Chevrolet Volt sales continue slow, GM cuts price by $5,000, but was already losing money on each sold before price cut

$7,500 tax credit, pricing it so low that they are losing money on each car, and they still couldn't sell more than 30,000 in 2012.  From Bloomberg:

GM loses money on each Volt it sells while not disclosing a specific figure. The model, which is eligible for a $7,500 U.S. tax credit, was introduced in 2010 and has struggled to meet some sales targets. Volt is GM’s flagship car for its efforts to have about 500,000 vehicles on the road by 2017 with some form of electrification. The car can travel 38 miles (61 kilometers) on battery power before a gasoline engine engages. . . . 

Leaf sales accelerated this year after Nissan Motor Co. (7201) in January added an S version of the Leaf that’s cheaper than the SV and SL models. Unlike the Volt, the Leaf has no extended range engine. Leaf sales more than tripled to 11,703 through July from 3,543 during the same period a year earlier, outselling Volt in the U.S. by 60 vehicles. . . . 

Even with the accolades, the car struggled to garner the kinds of sales sought by Chief Executive Officer Dan Akerson, who had forecast global Volt sales of 60,000 in 2012, before settling for about half that amount. 

In late April, Akerson said GM was working to cut the price of producing the Volt by as much as $10,000 each without removing features for the next-generation version which he indicated could come out in 2015 or 2016. . . .

Whatever one thinks of electric cars the Volt has been a waste of taxpayer dollars with government subsidies and a product of government control following the bankruptcy.

Big surprise: Despite years of subsidies, solar energy industry collapses when subsidies cut

So much for the claim that all the solar energy industry needed as a jump start.  From Fox News:

The solar industry got a huge boost during President Obama's first term when the stimulus package threw billions of dollars in subsidies at solar power companies in hopes of dramatically increasing production. Generation has increased in that time -- but now federal, state and local incentives are being slashed, leading some to conclude the future of solar power in the U.S. is dimming.  

"The fundamental problem is it's not economically sustainable," said Todd Myers of the Washington Policy Center, a think tank in Washington state.  

Federal stimulus incentives have run out and are not being renewed. States are also slashing their solar power subsidies. Oregon recently cut its solar business tax credit by 99 percent. And utilities all over the country are complaining about lost revenue.  . . .  

"Everywhere you go, solar energy requires massive subsidies, which eventually blow a hole in the federal or state budget, and then are dropped," said Myers. "Solar is a bad way to go."

GM again suspends production of Chevy Volt

Last year GM sold 7,671 Volts.  This year they seem on track to double sales.  But less than 20,000 units is pretty small, especially compared to the huge subsidies provided by the government.  Auto News has this:

General Motors plans to idle the plant where it assembles the Chevrolet Volt plug-in hybrid for four weeks starting next month, two people familiar with the plans said. 

GM will close its Detroit-Hamtramck plant from Sept. 17 until Oct. 15, one of the sources said. Union representatives last week told the plant's roughly 1,500 workers about the scheduled downtime, the source said. . . . 

It's the second time this year that GM has throttled back on Volt production. The Detroit-Hamtramck plant was idled from March 19 until April 16 amid swollen Volt inventories.
Volt demand has picked up this year, after sales last year fell short of GM's goals. GM sold 10,666 Volts through July, more than triple the 2,870 sold during the same period a year earlier. . . .  

Volt inventories have been whittled down, too, to 6,500 units, or 84 days' worth, as of Aug. 1. On March 1, just before the last production shutdown, GM had 154 days' worth. . . . 

UPDATE: But, as the commenter below notes, much of the Volt's sales are due to purchases from GE for its employees.

GE began purchasing Volts for its employees last month [March] in what it called "the largest order in history" of cars for its employees. However, the Volt numbers reflect a slow start to the GE Volt order. GE plans to buy 12,000 Volts by 2015. In effect, GE could buy 500 Volts each month in 2013 and 2014 and meet that target, without buying any Volt fleet vehicles this year. GE did say all fleet vehicle replacements in 2012 will be made with Volts, but it seems as if that could be a minor part of the Volt story if it is successful this year. 

The GE buying of Volts will continue to be a swing factor in month-to-month sales figures for the Volt, but the March data shows consumer demand for the vehicle is increasing at a critical time for GM, critical because of the excess supply. 

There have been more than 18,000 Volts produced and roughly half had been sold through February, a situation that led to the production halt and a more recent statement from GM that the production shutdown could be extended by a week. 

Analysts have also pointed to sales of the Nissan Leaf, down 29% for the past two consecutive months, as a sign that all is not well among U.S. consumers when it comes to the electric car market. 

