonetheless more expensive than their superior competition. I don’t believe that America is so bereft of a future that we must lock ourselves into the mistakes of the past. Yet we are. Other countries are going to clean our clocks in the next century.
November 17th, 2008 at 8:51 pm
The trouble with Yglesias and many other talking heads is that they assume the Big Three haven’t even begun to change. The fact is that Ford and GM at least have undergone the biggest restructuring in their history over the past few years, and right now is the point of highest transition costs — just as the economy is tanking, and just as the new GM and Ford products that in a normal economy would sell like hotcakes are coming on the market. We already have a mid-size Ford, the Fusion, that is arguably better than the Honda Accord and Toyota Camry, and a Ford SUV, the Escape, that not only beats any Honda or Toyota SUV for fuel efficiency but also their gas-powered compact cars, and we are just beginning to see new GM compact and mid-size models and Ford’s outstanding new subcompact Fiesta. And thanks to the wholesale cleanout o the past several years, we now have management at both companies that now regards fuel efficiency and quality as badges of honor rather than as unwanted cost centers, and young engineering talent as their ticket to future success rather than as a threat to the “system”. And the Big Three have suddenly much friendlier unions that have taken on a huge portion of their healthcare liability. In this regard, the Detroit automakers have been desperately unlucky with the timing of this crash, through no fault of their own. And to roast them as punishment for poor management decisions ten, 15 or even 20 years ago is the height of economic folly, but sadly typical of establishment Washington’s lack of understanding of manufacturing industry in general.
Besides, as others here have pointed out, allowing Detroit to fail sets off a chain reaction that takes out the auto parts industry, makes many Toyota, Honda and other foreign-owned factories in this country non-viable as a result, and leaves a minimum $200 billion transition cost in the federal taxpayer’s lap in the first year alone. No thanks.
November 17th, 2008 at 9:50 pm
Just to throw my two cents in, as a progressive academic who’s also a UAW activist.
I think blaming the UAW for this is a bad idea, considering that a lot of the structural problems that the Big Four/Three face are due to corporate policies that stood in contradiction to Walter Reuther’s original plans for social democracy in the auto industry. For example:
1. Private Health Care/Pensions – Reuther and the UAW were big adherents of universal health care and Social Security, back in the 30’s and 40’s, when it looked like FDR or Truman might pass health care and expand Social Security benefits, because they wanted workers to maintain independence from their employers and have loyalty to a laborist Democratic Party and their union. GM/Ford, etc. chose private health care and pensions as a way to stave off government intervention and to tie down workers to the company to reduce turnover and retain skilled workers. They made a historical bet that over time they’d be able to use quasi-monopolistic market share and steady economic growth to pay the cost of their private welfare state. The major story in the “labor cost” gap between the U.S and foreign auto companies is much more about health care and pensions than it is about wages.
2. Uncompetitive Pricing – Reuther famously demanded wage increases without price increases, and for the company to “open the books” so that the union and the company could keep the company profitable while sharing the proceeds equitably. GM/Ford turned him down, and offered health care and pensions instead – hence the problem we have today where GM/Ford’s cars are too expensive compared to the competition. Again, this is a historical bet that GM/Ford made – that they could “plan the market” for decades, and that they could set prices and demand through their market share position. They made a mistake, not UAW.
3. No Innovation in Product – Reuther wanted the UAW to be a major player in organizing production; hence, his plans for “500 Planes a Day” during WWII were promoting the idea that the unions could draw up plans for the future of the auto industry. Similarly, Reuther drove for a system of shop stewards to replace GM’s foreman system, so that workers could innovate from the factory floor, since the corporation would operate in more of a tripartite corporatist fashion. The Big Four/Three damn near declared war to protect the prerogatives of management. As a result, all innovation became centralized and bureaucratized at corporate headquarters – with results we see today. Imagine where GM and Ford would be today if workers could have the same kind of creative input that skilled workers have in Japan and Europe.
November 17th, 2008 at 11:44 pm
If I am not mistaken, the Volt project has already been killed.
On top of that, the volt was doomed to failure, for the very reason that the petrol engine won’t charge the batteries.
The CEO of GM thinks hybrids aren’t worth the time or effort to produce.
As bad as it sounds, a bailout of the big 2.5 isn’t going to actually address any of their structural problems. Just like the bank bailout isn’t actually going to cause the financial industry to change. I think perhaps, they should be allowed to fail. Which ever company comes out of bankruptcy successfully should be a stronger company for it, and may actually deliver the vehicles that they should have been delivering for the past 7 years.
Instead we will still get big SUV’s, and small cars no one wants to buy, AND we will have handed them a blank check.
People will lose their jobs, and that is truly unfortunate. However, if the Big 2.5 would have fought for a universal healthcare system, they wouldn’t have the burden of healthcare costs, and would be in a stronger position today, for it.
November 18th, 2008 at 1:55 am
If I am not mistaken, the Volt project has already been killed.
Er, who told you that?
November 18th, 2008 at 10:52 am
The Chinese pretty much already have the battery technology of the Volt. You can go to the hardware store and buy the battery technology for that matter. The Chinese are catching up on cloning the battery technology too.
November 21st, 2008 at 5:56 am
i ran across an article the featured the volt in side profile. i was surprised by how it’s better looking than i expected.
the VOLT is a god awful name for a car. it suggests a weak 9 volt battery or a car that wouldn’t be able to climb a hill.
it’s like they focus grouped the name to purposely come up with one that would sell the worst. why is this industry forever sabotaging itself?
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