Friday, June 7, 2013

Toyota Prius vs Chevy Volt

A few days back a commenter of the more liberal and green persuasion mentioned that they owned a Toyota Prius.  It was appropriate since we were discussing global warming and what we can do to lessen our contribution to it.  Of course I had to seize the opportunity to point out that a true liberal supporter of American Workers, Unions, Government Taxes / Spending, etc should be driving a Chevy Volt.
G2A:Made in America: Really
G2A: Made in America: The Myth

I have written about the importance of buying from American firms that have most of their marketing, design, test, IT, accounting, corporate, executive and other functions in the USA.  Of course, liberals who buy American assembled product from a foreign based firm seem to be able to rationalize their actions.  They seem to believe that those decisions and actions are in some way aligned with the political beliefs they promote.  They seem to believe they are less greedy than those evil rich folks and businesses they villify for moving the jobs overseas.

Now I know I should also be frustrated with the fiscal conservatives that do not support our American companies and workers.  However it is hard to fault someone who is so open and honest about their capitalistic beliefs.  I mean they are typically anti-union, pro-competition, pay for quality / effectiveness / value / etc, each out for their own, etc, etc, etc. So it makes sense that they will buy what they consider the best value no matter the consequences.

However to see a self proclaimed liberal who preaches sharing with the poor, supporting the American worker, raising taxes, higher government spending, supporting public workers, etc driving their sporty little Hyundai, Toyota, Kia, Honda, Subaru, BMW, Mercedes, Audi, etc seems very ironic if not even hypocritical.  And not only do they often drive them, but they have become highly brand loyal and insist on only buying them. 

Note: I do own a couple foreign vehicles, however I typically only own buy them when that vehicle type is not offered by an American company. (ie sport touring motorcycle Yamaha FJR1300)

So back to the Prius and the Volt, the reality is that Toyota spent 1+ billion dollars developing the initial Prius.  "The total cost of development was an estimated $1 billion -- after all the anguish, about average for a new car."  And I am sure some of that work was done in the USA, however the vast majority was done in other countries. (primarily Japan)  And in this case every Prius has been built in Japan so far, so one can not even claim that they are supporting the less beneficial American based assembly jobs.

Whereas GM incurred similar large development costs and is building the car in the USA.  And even better, Obama and crew are big supporters of GM and Michigan built vehicles.  I mean Michigan and GM have long been very good to the UAW and American employees, and Obama and crew gave over most of the company to the Union and its employees.  Many ex-employees say that GM actually stands for Generous Motors...

To me it is pretty simple, people just aren't putting their money where their mouth is.  If you want to support American workers, generate more tax revenues, enable more government spending, etc, then buy the product from a company where most of your money goes to American workers / taxes.  Be they in development, production, support functions or the corner office, and remember that production is an ever shrinking part of the pie in our very high tech "Research and Development" world.

Now this product may be very slightly less reliable, may not be quite as fashionable, may cost you a little more, may have slightly lower mpg, etc.  But by God you are a Liberal who believes in redistributing wealth through the American Government and Unions, so start spending more of your wealth here.  And reduce how much you are spending to support the governments, workers and poor in Japan, Germany, South Korea, China, etc.  Stop spending selfishly like you believe the greedy rich do.



John said...

To clarify why I used the word selfishly.

It seems to me that buying the "best quality", the most fashionable / trendy, the least expensive, etc no matter the cost to others is putting your ego or wallet first. (ie selfish)

By the way, this is expected of a pure capitalist since they believe in rewarding the highest value provider with their money and letting the market have its way.

It just seems to me that people who want to thwart the free market would not want to benefit from it at the cost of their neighbors.

My thought is that Unions, Tenure, Wealth transfer, Penalizing firms for moving jobs over seas, Affirmative action, Tariffs on imported goods, Over regulation, etc are all attempts to tweak/prevent the free market or make it "more fair". Now these are what the Liberals typically support, so why would they send their money and our jobs overseas for their own personal gain?

I thought that is what they disliked about conservative capitalists...

Laurie said...

On my teacher's salary I cannot afford a Volt as it cost about $2,000 more per year to drive than a Prious.

I was also interested to learn that it does have lower carbon emissions.

CO2 Emissions & Chevy Volt vs Honda Civic EX-L

John said...

Interesting link, though a bit long. And it seems he says the annual cost difference is much smaller.

All travel of the Chevy Volt is assumed to be electric; annual travel at 12,000 miles/yr, or about 33 miles/day; electricity at $0.15/kWh (includes all fees, taxes, surcharges, etc.); regular gasoline at $3.60/gallon, premium gasoline $3.80/gallon; Honda Civic EX-L mileage at 33 MPG (EPA combined); subsidies are ignored to enable rational decision making; values include upstream CO2 emissions.