However, the "inorganic source of demand," from GE and the trend in Leaf sales didn't reflect what was simply a good month for the Volt in March, once GM broke out the retail vs. fleet numbers on a conference call with analysts and the media. . . . . 

In addition, the Federal government has been making large purchases of GM cars, presumably also including the Volt.  This also brings into question how well the GM bailout has been going.  Here is a discussion from January this year.

Speaking of suspicious activity, an interesting statistic was revealed on GM's sales conference call. Government purchases of GM vehicles rose 32% from last year. This represents yet another conflict as the Obama Administration has a vested interest in GM's success as it spends more taxpayer dollars to help support the company as 2012 elections near. . . . 

GM sales spokesman, Jim Cain, government sales reportedly make up 5% of total sales and most of those sales are to state and local governments.  But 2% of 248,750 is still 4,975 units.  If even 10% of those sales are for Volts, the government may account for virtually all the remaining sales.

UPDATE: Military making big purchases of Volt.

The Pentagon is buying Chevrolet Volts to help “green up” the military—while propping up sales of the bailed-out automaker’s most politicized car. 

The Department of Defense began purchasing the struggling luxury electric car, which retails at $40,000, this summer as part of its goal to purchase 1,500 such green vehicles. The Marine Corps Air Station in Miramar, Calif. purchased its first two Volts in July, and 18 more vehicles will come shortly to Joint Base Andrews in Maryland, where Air Force One is based, according to military magazine Stars and Stripes. . . . 

GM is now offering the vehicle for as low as $169 per month, a financing deal that is generally reserved for $15,000 cars—a price so low that GM is reportedly losing nearly $50,000 per vehicle. The struggling automaker will again suspend production later this month after only 2,500 Volts drove off the lots last month. . . .

UPDATE: Advertising for GM's Volt in Europe banned as misleading.

. . . Now the commercial has been banned for misleading motorists who want to do their bit for the environment.The advertising watchdog’s ruling is a blow to Vauxhall’s Ampera, which beat the Range Rover Evoque to win the European Car of the Year award for 2012.Vauxhall insisted its claims about the Ampera were genuine and that once in ‘range extender mode’, it can indeed keep going for 360 miles. . . .

Germany moves to pay women to stay at home taking care of kids

If you are going to have the government pay people to take care of people's kids, why not give that money to the mom's themselves?  Who is going to do a better job taking care of kids?  From The Economist:

CRITICS call it a “hearth bonus” or “keep-your-kids-out-of-school money”. The government prefersBetreuungsgeld (“child-care benefit”). Few of its ideas are as contentious as a planned €150 ($199) monthly payment to parents who do not put their children into crèches. Angela Merkel, the Christian Democrat chancellor, defends this as “an essential part of our policy of freedom of choice.” But it seems to contradict much of what she stands for.
Germany’s long-term worries include a shrinking and ageing population, immigrants who are not fully integrated into the workforce and women who are both underemployed and underpaid. German women work fewer hours than women in most other OECD countries (see chart). The gap in median pay is the third-widest in the club, after South Korea’s and Japan’s. That is partly because mothers stay at home. In 2008 just 18% of children under the age of three were in formal child care, against an OECD average of 30%.
. . . . By 2013 parents will have a legal right to a day-care place after a child’s first birthday.
Good crèches are thought by some to be a cure-all. By helping women to combine motherhood and career, they relieve skills shortages, boost growth and reduce inequality between the sexes. They might even lift Germany’s miserably low fertility rate. . . . .

GM Volt sales very slow even before safety issue with fires

Someone really needs to add up all the subsidies that have gone into these cars. The average income of Volt buyers is $175,000 a year. Whether it is 8,000 cars this year or a chance of 45,000 next year, where would these sales be without these huge subsidies? So much for initial predictions of up to 60,000 sold in 2011. From the WSJ:

Before General Motors Co.'s Chevrolet Volt became the subject of a U.S. safety investigation, the auto maker's moon shot was falling well short of its stratospheric expectations.

GM's year-old, battery-powered Volt, cast by the company as a revolution in automotive technology, will miss the sales target of 10,000 vehicles that Chief Executive Dan Akerson set for this year, hampered by production delays, distribution problems and questions about whether Americans really want electric cars. The company is on track to sell around 8,000 Volts this year.

GM aims to sell 45,000 Volts in the U.S. next year, and the auto maker faces questions about whether it can deliver.

"We're getting a lot of interest, we're just not getting a lot of buyers," says William Willis, a Chevy dealer in Smyrna, Del. Mr. Willis says he has sold two Volts since the fall and has two on his lot. "Customers come in, they are wowed by the display, the quick acceleration. It's just going to take a while for the American public to accept the price."

