BONUS Video: December 19, 2011- Mark Modica, an Associate Fellow of the National
Legal and Policy Center, discusses GM's apparent goosing of Chevy Volt
sales figures. Mark is interviewed by Neil Cavuto on the Fox News
Channel.
Each Chevy Volt sold thus far may have as much as $250,000 in state and federal dollars in incentives behind it – a total of $3 billion altogether, according to an analysis by James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy.
Hohman looked at total state and federal assistance offered for the development and production of the Chevy Volt, General Motors’ plug-in hybrid electric vehicle. His analysis included 18 government deals that included loans, rebates, grants and tax credits. The amount of government assistance does not include the fact that General Motors is currently 26 percent owned by the federal government.
The Volt subsidies flow through multiple companies involed
in production. The analysis includes adding up the amount of government
subsidies via tax credits and direct funding for not only General
Motors, but other companies supplying parts for the vehicle. For
example, the Department of Energy awarded a $105.9 million grant to the GM Brownstown plant that assembles the batteries. The company was also awarded approximately $106 million for its Hamtramck assembly plant in state credits to retain jobs. The
company that supplies the Volt’s batteries, Compact Power, was awarded
up to $100 million in refundable battery credits (combination tax breaks and cash
subsidies). These are among many of the subsidies and tax credits for
the vehicle.
It’s unlikely that all the companies involved in Volt production will
ever receive all the $3 billion in incentives, Hohman said, because
many of them are linked to meeting various employment and other
milestones. But the analysis looks at the total value that has been
offered to the Volt in different aspects of production – from the
assembly line to the dealerships to the battery manufacturers. Some tax
credits and subsidies are offered for periods up to 20 years, though
most have a much shorter time frame.
GM has estimated they’ve sold 6,000 Volts so far. That would mean each of the 6,000 Volts sold would be
subsidized between $50,000 and $250,000, depending on how many
government subsidy milestones are realized.
If battery manufacturers awarded incentives to produce batteries the
Volt may use are included in the analysis, the potential government
subsidy per Volt increases to $256,824. For example, A123 Systems has
received extensive state and federal support, and bid to be a supplier
to the Volt, but the deal instead went to Compact Power. The
$256,824 figure includes adding up the subsidies to both companies.
The $3 billion total subsidy figure includes $690.4 million offered
by the state of Michigan and $2.3 billion in federal money. That’s
enough to purchase 75,222 Volts with a sticker price of $39,828.
Additional state and local support provided to Volt suppliers was not
included in the analysis, Hohman said, and could increase the level of
government aid. For instance, the Volt is being assembled at the Poletown plant in Detroit/Hamtramck, which was built on land acquired by General Motors through eminent domain.
“It just goes to show there are certain folks that will spend
anything to get their vision of what people should do,” said State
Representative Tom McMillin, R-Rochester Hills. “It’s a glaring example
of the failure of central planning trying to force citizens to purchase
something they may not want. … They should let the free market make
those decisions.”
“This might be the most government-supported car since the Trabant,” said Hohman, referring to the car produced by the former Communist state of East Germany.
According to GM CEO Dan Akerson, the average Volt owner makes $170,000 per year.
