Volvo Commits Seppuku

Guest Post by Eric Peters

With gas cheaper than it has been in at least 50 years – strongly suggestive that there is plenty of it available and will be for some time to come – Volvo has announced its decision to build nothing but expensive plug-in hybrid and full-on electric cars beginning after the 2019 model year.

Cue the falling of rose petals.

“This announcement marks the end of the solely combustion engine-powered car,” saith Volvo’s CEO Hakan Samuelsson.

No, it marks the end of sanity – and very possibly of Volvo as a manufacturer of cars. Well, as a manufacturer of cars that people can actually afford to buy or want to buy and which aren’t massively subsidized by the government – from the assembly line to the moment they drive off the dealer’s lot.

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But why is Volvo – why is the industry – so hell-bent on replacing cars that work with those that do not?

Especially now?

With gas prices going down rather than up?

It is the height of the summer driving season – when gas usually costs the most – and prices remain stable at around $2.00 per gallon. People notice this – and shop accordingly. Trying to sell them a hybrid or electric car when gas is cheap is like trying to get a cellulitic fat girl voted in as Miss Universe (though that is probably coming, in the spirit of “diversity”).

Did you know that sales of the Toyota Prius – the only somewhat reasonably priced hybrid car currently on the market – are down? And that Toyota had to give up trying to sell the not-reasonably-priced plug-in version of the Prius? (Which happens to be exactly the type of hybrid that Volvo will be making exclusively two years hence?)

This shouldn’t surprise anyone.

With gas at about $2.00 per gallon, spending $2,000 extra to buy a Prius ($23,475) vs. an otherwise similar but non-hybrid car like a base trim/four-cylinder Camry – which is actually a larger/nicer car than the Prius – does not make economic sense. It makes even less sense when you compare the cost of a Prius with the cost of something more directly comparable, such as a Corolla. You can buy one of those for $18,500 – which is $4,975 less than a Prius.

And about $15,000 less than the cost of the plug-in version of the Prius (RIP).

Volvo’s plug-in hybrids will be just as economically untenable – except worse. Because the price uptick will be even higher, given these are luxury cars. And an economical luxury car is as preposterous as a short giraffe.

You will never recoup the initial cost of a hybrid in down-the-road savings unless gas prices at least double – which is there is no sign of them doing, almost certainly because the supply is known to be vast if not essentially limitless.

This is why gas is so cheap. It must be so.

If it were not so, gas would be very expensive – and growing more so every hour.

The price of a commodity for which there is a huge market does not go down when supply decreases – or when there is the expectation of an imminent decrease in supply. Think about this a moment.

If the Peak Oilers and electric car-pushers were right and “peak oil” was just around the corner – as they have been insisting for the past 50 years – the price of gasoline would be hyperinflating like a Weimar Deutschmark.

This axiom of economic obviousness, however, cannot be mentioned by any establishment media journalist who wishes to keep his job – for the obvious reason that it makes a laughingstock of the stampede toward hybrid and electric cars, as if they were the only possible way to keep the wheels turning.

Is it not hallucinatory?

The organs continue to grind, producing near saturation coverage of Our Electric Future – so as to create the impression of its inevitability. And thus, it is hoped, the actuality.

Meanwhile, laws are passed outlawing affordable, efficient – and yes, clean – internal combustion-engined cars in European countries and requiring the manufacture of plug-in hybrid and electric ones.

This, by the way, is the real reason for Volvo’s announcement.

Volvo may indeed be “committed” to an electrified future, but that commitment has a lot to do with the laws and regulations on the books and soon-to-be-coming. It is why BMW and Mercedes have also grafted plug-in hybrid systems to almost every car they sell and cynically warble in tune with Volvo about unsere electrische zukunft.

There are areas in Germany where it is verboten to drive a car that isn’t rolling on battery power.

If they want to sell any cars at all, they must be plug-in hybrids or electrics.

And legislating these things into mass-production is the only way they will ever be mass-produced. Because absent laws requiring their manufacture, people – for the most part – are not going to buy them.

Not when gas is $2 per gallon and they can buy a car that costs thousands less than a hybrid and tens of thousands less than a plug-in hybrid or electric car.

But economics – and practicality – be damned.

The Agenda is all that matters. The car industry must be transformed. In spite of the fact that gas is cheap and hybrids and electric cars aren’t selling.

Precisely because of those facts, in fact.