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'Green' boom turned to bust for local vehicle maker

Government freebies can't overcome limits of market, technology

Saturday, April 21, 2012 - 7:36 am

Way back in 1993 I wrote an editorial about President Bill Clinton's efforts to promote electric cars headlined, “If government designs ‘green car,' you'll drive it.”

Nearly 20 years later, Government Motors' Chevy Volt has proven me wrong – possibly because, as The New York Times recently pointed out, it could take more than 26 years for the car's fuel savings to justify its price compared to a similar gas-only model. Volt sales have been so anemic that GM recently halted production for five weeks, resulting in 1,300 layoffs.

On the other hand, my thesis has proven true in reverse: If the government doesn't pay people to make or buy green cars, they probably won't.

Just as Jerry Medlin.

Four years ago, the future appeared bright indeed for Medlin and his company, EVI – Electric Vehicles Inc. Gas prices were soaring, Medlin had purchased the assets of a Missouri rival and the city had just awarded $100,000 no-interest loan to help EVI produce “golf cart”-style vehicles at his plant off Engle Road. “This will further the recognition of Fort Wayne as a hub for the electric vehicle industry,” Mayor Tom Henry gushed.

The following year, when the federal government authorized a $5,936 tax credit for anybody buying an EVI vehicle, hundreds of orders poured in and Medlin spent thousands of dollars on equipment and hired about 30 people to meet the expected demand.

Then the Obama administration abruptly rescinded the buyers' incentive for EVI and similar companies – and Medlin went from boom to bust virtually overnight.

Volt owners, meanwhile – few as they are – remain eligible for a $7,500 credit from the very government that remains part owner in the company that produces it.

“I used to sell to General Motors, and nobody ever bailed me out. That's the way it's supposed to work,” Medlin said. “I'm not picking on Obama, but the government shouldn't be picking who wins and loses. Look at Solyndra (a solar-panel company that went broke despite $535 million from Washington). This is just another example of the government thinking it knows more than anybody else.”

Medlin most definitely has not given up on alternative energy and vehicles powered by it. But his self-professed excitement about the industry's potential is tempered by the kind of realism too often missing from a debate in which self-congratulatory emotion and good intentions are too often deemed more important than tangible results.

“The point where a (“green”) car can actually go after a mass-market audience is when pricing starts making sense on paper,” said Jesse Toprak, vice president for market intelligence for TrueCar.com, which compiled data for the Times' analysis. Some buyers never do the math and others believe green cars will have higher resale value, the Times noted, while others willingly pay a premium in order to help the environment, feel better about themselves or to be admired by others.

“Can we build an ‘urban' car you just drive to and from work for less than $30,000? Yes, we have the technology,” Medlin said. But such a vehicle, he added, would have to be the latter-day equivalent of Ford's Model T: very basic transportation. No frills, few consumer choices.

There is, right now, little market for such a contraption – which is why the car companies are making much more expensive and complex vehicles that must rely on taxpayer-funded bribes, dubious science and other gimmicks to justify what the market alone cannot. Did I mention that the Volt on a local dealer's lot priced at $43,175 had a sticker on the window boasting a perfect “10” on its “global warming score”?

Whatever happened to buying a car because it was fun to drive or might get you a date?

Medlin is no doubt right to be optimistic about the long-term future of green vehicles. Eventually, some of the technical challenges – the cost, range and lifespan of batteries, for example – will be overcome, expanding the pool of potential buyers and driving down costs.

The price of fuel could change the equation, too, although the Times notes that gas would have to cost $8 a gallon before many of the cars in its survey would pay for themselves within the six years an average person owns a car.

And so I'll continue to drive my seven-year-old Pontiac with a clear conscience, even though I spend more on gas than I'd like. The Earth may indeed be a finite precious resource, but so is my paycheck.

In other words, when driving a “green” car makes sense, I and millions of others will gladly do it.

In the meantime, the bureaucrats who have repeatedly proven they really don't know more than everybody else should stop wasting our money on stuff few people want to buy.

This column is the commentary of the writer and does not necessarily reflect the views or opinions of The News-Sentinel. Email Kevin Leininger at kleininger@news-sentinel.com, or call him at 461-8