Saturday, November 22, 2008

That's It? That's What We Get for $25 BILLION?

[the Chevy Volt]

From the NY Times today--
G.M. says the car, which is scheduled to arrive in showrooms two years from now, will be able to travel 40 miles on a charge, but it will also have a small gas engine to extend the range to as much as 640 miles using both the battery and gasoline (the 1.4 liter, four-cylinder engine is intended to run a generator that will power the car and recharge the batteries once they are depleted). It is expected to cost about $40,000.

In only two years GM can produce an inferior version of the Prius? For $40,000. IF we give them $25,000,000,000 to do it?

I suggest we as a nation, and Congress as a congress, give them the national and Congressional bird. And I mean neither the eagle nor the turkey.

The very fact they have nothing better to offer suggests that they are bankrupt intellectually as well as financially. Let them go into bankruptcy, then have the trustee in bankruptcy sell their plants to Toyota or Honda. The Japanese car companies already knows how to build Priuses and Civic Hybrids and they don't need $25,000,000,000 to find out. Even if the government had to lend them part of the transition costs, it would still be a bargain.

Today, this very day, Toyota will sell you a shiny new Prius starting at $22,000 or a larger Camry Hybrid for $26,000 or a still-larger Highlander Hybrid for $34,000. A Honda Civic Hybrid starts at $23,000. Notably, Honda's FCX Clarity fuel cell car is already in production in limited numbers. Its tail pipe emissions are H2O, not CO2.

With GM management in charge, GM's assets are worthless because they can't make a profit with them. With Toyota or Honda management in charge, they might be worth something. This is an example where the free market is right. The penalty for persistent incompetence and short-sightedness is, and should be, economic extinction, removal from the marketplace. That has to happen to GM management.

Or we could bet $25,000,000,000 of our money that a $40,000 bad copy of the Prius will turn a profit. Especially with their Japanese competitors by then having a ten year lead in producing theirs. That ought to work.

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