General Motors Begs The U.S. Government To Dictate Its Sales Mix

Anton Wahlman Oct. 26, 2018


In a major surprise move, GM comes out in favor of having the U.S. government dictating what cars it must sell.

This is the most shareholder-unfriendly move imaginable, given that it by necessity will suppress GM’s profits.

GM also would anger 98.6% of its customers, as it would raise prices on those cars to subsidize 1.4% of its customers, who live mostly in coastal California.

The price increases required from GM’s profitable vehicles would drive down volumes and drive GM yet again on a path to bankruptcy.

GM needs to reverse course on this proposal, instead calling for the repeal of all government interference in the automobile market.

How often do you see a company calling for a government industrial policy – not a five-year plan, but a 12-year plan – that will cause the price of your products to increase, anger 98.6% of your customers, subsidize your competitors, and cause your profits to plummet? That sounds like an almost impossibly bad dream.

As it turns out, I had to pinch myself when I woke up Friday morning to the realization that this was, in fact, not an impossibly bad dream. It was the management of General Motors (GM) who suddenly has the brilliant idea of begging the U.S. government to cause its profits to plummet: General Motors Calls for National Zero Emissions Vehicle (NZEV) Program.

In other words, General Motors is calling for a U.S. national implementation of a variant of the California-led Zero Emissions Vehicle (ZEV) program. The phase-in of the program targets force the industry to produce 25% of cars as zero emissions ones by year 2030: A national electric vehicle program?

Let’s first note that the GM proposal does not technically say “battery-electric vehicle” (BEV). In other words, it could – at least in theory – include hydrogen fuel cell cars too. That said, given today’s cost of hydrogen as a fuel, and that hydrogen costs approximately three times as much as gasoline on a per-mile driven basis, we can probably dismiss hydrogen fuel cell cars as a viable consumer technology in the U.S. for the next few years.

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