The public Fisker
SEVEN MONTHS AGO, President Obama's auto industry task force rained skepticism on the Chevrolet Volt, General Motors' plug-in electric hybrid car. Projected to sell for roughly $35,000 -- after a $7,500 federal tax rebate -- the four-seat car "is currently projected to be much more expensive than its gasoline-fueled peers and will likely need substantial reductions in manufacturing cost in order to become commercially viable," the task force noted. Nevertheless, the administration rescued GM by buying a 60 percent equity stake -- and Volt production starts a year from now.
We bring this up apropos of the announcement Tuesday that California-based Fisker Automotive will take over a former GM plant in Wilmington, Del., to produce a plug-in hybrid of its own. Fisker's move, too, is made possible by government help, specifically a $528 million Energy Department loan -- $359 million of which will go to buy and retool the factory for production starting in 2012. Vice President Biden was on hand in his home state, which will also be a battleground in next year's Senate elections, to celebrate a triumph of the administration's "green jobs" policy.
We share the administration's fervent wish for a cleaner, greener vehicle fleet. All parties to the deal assure us that the site's proximity to transportation routes and other advantages, not politics, led Fisker to locate there. Just one question: If the Volt isn't commercially viable, why is Fisker's car? The company has not even described the vehicle publicly, except to say it's "family-oriented" and will cost about the same as the Volt. Both the Volt and the Fisker cost more than higher-performing models such as the Lexus ES350 and some cars in the BMW 3-Series. Even with fuel savings, it will be years before a purchaser would recoup the initial cost differential between a Volt or a Fisker and, say, a Toyota Prius.
To be sure, well-heeled "green" consumers may line up to pay the premium. But is it appropriate to use everyone else's tax dollars to support demand in this niche? The administration says Fisker's Delaware venture will create 5,000 jobs by 2016, directly or indirectly; that's $71,800 per job. It will save 43.2 million barrels of oil in that six-year interval, or about two days' worth of U.S. consumption.
For some time to come, plug-in electric hybrids will be at best a small part of the fuel-efficiency solution. The Fisker loan forces GM to share this tiny slice of the car market. In that sense, it collides with another administration goal: hastening GM's return to profitability without government support. Such are the risks of the Obama administration's policy, which seems to be: Fertilize the fields of green technology and hope that at least some of it sells.