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China isn't as willing to jump on board the idea of Chevy Volt tax credits as the Bush and Obama administrations  (Source: AP Photo)

GM reportedly sold more cars in China last year than the U.S.  (Source: AP Photo)

The Chevy Volt launches in the U.S. November 2010, priced at $41,000 with $7,500 tax credit. It will launch in China next year, priced in excess of $40,000.  (Source: Jalopnik)
Volt will cost over $40k USD when it goes on sale in China later this year

The Obama and Bush administrations saved General Motors from bankruptcy, and now as the company prepares to partially denationalize, the government will help once again to reduce the price of its upcoming EV.  For every one of its 2011 Chevy Volt electric vehicles sold, the government will give qualifying buyers a $7,500 USD tax credit (this also applies to vehicles like the Nissan Leaf).  This helps GM and its competitors to offer a more competitive price (after tax credit) and makes the vehicles potentially profitable for the company.

Critics of the tax credit, rolled out under President Bush's leadership, will likely be even more infuriated with pending proposals to bump the tax credit to as high as $10,000 USD.

For all its fortune in the U.S., GM is finding resistance to its push for government assistance in China.  China, looking to support local EV efforts, has thus far rebuffed GM's urging to adopt a level tax credit for Chinese EV buyers.  GM, which reportedly sold more cars in China last year than the U.S., is currently deciding whether to scrap plans to build a series of EV charging stations in China's urban areas.

GM China VP David Chen complains,"China is the only country that has different subsidy policies [for electric vehicles based on origin].  The U.S. government provides US$7,500 for every electric car no matter where it comes from."

As a result, the Chevy Volt is anticipated to be priced at over $40,000 USD after any applicable tax credits when it launches later this year.  This will be drastically more expensive the domestic hybrids produced by Chinese rivals.

China, no stranger to market regulation itself, recently announced an ambitious plan spend 100 billion yuan ($14.7B USD) to fund its domestic automakers.

At the moment, any EV sold in the U.S. (regardless of the country of origin) can get full tax credits.  In China, though, U.S. EVs receive unequal treatment.  

Even Japan, which long blocked auto imports from the U.S., recently caved in and offered a whopping 3.24 million yen (roughly $38,000 USD) tax rebate for those who buy Tesla Roadster EVs.  The Roadster, a luxury competitor to the Volt, currently retails for 12.8 million yen (roughly $149,200 USD) in Japan.

IHS Automotive analyst to Green Car Advisor writes, "Although the government is looking to increase the numbers of such vehicles sold in the country, it is aiming to maintain the stranglehold of locally built vehicles, and this is unlikely to change."

China's EV dominance isn't merely limited to domestic assembly, though.  The growing giant also maintains a tight grip on around 95 percent of the world's rare earth metal production.  EVs and hybrid vehicles use much more rare earth metals then standard vehicles.  And it takes years to create active mines and processing facilities for rare earth metals.  Thus, to some extent, China will be able to dictate the price of EVs and hybrids internationally.

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RE: protectionism
By dark matter on 9/8/2010 1:37:18 PM , Rating: 2
Actually your debt addiction is caused by the American debt model created by the federal reserve. Where every dollar created is loaned to your government with interest payable.

This is the very reason you strove hard to seek independence from England. Before getting "tough" with another government, it's time you held your own government to account. In fact, it's time we all did.

RE: protectionism
By ekv on 9/8/2010 2:29:21 PM , Rating: 2
Not a big fan of the Federal Reserve.

Currency Board seems to be a better model.

"Monetary policy: By design, a currency board has no discretionary powers. Its operations are completely passive and automatic. The sole function of a currency board is to exchange its notes and coins for the anchor currency at a fixed rate. Unlike a central bank, an orthodox currency board does not lend to the domestic government, to domestic companies, or to domestic banks. In a currency board system, the government can finance its spending by only taxing or borrowing, not by printing money and thereby creating inflation."

RE: protectionism
By Kurz on 9/8/2010 2:49:29 PM , Rating: 2
You need an anchor currency.
I would love to have gold as the anchor currency.

Or just flat out use gold. And we can use gold certificates to easily transfer the gold (As long as we don't have the government overprinting these we should be ok.)

Though we should make a policy not the trade paper for gold that aren't gold certificats.

RE: protectionism
By FITCamaro on 9/8/2010 3:43:51 PM , Rating: 2
I'm not sure there's enough gold or platinum on the planet for the trillions that have been printed.

RE: protectionism
By Kurz on 9/9/2010 6:22:22 PM , Rating: 2
There is... if you stop printing for a year or two the prices will settle and if you take inflation and advancement of technology you'll find the prices will be pretty much the same.

Example 1 kilo of gold costs what 40,000 dollars?
Same kilo of gold costed 735 dollars in 1900.

The main thing that is changing is the value of dollar.
(Of course there are fluctuations in the Gold supply and cost of mining, but it pails in comparison with the dollar inflation.)

So effectively 1 kilo of gold represents a unit of wealth in society and tends to hold that value when its treated like a monetary instrument... Currently its being treated more and more like an investment/ monetary instrument.

RE: protectionism
By Mogounus on 9/8/2010 4:48:55 PM , Rating: 2
Did I say they were causing our debt addiction? No, I said they were subsidising it. They are buying large amounts of our debt at low prices.
And that wasn't even the main point of what I wrote. I said they were being protectionist by subsidising only autos made by Chineese companies (aside from other things) and because of our dependence on their debt purchasing we are not willing to stand up to them.
Maybe you should read better next time.

“Then they pop up and say ‘Hello, surprise! Give us your money or we will shut you down!' Screw them. Seriously, screw them. You can quote me on that.” -- Newegg Chief Legal Officer Lee Cheng referencing patent trolls

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