Washington at its dysfunctional worst was in full view yesterday at a U.S. House Subcommittee hearing over how the National Traffic Highway Safety Administration handled Chevrolet Volt fires. Once again NHTSA said there are no real-world crashes that have resulted in battery-related fires involving the Chevy Volt or any other electric or hybrid vehicle.
The world’s most prominent auto safety agency set an unusual precedent back in November by opening a safety defect investigation without any supporting data from real-world Volt incidents. (See also NHTSA Closes Volt Battery Fire Investigation with No Recall)
In the end how you view this low-voltage Congressional short circuit – with lots of political smoke but no fires – depends on how you view Obama Administration actions that used taxpayer-funded subsidies to encourage production of the Volt. These include $151.4 million in stimulus funds for LG Chem, which produces lithium-ion polymer battery cells for the Volt and $105 million given directly to GM, as well as an end-user federal tax credit of up to $7,500 per Volt purchased. Such subsidies will likely be hotly debated for all industries during the election.
The opening statement from California Republican Darrel Issue and Ohio Republican Jim Jordon, who read the document as he presided over mostly empty seats for lawmakers, put forth the proposition that Volt “raises significant concerns regarding the unnatural relationship between General Motors, Chrysler and the Obama Administration.”
A conspiracy theory was then presented: “In the face of that political dependency, it is deeply troubling that public notification of the safety concerns related to the Volt was inexplicably delayed for six months – a period of time that also coincides with the negotiation over the 2017-2025 fuel economy standards. The necessity of a full explanation for NHTSA’s silence concerning the Volt’s safety risk has been compounded by its lack of cooperation with the Committee,” said Jordan.
It was Jordan’s contention that the Administration is “too heavily invested in the success of GM to be an effective regulator. Moreover, questions have been raised as to whether or not GM receives special deference from the Administration because of its status as a ward of the state.”
Thus an ideological attack on the Obama Administration was set forth. This attack was loosely based on one fire in a Volt three weeks after a severe side impact test and rollover – without draining the battery when the Volt was pushed outside after the crash. Neither NHTSA nor General Motors could duplicate the fire. Initially the fire was investigated as possible arson since it was without an apparent root cause when the Republicans accused NHTSA of a cover-up back in October. The only other fire occurred after battery packs were removed from previously successfully crashed Volts and deliberately damaged. This was at the end of November. The committee was briefed in January by NHTSA after a root caused was finally established and GM proposed a fix.
The Republicans looked foolish to me when this time line is laid out – and while the basic facts have been publicly known for months, that didn’t stop the no-nothing Republicans from making wild charges yesterday. This was impure political mud slinging that will appeal to ideologues, but won’t sway open-minded people, particularly ones who understand advanced technology, how risk adverse automakers are in general when deploying it, as well as the specifics of the Volt matter. (Testimony during the hearings said that an average of 278,000 cars with gasoline engines caught fire in the U.S. each year between 2003 and 2007, according to the National Fire Protection Association.)
The $42,000 Volt remains an engineering masterpiece, albeit an expensive one. The Volt project was well underway before the controversial taxpayer bailout of GM in 2008. Volt was built from GM’s hard earned knowledge acquired with the EV1 back in the 1990s. The irony here comes because that politically motivated disaster was caused by left wing ideologues without a grasp of the technical issues and the resultant costs. It wasted billions of automaker and taxpayer dollars when the California regulators found out they couldn’t dictate customer demand for expensive, limited range electric vehicles. The engineering in the Volt goes a long way in solving the problem with its more than 300 mile range.
An annoyed General Motors Chairman, Dan Akerson, said to the committee: “Unfortunately, there is one thing we did not engineer. Although we loaded the Volt with state-of-the-art safety features — we did not engineer the Volt to be a political punching bag. And that, sadly, is what it’s become. For all of the loose talk about fires, we are here today because tests by regulators resulted in battery fires under lab conditions that no driver would experience in the real world.”
There are indeed genuine national security and economic well being arguments to be made for supporting the development of automobiles that rely on electricity instead of oil, which comes from terrorist supporting countries run by despots. So what is the problem with the Volt engineering exercise?
Republicans actually in other forums support energy independence and alternative fuels, but this wasn’t the time or the place to admit this. Besides, not only had the Obama Administration executed Osama Bin Laden, who had escaped the Bush Administration that was running country when Al Qaeda attacked, but it had the night before the Volt hearing pulled off another daring Navy Seal raid, this time freeing an American kidnapped in Somalia with no U.S. casualties and at least nine dead kidnappers.
When asked if GM got special treatment from NHTSA, it looked as if Akerson could hardly keep from sneering as he pointed out that he would rather have gone it alone fixing the alleged problem than enduring two months of negative Volt publicity until NHTSA finally dropped the investigation. As Mark Twain noted about tarring and feathering – if it wasn’t for the honor of the thing, he would just as soon forgo the experience, precisely Akerson’s point.
The bulk of the testimony presented at the hearing, whether it came from NHTSA, GM or the International Council of Clean Transportation (ICCT), was heavily dependent on data, that taken as a whole destroyed virtually all the Republican arguments against the Volt – except for the fact that they hate President Obama, and they hate an industry bailout that saved the automaking sector in the U.S., not just General Motors and Chrysler, but most of the wealth creating and taxpaying companies associated with it.
The real conflict of interest here is posed by the Republicans running for office and using the subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending to do so. What a waste of taxpayer money solely to make inaccurate reelection talking points.
It was John German of the ICCT who destroyed what on the surface appeared to be an interesting Republican theory that somehow the federal government was protecting the Volt because the fuel economy standards for 2017-2025 were under development when the fire occurred. The implication was that EVs and plug-in hybrids with lithium ion batteries will be needed in large numbers to meet the new standards and that the Democrats were protecting a faulty, but favored technology. This assertion also implies that Republicans are against improving fuel economy?
Not true German testified, and he backed it up with data and computer simulations showing that electric vehicles and plug-in hybrids are not needed by the auto industry to meet the proposed standards, which is now in the public comment phase and supported by virtually all automakers. Engine and transmission technology, as well as weight reduction and other advanced aerodynamic and friction reduction techniques will improve fuel consumption on conventional vehicles to a far, far greater extent than most people realize.
This ongoing engineering competition – that the Volt is only a small part of – is a good thing because public acceptance of EVs and plug-in hybrids is tenuous at best. They represent just over 2% of the U.S. auto market. It remains to be demonstrated that this niche market will grow significantly no matter how much environmentalists love it. In fact, GM sold 7,671 Chevy Volts in 2011, ~23% fewer than its goal of selling 10,000. How the damaged reputation of the Volt will affect 2012 sales is unknown. But one thing is certain; GM is not giving up on the Volt. It’s good for GM, and I submit good for the U.S.A.
Currently, taxpayers still own more than 26% of General Motors, after having received $13.5 billion in exchange for 412 million shares of GM stock sold in GM’s November 2010 initial public offering. Taxpayers will only be made whole on their $50 billion bailout if GM’s stock price reaches ~$52 per share. This is unlikely to occur at the moment since the stock price ranged between $19 and $39 during 2011 and is currently at around $24 per share. There is no economic reason not to hold on, although some think there are ideological reasons to dump the stock at a loss.
GM has been making money, but its balance sheet is still weak and it still has $22 billion in unfunded pension obligations. This means that the bailout – and government ownership – will remain political fodder during an election year, even as GM slowly recovers.