We live in incoherent times, but maybe someone can explain it to me: How does a $40,000 "economy" car make economic sense?
The $40k is the price GM will reportedly charge for its all-electric Volt sedan -- due out in late 2010 as a 2011 model. Unlike current hybrids, which mostly get going on their internal combustion engines -- with their battery packs and electric motors providing a supplemental boost -- the Volt will be propelled entirely by electric motors and batteries. The small onboard gasoline-burning engine is only there to provide the power to charge the batteries. It is basically a generator -- and is not connected to the drive wheels at all.
The Volt is thus touted by GM as being capable of returning as much as 230 miles per gallon, since it is for all intents and purposes a fully electric car that carries its recharger with it. (The Volt can also be plugged into regular 110 volt household outlets.)
But, $40,000? That is almost exactly what you'd pay for a new BMW 335i ($40,300) and not too far off the asking price of a new Mercedes-Benz E-Class ($48,050). These are fine cars, but not exactly marketed to people who are concerned about their pocketbooks.
Forty Thousand Dollars. That is a lot of coin. Even with a government subsidy (on top of the subsidy GM has built into the car's price) expected to be as much as $7,500 (thank you, fellow taxpayer), the potential Volt buyer is looking at a bottom line price that is right there in the entry-luxury range -- and roughly three times the cost of a new econobox.
Does it compute? Well, let's see... .
For the sake of discussion, we'll take GM's 230 mpg claim at face value. This figure is about four times the published mileage of the 2010 Toyota Prius (50 mpg, average). But the Prius costs just over half as much ($22k). So, the Volt buyer would have to "work off" the approximate $18,000 difference ($12,000 or so, if you subtract the proposed $7,500 government subsidy).
Twelve grand buys one helluva lot of gas -- even at $3 per gallon. Four thousand gallons, to be precise. If whatever you are driving now gets an average of 25 mpg (half what the Prius gets) that 4,000 gallons would keep you going for 160,000 miles.
That is a long time to wait to break even... .
Now let's alter the scenario a bit and use as our "demo vehicle" a new Nissan Versa 1.6 -- which you can buy for less than ten grand, brand spankin' new. It may only get 29 mpg (average, city plus highway). But the difference in up front costs between it and the new Volt Wunderwagen is a forbidding $30,000 (okay, $23k if you subtract the $7,500 subsidy).
How much gas can you buy with twenty-three thousand dollars at $3 per? Six thousand, nine hundred gallons, chief. Holy Opec! That's enough for 200,000-plus miles of motoring before you'd hit the "break even" point.
How many people even keep their cars for 200,000 miles? (Or 160,000 for that matter?)
Has anyone done the math? I assumed there were, you know, engineers (math guys) working at GM.
But maybe not.
Even leaving aside the operating costs, how many people who are really concerned about gas mileage (that is, about the expense of a car) are in a position (or desire) to spend $40,000 on a vehicle? By definition, if you are spending that kind of money on a car, you either don't care much about gas mileage -- or don't really have to care much about it.
Forty thousand bucks is damn near the current average middle-working class family's net income for an entire year and as financially sensible a purchase for such folk as a new BMW or Benz.
The whole thing is just startlingly stupid.
GM thinks people should spend an amount equivalent to a new luxury car on an "economy" car -- and the government wants to subsidize this debt-inducing consumptive imbecility with an amount ($7,500) that would be sufficient to buy anyone who wants one a perfectly good 35 mpg-capable slightly used standard economy car, "cash on the barrelhead" -- without putting them in hock for another twenty to thirty grand (plus interest).
We are, truly, through the looking gas.
Forty grand to "save gas" -- with the government carjacking taxpayers (via the IRS) who are smart enough to live within their means by driving cars that are either low-cost or paid-for in order to provide a $7,500 bounty to those who either can't do supermarket math or just like the idea of a government-subsidized Ed Begley, Jr./Leo DiCaprio techno-toy they can toodle around in and tout how "green" they're being.
And they are -- with other people's green.
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