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  (Source: Wikipedia)
Gas prices at $4 a gallon have pushed drivers over the edge

With gas hovering $4 a gallon, it's easy to understand why many drivers are becoming increasingly frustrated with their gas guzzling vehicles that drain their wallets on a normal basis. To make matters worse, fuel prices are expected to remain around the $3 to $4 mark for some time, and these high prices are pushing some consumers toward electric vehicles like the Chevrolet Volt.

According to a study from the University of Delaware, which surveyed over 3,000 people, consumers would be willing to pay for several different electric vehicle attributes. For instance, the UD study found that consumers put a price of $75 per mile up to 200 miles of additional range, and $35 per mile from 200 to 300 miles. 

"This information tells the car manufacturers what people are willing to pay for another unit of distance," said George Parsons, a professor at UD. "It gives them guidance as to what cost levels they need to attain to make the cars competitive in the market."

In addition, the study found that consumers believe the cost of batteries needs to decrease significantly without subsidy. But researchers noted that the current $7,500 government tax credit could "bridge the gap between electric car costs and consumers' willingness to pay if battery costs decline to $300 a kilowatt hour." 

"It appears that even modest electric vehicles with today's limited battery range, if marketed correctly to segments with appropriate driving behavior, comprise a large enough market for substantial vehicle sales," the study concluded.

With this in mind, automakers like General Motors are looking to increase production to meet consumer demand of electric vehicles. As a matter of fact, GM has announced that it will increase production of its electric Chevrolet Volt. 

GM announced the news yesterday, saying it would build 1,000 more electric Volts than previously planned for 2011, and will build an additional 15,000 Volts on top of its target for 2012. This would put the electric Chevrolet Volt's total production number at 16,000 in 2011, and 60,000 in 2012.

In June, GM will shut down its Detroit-Hamtramck plant for four weeks to prepare for added production. Cristi Landy, director of Chevrolet Volt Marketing, mentioned that this temporary shutdown will withhold Volt supplies at dealers through the summer, but will allow GM to ready itself for the added Volt production. 

Of the 16,000 Volts made in 2011, about 2,500 will be sent to dealer demonstration fleets, 3,500 will be exported to Canada, China and Europe, and the other 10,000 will be sold in the United States. As far as 2012's 60,000 Volts go, 45,000 will be sold in the U.S. 

A big question regarding the added production is whether it will create more jobs at the plant. Currently, the plant employs 958 hourly and 159 salaried workers, and runs on one shift. These employees will be laid off during the plant shutdown. 

"We're not talking about jobs yet," said Michelle Bunker, a Chevrolet spokeswoman.

GM did announce last week, however, that it would spend $2 billion at 17 U.S. locations for upgrades, and that this would create or keep 4,000 jobs in eight states.

GM hopes to eventually build more than 100,000 Volts a year. So far this year, it has sold 1,700 Volts, which are priced at $41,000 minus $7,500 in tax incentives.

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By Bobalouie on 5/19/2011 8:00:39 PM , Rating: 1
It's not a subsidy. It's a tax credit. A subsidy is what we give the oil companies. A tax credit is applied to taxes I have already paid. 47k is incorrect. I paid $32k after the $7500 credit. I did not get the polished wheels, but I have every other option. In other words: fully loaded with Bose sound system, dual LCD screens, 8 airbags, OnStar, parking assist, heated leather seats. Oh, and the ability to drive gas free for almost all my driving but still go cross country like any other car. At 0 RPM this care has the torque of a revved 300 HP engine. It GOES.

By Bobalouie on 5/19/2011 8:26:17 PM , Rating: 2
This car weighs as much as a full size car. That's actually a safety advantage in a crash. The insurance industry gave it Top Safety Pick (the highest) for front, side, rear and rollover crashes. Part of that is attributed to it's 4350 lb weight, part to 8 air bags, part to HHS (high strength steel) body, part to great engineering.

As far as absurd, I find giving the oil companies $4 billion a year to add to their $32 billion profits just a tiny, tiny bit absurd.

By Chaser on 5/19/2011 8:36:16 PM , Rating: 2
As far as absurd, I find giving the oil companies $4 billion a year to add to their $32 billion profits just a tiny, tiny bit absurd.

