Consumers Should Select Cars, Not Government

NLPC Associate Fellow Mark Modica says it is time to end tax credits and subsidies for electric vehicles. He is interviewed by Neil Cavuto on the Fox Business Network on Friday, January 6. Here’s a transcript:

Neil Cavuto:  Meanwhile, a Fox Business Alert that is going to be a topical issue, drivers paying more to fill up. But it doesn’t look like they’re getting fed up with the gas guzzlers. Gasoline now at its highest price ever for the start of the year. It’s still rising. But look what else is rising. Sales of really big vehicles like the Dodge Durango, the Jeep Grand Cherokee, so much so that Chrysler is adding, adding over a thousand jobs to build them. Former GM bondholder Mark Modica says the car buyers are going for the gas guzzlers. So D.C. should stop fueling its green car agenda?  Mark, you do raise an interesting point. That’s what’s on fire here.  But does anyone get it?

Mark Modica (National Legal and Policy Center):  I don’t know, Neil, but it’s great to see jobs being created. But more importantly, it’s created by capitalism and free markets. Chrysler’s going to build cars that the people want, as opposed to an agenda that’s pouring billions of taxpayer dollars into producing vehicles that the majority of Americans just don’t want.

Neil Cavuto: But GM must see this too, right? It knows that at the best of Volt and the disaster that’s proven to be. It might be sort of an ego loss leader. But it’s a loss leader. What’s selling are the big guzzlers. All the more power to them, but that’s the stuff that’s selling, right?

Mark Modica:  Yeah. The gas guzzlers are the ones that make the companies money. And I don’t understand why GM isn’t focusing on building cars that make money for stock holders.

Neil Cavuto: Because I think it’s all for image. My view on this, Mark and you and I can disagree. I think it’s all for image. Remember when McDonald’s in the early days started offering salads and yogurt to kids? I think it was just doing this mollify a lot of these angry, you know, skinny gymnasts and all that. It was saying they were having it, getting annoyed with it. Bottom line, the big moneymaker for them, the burgers, the fries. But at least they had the cover of offering this nonsense. Not that it’s nonsense, but go ahead.

Mark Modica:  But GM’s doing that. But the problem is they’re sending the Hamburgler to take the taxpayers’ money and put them into this Volt. And there’s another thing behind this. They’re raising CAFE standards. The automakers have to build cars that are getting, by EPA estimates, ninety, a hundred miles per gallon to offset those gas guzzlers.

So even though they’re only going to sell a few thousand of them, they’re going to take billions of dollars of taxpayer money to produce them, only sell thousands. And that helps them raise the CAFE standards.

Neil Cavuto: I never thought of that, Mark that even if you’ve got…

Mark Modica:  You heard it here first.

Neil Cavuto: …Well, that’s a very good point. So this will bring them in line with those standards, even if you’re selling two and a half cars?

Mark Modica:  Part of the reason is the halo effect, bringing people into dealerships, baiting and switch them over to Chevy Cruze. And part is the CAFE standards, something that hasn’t been reported, but definitely is playing into this, at the taxpayer expense.

Neil Cavuto: Where do you think it ends though? If it’s proven that the Volt has been a dope, it hasn’t really sold, even with the credits and everything, while there is still a strong market for hybrids, traditional hybrids, do you think the automakers still pursue, in varying degrees, like Nissan has with its Leaf, this technology, because they think that eventually it will register?

Mark Modica:  Well, the technology has to improve. As far as the Volt in its current state, I don’t know. GM has dug the hole pretty deep. They’ve lost a lot of credibility. And now it appears that they’re going to just try to sell more to General Electric and the government. They can prop up the sales and prove it’s a success. And they keep playing the same hand, where they say this is a big success, while all evidence points that it’s not. So, I’m hoping that that seven thousand five hundred dollar tax credit goes away. Representative Mike Kelly from Pennsylvania’s introduced a bill, and people should be behind this. The average income of a Volt buyer is a $175,000. That’s besides those fleet purchasers $175,000 they’re making. They don’t need our $7,500 Neil. And they say they love the car. They’re early adopters. They’re going to buy the car anyway, in limited numbers. So let them buy it. They’re happy with it. Just don’t take $7,500 from the rest of us.

Neil Cavuto: We might be getting there anyway, Mark thank you very much. Good seeing you again.

Mark Modica:  Thanks, Neil. Good to see you.