Saturday, December 13, 2008

Trillions for tax cuts -- not one billion for millions of jobs

"They're in favor of trillion dollar tax cuts for the rich, but $15 billion [loans] to save American jobs is just too much for them." – thank you Avant Guard.

Watching a “Mean Green Machine” TV runoff between a hybrid Chevy Tahoe a gas powered Chevy Silverado I was struck by what desirable machines both were – inside and out – must be some reason folks ante up so much cash for them. The hybrid and gas competitors ran neck and neck in all categories but one: pulling a 6000 pound tractor 100 yards across a field. There the battery hybrid left the all gas in the grass: 51 v. 67 seconds.

Americans don’t want to buy GM cars? Americans will always desire a substantial enough number GM cars at some price point to keep a enough GM factories open to sustain the corporation – I am sure there is an stay-open equilibrium point somewhere there in non-recession times even for the last generation of liquid fuel vehicles.

Hybrids are about to embark the world on a entirely different era of auto manufacturing –as different as tube and flat screen TV making – Chevy’s Volt leading the way.

Right now the expense of a lithium ion battery brings the Volt in at $10,000 more than an equivalent sedan. (I once noticed the USA could save $10,000 per vehicle life on imported oil via a switch to hybrids – if the switch cut our then 10 million bbl/day appetite for foreign oil to 5 million bbl/day – and if that lower demand could in turn cut the then price of $60/bbl to $30/bbl.)

Lithium ion batteries with multiples of today’s charge holding capacity (10X expected eventually) are about four years away according to Stanford U. researchers. That could mean batteries that cost 1/10 as much as they would otherwise (prices will drop somewhat whatever). 10X may also insure that the world does not run out of lithium before it runs out of oil.

Theoretically there should be nothing easier to manufacture than electric cars – that’s why all kinds of boutique manufactures can jump into it who could never climb the high ground of automotive technology: engines and transmissions. Electric motors are as reliable as turbine (jet) engines– just on big spinning part – but instead of a collection of super sophisticated turbine blades, they just take some windings around an armature (anybody want to help me assemble an electric motor – so simple a caveman or a robot can do it).

Millions of America auto customers – and millions of Americans who are simply sane enough (not subject to yuppie exceptionalism) to value our core industries – will feel devastated should the big 3 go into the dustbin of business history – and just when the Volt was about to lead the whole business, foreign and domestic, in the right manufacturing direction. I know what Ronald Reagan would do.

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