Annual Operating Cost:
Honda Civic EX-L
Annual energy cost = (12,000 m/yr)/(33 m/gal) x $3.60/gal = $1,309/yr

Chevy Volt
Annual electricity = 0.35 kWh (AC)/mile x $0.15/kWh x 12,000 miles/yr = $630/yr

The Chevy Volt costs $39,145 and the Honda Civic EX-L Sedan $22,105, for a difference of $17,040, which would require annual amortizing payments of $2,531/yr, if borrowed at 4%/yr and paid off over 8 years.

Chevy Volt annual operating cost increase = ($630/yr, electricity + $2,531/yr, amortize extra cost, Chevy Volt) - ($1,309/yr, gasoline, Honda Civic EX-L) = $1,852/yr."

This guy seems to agree, especially if you do mostly in town driving.
Volt vs Prius Plug In

So where did you get the $2,000/yr difference number?

And so it is okay for you to send jobs overseas to save some money... But it is bad of companies and the wealthy to do the same thing? Should we Americans penalize you for buying foreign to save some money like many Liberals would have the government do to the businesses and wealthy? How do you rationalize the double standard?

Laurie said...

I rounded up because my Prious cost me $19,000.

"Chevy Volt annual operating cost increase = ($630/yr, electricity + $2,531/yr, amortize extra cost, Chevy Volt) - ($1,309/yr, gasoline, Honda Civic EX-L) = $1,852/yr."

If I was going to spend $2,000 towards the common good it wouldn't be by buying an American car. I would spend quite a bit more than I do for teaching materials for my school.

John said...

That's probably what the wealthy and businesses say...

John said...

I'll have to look into the cost differential more later. It seems too high. Possibly he did not apply the tax credit to the volt...

Do you have plugin prius or a normal "hybrid only"?

Let's say there is actually a $150 /mth adder... And that you have decided supporting American workers isn't worth paying this. Now why would any company management in their right mind keep jobs here where the costs are higher? (Ie fair wage)

I mean if a serious Liberal like yourself isn't willing to pay more for American product, who would be other than a few idealistic buy american fools like me. Yet the Liberals like yourself continue to rant about making a product at the price point you like.

If GM starts developing and producing all their product in China to hit your price point, would you praise or villify them? Would you buy their less expensive car?

FYI. My responses will be slow til Wednesday. I am at MSP waiting to board... Sweden here I come. Ironically I have a design review with an auto manufacturer...

John said...

Okay... I made it safe and sound, if somewhat jet lagged to lovely Gothenberg...

Laurie said...

I briefly visited Gothenberg in 1984. I don't remember a thing about it.

John said...

It is very nice and the weather is beautiful here. Our hotel is right downtown so there are lots of people walking and biking in the area.

On the way to our meeting which was out of town, I would have sworn we were driving up near the North Shore of MN. No wonder so many Scandinavians settled in MN...

John said...

Now back to the topic...

Should GM send the jobs overseas to lower their cost/price point to attract buyers like yourself and their hard earned money while maintaining the necessary margin?

The hard cold reality is that if people will not buy their American developed and built higher priced product, they will need to change or they will be back in bankruptcy... Which may lead to the loss of a lot more American jobs...

What would you do as the CEO of an American manufacturing company? Employ higher cost Americans and possibly cause the company to fail, hire help where your competitors do to stay competitive or something else?

Laurie said...

I believe my Prious was produced in Japan, where wages are probably similar to the USA (where manufacturing wages have gone down.)

I believe CEOs here are paid quite a bit more than Japanese CEOs so that is one place I could cut costs to stay competitive.

btw my Toyota Sienna was built in Indiana, so American worker wages do not automatically make the price of their product noncompetitive.

John said...

Why have mfg wages gone down? Oh yeah, that is the point of this blog post.

How many USA tax revenues were raised by the Japanese corporate SGA, janitor, accounting, component RD and vehicle development, etc salaries??? Just the development budget alone is apparently $1+ billion per model.

Also, remember the cars manufactured cost is <50% of the price. And the assembly costs are <10% of the price.

They assemble cars here to save money, reduce monetary risk and to help people like yourself rationalize helping their foreign company, employees, goverments, etc instead of helping the domestic manufacturers, employees and America.

It is cheaper to ship compact expensive components in containers than to send bulky finished cars. And the foreign firms source more of these abroad. That is why Ford and GM were not hurt by the Tsunami nearly as bad as Toyota, Honda, Nissan, Subaru, etc.

John said...

Food for thought.
Japan vs USA

I like this stat best.
"Local Purchasing Power in United States is 47.84% higher than in Japan"

Richard in Arizona said...

The retail price-point for the Volt is about $10k more than it needs to be for strong sales. At less than $30k out the door, would be a big seller. At its current price point, regardless of the $7k tax credit, its approaching luxury car prices. Doh, GM!

John said...

Hi Richard,
Since GM is supporting the American worker and economy, their costs are higher. Should they off shore much of that development and manufacturing to reduce their costs? Or should they reduce the price so they can sell more of them at a loss?

Which choice would you make if you were the management of GM?

Remember USA Wages, Regulations, etc are not variables that can be adjusted. In fact, the Unions, Liberals and Environmentalists want to further raise those expenses.