Anything to make gasoline less expensive for all U.S. consumers regardless of what they drive or own is reasonable. The federal government subsidizing a handful of fringe overpriced cars is ridiculous and pathetic. Just a teensy bit.

By Bobalouie on 5/19/2011 8:51:42 PM , Rating: 3
If we take away the oil companies corporate welfare, they will have a hard time making ends meet on just $32 billion dollars of profit? The oil companies do not need the help.

Threatening to raise the price of gas sounds like blackmail because it is. The last guy who retired from Exxon was given half a billion dollars in severance. If we took away Uncle Sam's corporate welfare payment, I think he would still have been in fine shape.

By Solandri on 5/20/2011 2:59:22 AM , Rating: 3
The $4 billion "subsidy" (when you get to the bottom line in accounting, there is no difference between subsidies and tax breaks) works out to something like 2 cents per gallon of gas sold. The oil companies are not making off like bandits from it.

You're conflating amounts and rates. While $4 billion is a large amount, it's a rather small rate compared to the cost of gas. 2 cents out of $4 is 0.5%. $7500*300k cars sold is $2.2 billion, which is a smaller amount. But $7500 of $40,000 is 19%, making it much, much higher rate for a subsidy/tax break.

The government also takes in far more revenue in the form of gas taxes (18-40 cents per gallon for Federal + state taxes) than it gives back to the oil companies via tax breaks. So if you follow the theory that cutting oil company subsidies will cause a decrease in gasoline consumption, it would probably result in a net revenue decrease for the government. They save 2 cents per gallon sold, but end up losing about 25 cents per gallon not sold.

OTOH if you follow the theory that lower taxes is better, then this could be a good thing. Bottom line is, it's a lot more complicated than you're making it out to be.

By tng on 5/20/2011 8:33:36 AM , Rating: 2
Once again, common sense rules.

Wish I could rate you up on that.

This story does nothing but confuse me, it leads me to think that the Volt so far has been a complete failure, but we know that is not really true. Maybe we should not be talking about production volume but the number of customers on the waiting lists?

By shin0bi272 on 5/22/2011 6:09:00 AM , Rating: 2
actually what he said was the government makes 25c/ga but they give the oil companies 2c/gal. So if you wanna hurt the government's wallet get an electric car because you wont be giving them the 25c/gal (plus there's a 30c/gal state gas tax in my state) by buying gas. If you want to hurt the oil companies buy an electric car AND push your congressman to vote to repeal their tax subsidy. Though they will just raise prices accordingly and end up right where they are now profit wise since businesses dont pay taxes... they pass the expense on to you the consumer... yaaay tax the rich huh? thats just a tax on the poor by proxy. Brilliant!

The flaw in his logic is 2 fold. 1) the government will NEVER do with less... so they will raise the gas tax and dump the subsidy for oil companies and probably invent a new miles driven tax so that they can get every cent out of you that they can and then a few cents more. Then 2) more people buying these electric cars will lower gas demand and that will lower prices on gas which lowers the demand for electric cars because unless they jack the gas tax up to $5/gal on top of the cost of the gas itself an electric car isnt cost effective at less than $4/gal.

By Paj on 5/20/2011 7:43:12 AM , Rating: 2
Fuel is already incredibly cheap in the US compared to the rest of the world. Why subsidise a power source that will soon be on its way out? Its the same argument as why charcoal isnt subsidised - its been superseded.

By shin0bi272 on 5/22/2011 6:22:10 AM , Rating: 2

we need oil for more than gasoline. The result of cracking petroleum results in ~19gal of gasoline ~10gal of diesel and lesser and lesser amounts of things like asphault and so on. Why in the living hell would we get rid of an energy source as abundant as gasoline?

And to your other comment... not everyone is dependent on charcoal. If there was something that everyone used as was as or more energy dense than gasoline then we would be using that. You put up a strawman argument to try to defend your opinion but you have failed.

By StanO360 on 5/27/2011 2:06:44 PM , Rating: 2
Let's be clear on two points.

First the giving $4Bil to oil companies. Very little if any money that you're talking about is "given" it's not taken from them. The government receives far more than it doesn't take from the oil industry. And in an age of vanishing American jobs, oil and gas are dominated by US companies that provide a lot of jobs in the US.

