Automotive Cooling

Along with lower car sales, the product mix hasn’t lived up to the expectations of EPA bureaucrats and the Obama administration. Kelley Blue Book reports that demand for large vehicles is up and sales of small cars are declining. This trend is due to a drop in fuel prices, the fact that many large cars are a better value, and that, given the choice, people like larger vehicles.

So if we recap the government’s cash-for-clunkers program, it looks like for our $3 billion we got a badly managed incentive program that spiked sales for two months, then collapsed and had little effect on buying habits. Of course, that hardly means our current administration, Congress, or environmentalists are through tampering with markets.

Just this week, Fisker, a declared producer of luxury “plug-in hybrid” vehicles, was awarded a $528 million federal loan to build an "affordable" version of its extended-range electric vehicle technology. Now, I like Heinrich Fisker and his $80,000 Karma model is a viable fit in the green luxury space, assuming it performs as promised. But isn’t the normal capital market the place to finance these ventures? After all, the company has willing dealers and more than 1,500 orders for its attractive, electric vehicle.

Fisker promises to build a car code-named Nina, a reference to Christopher Columbus’ discovery of the new world, and the projected price will be $39,900 after $7,500 in tax credits. I suppose that’s affordable, although it’s a lot more than the very efficient Ford Fusion Hybrid or a four-cylinder Camry or Accord. On the other hand, I’ll bet it looks really great when Heinrich puts his design talent to work on the styling.

Tesla, a producer of two-passenger electric roadsters that start at $101,500, received a remarkably similar loan to build its "affordable" sedan. In Tesla’s case our $465 million will help fund a pure electric that will retail for $49,900 after our $7,500 rebate. Buyers should stick to home base, since we’re not really doing much to provide public plugs for electrics to plug into. Gee, isn’t that a better place for stimulus? Just wondering …

There’s a teachable moment here. What if we canned all the unnecessary bureaucrats who keep busy doing the impossible job of trying to manage human behavior for what they believe is the public good? Instead, simply levy a carbon tax if the real goal is to increase fuel economy, lower our dependence on oil, and save the planet.

And electric cars do have a place in the automotive fleet, especially in and around major cities. But the government’s job isn’t to build them. Its best effort would be to encourage clean, nuclear power generation and help establish a smart plug-in grid in urban areas. That’s when I’ll take those efforts seriously and not as just another political gimmick.