Market shmarket

Market shmarket

June 28th, 2012 in Opinion Free Press

A driver takes Tesla Motors' Model S all-electric car for a spin at Tesla's manufacturing plant in Hawthorne, Calif.

Photo by Associated Press/Times Free Press.

Who would have dreamed that the blessings of liberty included the privilege of helping multimillionaire actors and assorted fat cats pay for fashionable electric sports cars with our tax dollars? Certainly not the framers of the Constitution. The automobile didn't exist at the time, but they had the sense to include the 10th Amendment, which strictly limited federal power and included nothing that could be construed as permitting subsidies for government-preferred vehicles.

No, it takes a Congress and a series of presidents who feel unbound by the Constitution to screw things up that badly.

Today, a handful of well-to-do motorists own costly vehicles made by heavily subsidized Tesla Motors.

But Tesla might not even be manufacturing the cars were it not for the -- get this -- $465 million loan it received from the U.S. Department of Energy.

It's no secret that Washington funds all manner of "green energy" schemes, and impractical, unsustainably expensive electric cars are in the thick of the market-flouting silliness.

In case you wondered, the Tesla sports cars in question cost $109,000. Oh, and did we point out that Tesla has lost nearly $800 million since its founding in 2003 and never once made a profit, relying for its survival in large part on the huge federal loan it received?

As further evidence of the vehicle's disconnect from reality, it is manufactured in California, a state most other car manufacturers have fled the past couple of decades because of its high taxes and regulatory costs. But hey, you can afford not to care about those costs when taxpayers are footing a big part of the bill.

And hold on to your hats because Tesla is going even bigger -- again, with your generous if involuntary help.

It now is selling a mass-market electric vehicle, the Model S. Well, as "mass market" as a car can be that will have a starting price of roughly $50,000 -- after a big federal tax credit, that is.

Will it sell? You decide: Nissan's electric Leaf is about half the price of the Model S, but Nissan has sold a grand total of fewer than 30,000 Leafs since 2010. (For perspective, Nissan sold more than 22,000 of its traditional, gas-powered Altimas in just one month early this year.)

Tesla predicts only about 5,000 sales of the Model S in 2012, and deposits that people have made on the vehicles are refundable. Meanwhile, only about 2,200 of the original Tesla Roadsters -- driven by folks such as George Clooney -- have been sold since 2008.

It doesn't help that the Model S can go only 160 miles on a charge -- or 300 miles if you are willing to fork over the extra cash for a battery upgrade.

Would that Tesla were an isolated case of the federal government trying to build cars.

U.S.-based Fisker Automotive got a nearly $530 million federal loan to help it build $108,000 plug-in hybrid electric cars, in Finland of all places. And on Consumer Reports' test drive of the vehicle, the Karma, it broke down.

"[T]his is the first time in memory that we have had a car that is undriveable before it has finished our check-in process," Consumer Reports noted.

Ah, those brilliant social engineers in Washington. Where would we be without them?