"The public Fisker"
"Washington can help build plug-in hybrids. But who will buy them?"
Wednesday, October 28, 2009
SEVEN MONTHS AGO, President Obama's auto industry task force rained
skepticism on the Chevrolet Volt, General Motors' plug-in electric
hybrid car. Projected to sell for roughly $35,000 -- after a $7,500
federal tax rebate -- the four-seat car "is currently projected to be
much more expensive than its gasoline-fueled peers and will likely
need substantial reductions in manufacturing cost in order to become
commercially viable," the task force noted. Nevertheless, the
administration rescued GM by buying a 60 percent equity stake -- and
Volt production starts a year from now.
We bring this up apropos of the announcement Tuesday that California-
based Fisker Automotive will take over a former GM plant in
Wilmington, Del., to produce a plug-in hybrid of its own. Fisker's
move, too, is made possible by government help, specifically a $528
million Energy Department loan -- $359 million of which will go to buy
and retool the factory for production starting in 2012. Vice President
Biden was on hand in his home state, which will also be a battleground
in next year's Senate elections, to celebrate a triumph of the
administration's "green jobs" policy.
We share the administration's fervent wish for a cleaner, greener
vehicle fleet. All parties to the deal assure us that the site's
proximity to transportation routes and other advantages, not politics,
led Fisker to locate there. Just one question: If the Volt isn't
commercially viable, why is Fisker's car? The company has not even
described the vehicle publicly, except to say it's "family-oriented"
and will cost about the same as the Volt. Both the Volt and the Fisker
cost more than higher-performing models such as the Lexus ES350 and
some cars in the BMW 3-Series. Even with fuel savings, it will be
years before a purchaser would recoup the initial cost differential
between a Volt or a Fisker and, say, a Toyota Prius.
To be sure, well-heeled "green" consumers may line up to pay the
premium. But is it appropriate to use everyone else's tax dollars to
support demand in this niche? The administration says Fisker's
Delaware venture will create 5,000 jobs by 2016, directly or
indirectly; that's $71,800 per job. It will save 43.2 million barrels
of oil in that six-year interval, or about two days' worth of U.S.
For some time to come, plug-in electric hybrids will be at best a
small part of the fuel-efficiency solution. The Fisker loan forces GM
to share this tiny slice of the car market. In that sense, it collides
with another administration goal: hastening GM's return to
profitability without government support. Such are the risks of the
Obama administration's policy, which seems to be: Fertilize the fields
of green technology and hope that at least some of it sells.