Wednesday, December 21, 2011

Electric Car: $250,000? But it gets 39 miles per charge!

According to research done by Mackinac Center for Public Policy, the electric-powered Chevy Volt may have as much as $250,000 in federal and state tax incentives per car. In other words, taxpayers are covering the risk in this venture by General Motors into electric powered automobiles. Read the full article in Capitol Confidential here.

Back in the "old days" entrepreneurs invested their own money or found venture capitalists to take the risk on a new idea. Or maybe they would go public, pitch an idea and see if anyone wanted to buy stock in the company. The downside for the investor? He lost it all, but the upside was that he could become a millionaire. This scenario has occurred thousands of times.

Today, we have members of Congress and state legislators who vote either for direct aid (bailouts) or huge tax incentives and subsidies to pick up the risk in place of the private investor.

What do you think are the chances of success when the manufacturers are using somebody else's money instead of their own?

I suppose you could argue that the Volt will ultimately be a huge success and that GM will sell millions of units at a tidy profit. But, if they do, will the taxpayer benefit the way the private investor would have? No, they will not. And if they don't, who will pick up the tab? I think you know the answer to that one.

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