The $41,000 Volt solved the biggest hurdle with electric cars: range. But that came with compromises on price and space. Now questions have arisen about safety in the wake of fires caused by government crash tests. . . .

Subsidies

tax credit of up to $7,500

federal tax credit equal to 50% of the cost to buy and install a home-based charging station with a maximum credit of US$2,000 for each station. Businesses qualify for tax credits up to $50,000 for larger installations.

There have been other huge subsidies in terms of the development of the cars and even the equipment used to manufacture the cars.

Who can forget all the big subsidies to General Motors?

"Overflowing" Government Subsidies

It is bad enough that projects that don't pay for themselves are getting subsidies. The problem is that they are getting almost all their money from the government and (surprise) that the subsidies are haphazard. From the New York Times:

. . . Obama administration officials said the subsidies were intended to help renewable-energy plants that were jumbo-sized or used innovative technology, both potential obstacles to getting private financing. But even proponents of the subsidies say the administration may have gone overboard.

Concerns that the government was being too generous reached all the way to President Obama. In an October 2010 memo prepared for the president, Lawrence H. Summers, then his top economic adviser; Carol M. Browner, then his adviser on energy matters; and Ronald A. Klain, then the vice president’s chief of staff, expressed discomfort with the “double dipping” that was starting to take place. They said investors had little “skin in the game.”

Officials involved in reviewing the loan applications said that Treasury Department officials pressed the Energy Department to respond to these concerns.

Officials at both agencies declined to discuss the anticipated financial returns of the clean-energy projects the federal government has agreed to guarantee, saying the information was confidential. . . .

In at least one instance — NRG’s Agua Caliente solar project in Yuma County, Ariz. — the Energy Department demanded that the company agree not to apply for a Treasury grant it was legally entitled to receive. The government was concerned the extra subsidy would result in excessive profit, NRG executives confirmed.

In other cases, the agency required that companies use most of the Treasury grants that they would get when construction was complete to pay down part of the government-guaranteed construction loans instead of cashing out the equity investors.

“The private sector really has more skin in the game than the public realizes,” said Andy Katell, a spokesman for GE Energy Financial Services, which like Goldman Sachs, Morgan Stanley and other financial firms has large investments in several of these projects.

But there is no doubt that the deals are lucrative for the companies involved.

G.E., for example, lobbied Congress in 2009 to help expand the subsidy programs, and it now profits from every aspect of the boom in renewable-power plant construction.

It is also an investor in one solar and one wind project that have secured about $2 billion in federal loan guarantees and expects to collect nearly $1 billion in Treasury grants. The company has also won hundreds of millions of dollars in contracts to sell its turbines to wind plants built with public subsidies. . . .

US goes after China for subsidizing Wind Power?

The complaints against the Chinese seems to focus on protectionism more than subsidies per se, but still it is pretty ironic that the Obama administration, which has given huge subsidies to wind power in the US, would complain about China's subsidies.

The U.S. said Wednesday it is requesting consultations with China at the World Trade Organization to end hundreds of millions of dollars of subsidies to boost wind-power production. . . .

China's Ministry of Commerce said Thursday that China is "highly concerned" about the U.S. invoking dispute settlement procedures at the WTO. China will study the U.S. request for talks and handle it in accordance with WTO rules on dispute settlement, while reserving China's "relevant rights," the ministry said without elaborating.

In the past, Chinese officials have called the union's complaints "groundless and irresponsible."

The U.S. says wind energy is the fastest-growing sector in China's renewable-energy market, which overall is expected to reach $100 billion by 2020. Chinese wind-turbine makers now rank among the top 10 producers globally, and foreign companies' share of the Chinese market has been slashed to 13% from 79% in the past five years, according to Goldman Sachs. . . .

Just one recent note on the subsidies to wind-power in the US.

Alas, market forces ruined the Pickens Plan. Mr. Pickens should have shorted wind. Instead, he went long and now he's stuck holding a slew of turbines he can't use because low natural gas prices have made wind energy uneconomic in the U.S., despite federal subsidies that amount to $6.44 for every 1 million British thermal units (BTUs) produced by wind turbines. . . .

. . . "The place where it works best is with natural gas at $7."

That may be true. But on the spot market natural gas now sells for about $4 per million BTUs. In other words, the free-market price for natural gas is about two-thirds of the subsidy given to wind. Yet wind energy still isn't competitive in the open market.

Despite wind's lousy economics, the lame duck Congress recently passed a one-year extension of the investment tax credit for renewable energy projects. That might save a few "green" jobs.

But at the same time that Congress was voting to continue the wind subsidies, Texas Comptroller Susan Combs reported that property tax breaks for wind projects in the Lone Star State cost nearly $1.6 million per job. That green job ripoff is happening in Texas, America's biggest natural gas producer. . . .