What’s GM Thinking?

Its electric Chevy Bolt is about Washington games, not about making money or saving the planet.

By Holman W. Jenkins, Jr. in the Wall Street Journal

General Motors chief Mary Barra says the company’s new electric car, the Chevy Bolt, will cost around $30,000 and get 200 miles per charge. One thing she didn’t say it would be is profitable, even considering the $7,500 that federal taxpayers will presumably contribute to each buyer.
An electric car aimed at the middle class at a time when, in inflation-adjusted terms, gasoline is selling near its all-time low, might seem the definition of wrongheaded. Relying on continued taxpayer subsidies to electric car buyers now that Republicans are in control of Congress might also seem a tad risky.
But maybe gasoline prices will go back up. Maybe various proposals for an increased gasoline tax or carbon tax will steepen the price of gasoline enough to make the electric Bolt look like a good deal to cost-conscious, middle-income consumers.
Or maybe something else is going on. For once, when a CEO uses the term “game-changer,” as Mrs. Barra did, perhaps the words should be credited with carrying actual meaning.
The year 2017, when the Bolt supposedly rolls out, will also be the year of the much-anticipated midterm review of the Obama fuel-economy mandates.
Let us review why a review is necessary. In the early years of the mandate Mr. Obama first announced in 2011, the rules have been tilted to protect the Domestic Three’s truck and SUV business, even at the cost of irate private emails from Toyota and public denunciations from German car makers.
In the early years, the rules have also been designed to encourage car makers to fulfill Mr. Obama’s throwaway prediction of a million electric vehicles on the road by 2015 by overegging the mileage credits for electric cars in order to help offset Detroit’s low-mileage trucks and SUVs.
But after 2017 the full wallop of the Obama mandate kicks in. As detailed by a congressional investigation, the Obama target of 54.5 miles per gallon was not the product of science and engineering, which tell us that nearly all post-2025 cars would have to be hybrids roughly the size of a Fiat 500.
Arguably the 2025 goal was never meant to be taken seriously at all. It was simply the product of the White House PR shop’s hunt for an impressive-sounding headline number. As a concession to the auto makers, and to sanity, the administration also included a statutory review to take effect just after Mr. Obama leaves office, whereupon he can be seen criticizing his successor for backsliding on the earth-saving measures Mr. Obama put into effect.
As he must, Ford Chief Executive Mark Fields continues to pay lip service to meeting the 2025 target—though sometime well after 2025. “I expect we’re going to have a very robust midterm review. . . . It’s a great opportunity to talk about the feasibility and the time frame to meet those requirements,” he recently told the press.
Ms. Barra put her own chip on the table in the form of the promised Chevy Bolt, which is supposed to make the federal climb-down easier. See, Detroit received the message and no longer needs a federal boot up its backside to pursue zero-emission vehicles.
Though the car industry daily works to reduce its cycle time, it still takes years to bring a new vehicle into production. Deeply crazy and obviously undesirable, then, is afflicting such a high-investment industry with so much regulatory uncertainty about the fuel-mileage targets it’s supposed to begin meeting just two years hence.
Which may explain another mystery. Sen. Bob Corker , usually a favorite of conservatives and hardheaded business types, is finding invective rained on his head for putting his name to a bill that would hike the federal gasoline tax.
Mr. Corker represents Tennessee, which is rapidly emerging as America’s premier car-building state, with GM, VW and Nissan churning out vehicles locally. He cites the need to fund the highway trust fund, but Mr. Corker’s modest, 12-cent hike in the federal gas tax would also be an efficient way to encourage Americans to use less gas (if that really must be our goal). At this point, for any given gasoline-consumption target, it certainly would be far more efficient than continuing to inflict on car makers an increasingly convoluted, costly and politicized duty to build cars the public doesn’t want and that can only be sold at a giant loss.
Mr. Corker’s bill also stipulates that any gas tax proceeds would be used to offset other taxes, but even so his bill likely won’t be going anywhere. Still, it’s another chip on the table in the game the auto industry and federal regulators and politicians will be playing over the all-important midterm review of the fuel-mileage rules.