Government Motors Is A Failed Enterprise

January 27, 2013

Government Motors Is A Failed Enterprise
Henry Payne writes in the WSJ that much of the auto industry is thriving — just not the government-subsidized parts. And hey, you GOP voters (and fans of the GOP’s pretend small government, which is really just slightly smaller government), Bushie put in some of these idiotic and damaging ethanol mandates, too:

Predicting a breakthrough in switchgrass-based ethanol technology in 2007, the Bush administration mandated that cellulosic, or plant-cell based, ethanol production for American autos increase to 500 million gallons by 2012 and a staggering 16 billion by 2022. Washington then subsidized its fledgling industry with $1.5 billion in federal grants and tax credits. Prodded by Washington, General Motors GM +1.01% used the 2008 auto show to announce investments in cellulosic ethanol companies and flex-fuel vehicles, and a national campaign to add E85 (a blend of 85% ethanol and 15% gasoline) pumps at gas stations.

Five years later and the ethanol market is a bust. Fewer than eight million gallons of cellulosic ethanol were produced in 2012, E85 pumps are rare (most blends are 10% or 15%), and ethanol is rarely mentioned at the auto show.

The electric revolution is muted too. Spending an estimated $10 billion of the 2009 federal stimulus bill on battery power, Team Obama predicted a million electric cars on the road by 2015. Today there are barely 30,000, and federally subsidized auto-battery suppliers like Ener1, A123 Systems AONEQ -7.55% and LGChem are either struggling or bankrupt.

…Poor sales have dogged the electric Ford Focus, Chevy Volt and Fisker Karma as well. A $7,500 federal tax subsidy to electric-car buyers has done little to boost the market, even as it subsidizes One Percenters like Leo DiCaprio and Justin Bieber, who both own $100,000 electric Karmas; and Michigan Sen. Carl Levin, owner of a $40,000 Chevy Volt.

In an ironic twist, one of the showstoppers is the VL Destino, which strips the Karma of its electric drive-train and inserts a fire-breathing, 638-horsepower Corvette ZR-1 gas engine in its place. The result? A lighter, more competitive, four-door sports sedan.

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