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Market Socialism in Detroit



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Detroit — Planet Gore has consistently reported on how mpg laws have forced a dual-track business plan on automakers. They must produce autos that satisfy government mandates, and others that consumers actually want to buy. The resulting expense is not only forcing consolidation in the industry, but also forcing an inevitable merger of Big Auto and Big Government as the former lobbies government to finance its mandates.

My Detroit News colleague Christine Tierney does some reporting from the field this week on what this looks like. She writes:

Making the kind of ultra-clean, high-tech cars that automakers will have to sell to meet strict emission rules coming into force in the United States and other regions will be very expensive. Most carmakers won’t be able to cover the costs by themselves — and that will spur many to seek new partnerships, say industry executives and experts.

Consider those words. Automakers will “have to sell” cars “to meet strict emission rules.” There is no customer in this equation. This is pure market socialism as the U.S. joins the world in global warming-obsessed industrial policy. Continues Christine:

Even for the biggest companies, the costs of new technologies and materials are daunting. Consider:

- A hydrogen-powered fuel cell SUV costs four times as much to build as a conventional SUV.
- A transmission for a hybrid SUV costs three times more than a transmission for a regular SUV.
- Batteries large enough to power cars without assistance from a gas engine cost from about $12,000 to as much as $50,000 for a performance car.

No consumer-product maker would voluntarily invest in an uncompetitive design (solar-powered iPhones!) for a market that doesn’t exist (hybrids have stalled at 2 percent of vehicle sales). So . . . government pays for this niche, creating a bizarre two-track market.

“In addition to working on the fueling infrastructure, governments are helping to cover the cost of developing ultra-clean cars with grants and loans, such as the U.S. Energy Department’s loan program for advanced technology vehicles,” writes Tierney. “The federal government also is offering tax credits up to $7,500 for clean-car purchases, and some states are offering credits, as well.”

The cars won’t make money. But their costs will force permanent changes in the industry, driving it ever closer to government dependence.



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