What We're Reading: Tax-Powered EVs, OnStar Goes Mobile, Apple vs. the Web, Black Swan Crashes the Stock Market
By Michelle Krebs May 14, 2010The auto industry at large is a diverse group of professionals with different perspectives on the auto industry and the world. Here's a look at what we're reading and thinking about this week...
Welfare Wagons: The new electric cars are powered by taxpayer credits by Holman Jenkins (The Wall Street Journal)
"Congratulations. You're about to buy a fancy new Nissan Leaf or Chevy Volt . . . for someone else."
"This is news masochists will want to grind their faces into after sending a big check last month to the IRS. GM's Volt is expected to arrive on the market first, in November. Nissan, whose all-electric Leaf will roll out in December, landed a preliminary blow last month, announcing a surprisingly modest price for an electric car of $25,280. That's after a $7,500 federal tax credit is counted."
Edmunds staffer says:
His opinion of the EV as a car for wealthy hobbyists is a valid one - albeit open to lots of debate - but he's spot on about the huge subsidies and about the wisdom of a gas tax.
Simply raising the price of gas and telling those who can't afford it to walk, however, is just as regressive as -he argues - is the idea of subsidizing EVs (and other alternative fuel vehicles?). Taxpayer funds are used by government to "encourage" social, economic and military policy every day - using them to encourage the success of EVs may be costly, but justified if there is, indeed, a valid policy reason behind it.
We've suggested in GreenCarAdvisor.com that people would be foolish not to take advantage of the subsidies if they really are in the market for an EV, but we've also pointed out that they are taxpayer funds and that everyone is helping to pay for cars for the few.
We've also strongly backed the idea of raising the gas tax (or settling a national gas price floor) WITH provisions to make it revenue neutral and to ensure subsidies for the least able to afford the higher prices.
-- John O'Dell, Sr. Editor, Edmunds Green Car Advisor
Read the full article: Welfare Wagons: The new electric cars are powered by taxpayer credits
Auto Politics
Congress accelerates out of control: New auto safety rules may cost lives by Steve Chapman (Chicago Tribune)
"When the news broke about alleged safety defects in Toyota vehicles, official Washington was appalled. Transportation Secretary Ray LaHood accused the company of being "safety deaf" and said "they have a very bad business model." "
"Then there was the reaction from customers, the very people whose lives and safety are at stake every time they get in a car. In the first four months of this year, Toyota's U.S. sales did not fall, as you might expect. They rose by 12 percent."
Edmunds staffer says:
I like how this article points out the advances in automotive safety there were market-driven, versus government-mandated. I find it disturbing that the concept of a market-driven improvement is becoming a quaint concept, at least in the increasingly government-mandated auto industry.
-- Karl Brauer, Sr. Analyst and Editor at Large, Edmunds.com
Business
Get ready for OnStar everywhere by Peter Valdes-Dapena (CNNMoney.com)
"General Motors will soon launch a new, more powerful version of its famed OnStar mobile service. The move could take OnStar beyond the car and maybe even beyond GM itself, a GM executive told CNNMoney.com."
Edmunds staffers say:
The ad-driven model for services such as OnStar has been the end game for quite some time. Microsoft (which is behind Ford's Sync) is on record verifying it, and with location-based services coming on strong I believe it will really gain momentum. And for people whose knee-jerk reaction is that they don't want to be subjected to ads while in the car, I always ask them if they ever listen to AM and FM radio while driving.
--Doug Newcomb, Sr. Editor, Technology, Edmunds.com
GM has clearly been trying to make OnStar the "industry standard" for years (remember when Lexus used it). It must be frustrating to have had such a head start on Sync before watching Ford pass them in terms of implementation and adaption by customers.
--Karl Brauer, Senior Analyst & Editor at Large, Edmunds.com
While there has been some fumbling on the On-star side, I think Ford has made more traction because it offers people a way to integrate their own chosen tech into the working environment of a car. They don't have to sign up for a pre-determined package that's owned by the carmaker and only works at extra subscription cost. I don't think On-Star can compete with that.
--Dan Edmunds, Director of Vehicle Testing, Edmunds.com
Technology
Apple vs. the Web: The Case for Staying Out of Steve Jobs's Walled Garden by Daniel Lyons (Newsweek)
"Long before Apple even announced its new iPad, media companies were going nuts about the device, for two reasons. First, they believed they would be able to create apps that would be gorgeous and stunning and way better than anything they've been able to do on a Web browser. Second, money. As in, media companies figured that with apps, customers would be willing to pay subscription fees, something they have been reluctant if not outright unwilling to do when their news delivered via a browser."
Edmunds staffer says:
Time will tell what impact the iPad will have on business, the web, and culture in general. Not everyone uses the internet the same way, and not everyone expects the iPad to be just like a personal computer or an over-sized iPod -- it's a new thing and it needs to be thought of in that way. It appeals to demographic groups that previously were either not interested or couldn't afford, support, or transport such a powerful bundle. Not all iPad users will have the same needs, expectations or demands. Existing technorati will get to use what they are already familiar with in the form of iPhone apps and the web, and as new kinds of apps and media become available that appeal to the non-techies, the techies will benefit from those as well. The companies who will make money from the adoption of the iPad into the mainstream culture (or whatever other new devices spring from its inspiration) will be those who take into consideration iPad's unique interface capabilities, portability and appeal to non-techies, and who understand where the iPad fit's into the lives of a growing variety of users.
-- Martin Leon, Software Test Architect, Edmunds.com
Economy
Did a Big Bet Help Trigger 'Black Swan' Stock Swoon? by Scott Patterson and Tom Lauricella (The Wall Street Journal)
"Shortly after 2:15 p.m. Eastern time on Thursday, hedge fund Universa Investments LP placed a big bet in the Chicago options trading pits that stocks would continue their sharp declines."
"On any other day, this $7.5 million trade for 50,000 options contracts might have briefly hurt stock prices, though not caused much of a ripple. But coming on a day when all varieties of financial markets were deeply unsettled, the trade may have played a key role in the stock-market collapse just 20 minutes later."
Edmunds staffer says:
In response to the initial theory that last Thursday's market crash was a result of a "fat fingered" trade: As a systems-guy, I rejected that excuse immediately and suspected a cascading failure that complex systems sometimes introduce (think of the New York blackout). I was concerned to learn the majority of trading volume is done programmatically, without direct human involvement other than the original business rules. This is very different than automated control systems for missile guidance or airliner fly-by-wire, etc. because this is a network of independent, competing systems that are acting against one another as opposed to working in concert for coordinated flight.
-- Keith Reynolds, Director, Business Analysis, Edmunds.com
What are you reading? Tell us at reading@edmunds.com. Include the article link and a note about why you feel it's a good read. We may publish your commentary in next week's column.
Photos by automakers
1. Nissan Leaf
2. GM's OnStar
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