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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 8:51:42 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.

"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997

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