Second, if you understood anything about business it is not just the profit that's important it's the profit margin. So oil companies are not making huge profit margins. Small compared to companies like Apple. Are you raging against Apple? Demanding that those fat cats in Cupertino stop robbing the consumer?

By Hiawa23 on 5/19/2011 11:28:15 PM , Rating: 2
Our government shouldn't be subsidizing cars. I thought we were broke, isn't Saturday the rapture? Won't matter after that.

By smitty3268 on 5/20/2011 1:39:04 AM , Rating: 2
Why would you get a "tax break" for buying a car? It's absurd.

Why should anyone get a tax break for anything? Why do married couples deserve a tax break which singles don't get? Why give people a tax break if they have a mortgage? It's all absurd. Buying a car is no different than anything else in the tax code.

By tng on 5/20/2011 8:46:15 AM , Rating: 3
Why do married couples deserve a tax break which singles don't get?

Actually, it is the other way around. When I got married I did the taxes for about 4 years both ways, just for fun, Married filing Joint and single for both of us. Every year it turned out that if we were single, we would pay ~$2k less in taxes overall.

Looking at this you realize that someone in the government along time ago looked at the fact that 2 people can live cheaper than one and decided to confiscate those savings from you.

By shin0bi272 on 5/22/2011 6:25:21 AM , Rating: 2
that's the marriage tax penalty. that's the thing that the republicans tried to get rid of but the democrats brought back in 2007.

By ZmaxDP on 5/19/2011 8:07:53 PM , Rating: 2
Ummm, when the government gives you 7.5K back, they're taking it from someone else to do so. The government is spending X amount of tax revenue per year on this program. We're all paying for your new car. Given, it's a teensy tiny bit. But, no offense, I'd rather put that teensy tiny bit towards my own new car instead of financing 7500 of yours.

By Bobalouie on 5/19/2011 8:17:45 PM , Rating: 3
Adding leather seats and a backup camera will add, what 5 pounds to the weight? Big deal. Everything else comes standard. Yes, an "economy" car like a BMW 5 Series! I think incenting people to switch to a new type of vehicle that can get us off the OPEC oil teat and enhance our energy security is well worth it. This car is the iPad v1, something very new and different. Everyone but the early adopters like me panned that too. This car represents the best of American ingenuity. I'm tired of spending billions of our country's wealth protecting oil tyrants, much less with American souldiers lives.

By Bobalouie on 5/19/2011 8:36:17 PM , Rating: 2
Electric comes from coal, nukes, hydro, nat gas, solar, geo. Those are all domestic. There are Volt owners who are charging their cars from PV panels mounted on their house.

In the real world, 80% of US drivers travel 40 miles per day or less. That's gas free in a Volt. Volt drivers last month averaged 1000 miles between gas fill ups. Real world.

A hybrid runs a gas engine at all times with a battery assist. The Volt is driven by an electric motor. When the battery is drained, a gas engine generates electricity at 40 MPG. Toyota will be introducing their reply to the Volt summer/fall of 2012. It will have a range of 13 miles (compared to 40) on battery. And it will be $1k more than the Volt.

Name calling. Classy.

By torpor on 5/20/2011 12:13:22 PM , Rating: 1
Complete fail on this post.

1: Hybrids, such as the Prius, have a hybrid transmission which allows either/both the gas engine or the electric motor to provide propulsion. An alternator slaved to the gas engine generates electricity for recharge purposes. So they are called hybrids because both engines (gas and electric) provide motive force. It is NOT a generator.

2: The Chevy Volt has a similar transmission setup to other hybrid cars. And the Volt's engine can/does engage the transmission to assist the electric motor when needed.

3: Hybrids will shut off the gas engine when not needed. A Prius at a stoplight is perfectly silent because the gas engine has shut off; it does not run "at all times".

4: An MPG rating for the generation of electricity on a supplimental drive? Did you really go there?

5: If you live near Canada, you probably import electricity from there. So it's not domestic in many cases.

I understand you're jazzed about your expensive toy, but you really need to get your head on straight about it. Back away from the marketing materials...

By Dr of crap on 5/20/2011 8:41:37 AM , Rating: 2
And how do you think the govt is going to make up for the TAX BREAKS it is giving out to these buyers?

"We basically took a look at this situation and said, this is bullshit." -- Newegg Chief Legal Officer Lee Cheng's take on patent troll Soverain

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