An Electric Vehicle in Every Driveway Pt 2: Super Affordability
By: Tom Walker
Tags: Green New Deal, Politics, Ecology, Electric Car, The Green New Deal

Part of “The Workable Green New Deal” series and second of a 3-part EV transition commentary.

60 Second Charging — Affordability + No Down Payment — Retrofits, Baby

Let’s spend zero dollars and fix the climate change issue, and as part of that plan let’s tackle putting electric cars on the road in big numbers, quickly. Really. This is AMERICA, baby! We do things differently here, right? Good bye fossil fuels, and faster than the Green New Deal thinks possible.

At zero cost to the taxpayer.

Without all the uber-political socialist agenda junk (so we can get independent voters to jump on board by the millions!)

This is the French Citroen Ami, which runs about $7 grand. Let’s make a USA version and let’s build in here.

So — An Electric Car in Every Driveway:

We can sell tens of millions of electric cars in the next five years. Three with a little push. But we can’t do it the way it’s happening under private enterprise only. The government shouldn’t interfere too much either, right? There is a Golden Balance and a way forward, and it is basically very, very simple.

More EVs are coming into the market on a rapid basis, but there are some big barriers to rapidly replacing gas-powered cars. What are some of those issues?

· E cars have to be good enough to travel long distances when we want to

· E cars have to be cheap enough to change your mind when we car shop

· I already have a car, thank you very much (a major issue)

· A lot of people can’t afford a down payment

· A lot of people have bad credit (another big issue)

In the end, everything is about cost, isn’t it? Let’s really look at affordability, then, because we can put an electric car in pretty much every driveway if we set our minds to the financial side of the equation. Let’s think like Americans in search of making a business deal happen.

With a zero-cost set of programs this process can be accelerated a lot — and once more, we can do so at zero cost to taxpayers, and at zero net cost to Uncle Sam. Where’s the profit? Ah. Greedy little Americans, yes, we will cover making a profit, too, by making lots of jobs happen here at home and selling a ton of cars.

First: A Good Cheap Electric Car

Fancy pants rich folks can buy whatever they want. We’re talking about the Blue Collar crowd right now.

Step back for a moment and think of this as a national priority. Let’s be WalMart and sell ninety zillion trinkets at a dinky profit for each one.

Okay, so we’re talking about an entry-level electric car, and car companies are working on that. It’s coming along… but most people still can’t buy one even if they want to, and not everyone wants to. Agreed. But remember, we’re talking about a truly affordable answer. A revolutionary affordable answer. The 1960’s VW Beetle of electric cars.

Let’s look more deeply:

Imagine a cheap entry-level electric car; it will still cost something the average family cannot afford — a down payment. Any car loan also requires something else a lot of Americans don’t have: Good credit. And what is a “cheap” electric car, more than $20 grand, yes? Try on the word “no” for size. We can get the price down a lot…

What would motivate the purchase of a ton of entry level e-cars? Affordability in each area: Down payment, credit, monthly payment. We can address them all.

What would happen if the sales of entry level e-cars went through the roof? Why, we could get the car companies to lower the price quite a bit, couldn’t we? Let’s put the rubber to the road on these issues…

HD Financing, Again

In this series we talk about how the Hoover Dam was financed because that sucker is paid off and making profits for us daily. It never cost *anything* (it was 100% paid for with low cost loans) and instead of big costs it *made* money. Hoover Dam is cranking out money right now. That, my friend, is how America turns pain into profit.

The finance model of the Hoover Dam did Big Things and now we want that kind of tool to back the car finance market so buying an e-car not just easy, but *super* easy. Cost to taxpayers? Zero. Process: Treasury lends money out, treasury charges interest, interest income covers the problems we’ll have, money comes back in over time, net cost = nada, zip, niente. The profit? We just took millions of gas cars off the road, quickly.

What will we do with all those left-over gas guzzlers? Come back for part three of the series, please.

How would Treasury-backed e-car credit matter and how would it work?

Good Electric Credit

35% of Americans have poor credit. How about if our Treasury backed a zero- or very-low-down purchase for anyone with a job or a 1040-proved income? Or even an account with a utility company? How about if we help people repair their credit by getting into a cheap car? Friends, a third of adult Americans is a pretty good marketplace!

Cool — but here is a super important note: The Treasury will *back* your loan, not *make* your loan. That is still up to the private car loan industry. The government is just super-lubricating the process. (Did you know that the government backs bank accounts? FDIC — the federal deposit insurance corporation. Huge program. Did you know the government backs home loans? Fannie Mae and Freddie Mac. Enormous. What barrier is there to backing the car market? O, um, uh... None. Because some people don’t want us to? Pfft. Sorry, but those folks are gonna have to get out of the way. They can protest — over there, go stand in the parking lot, out of the street, please.)

With no doubt whatsoever, there will be problems. Those problems could be big and they would still be small. Why? There will still be repossessions, that’s why. If you don’t honor your debt the finance company takes your car back and sells it to someone else. The government is giving you a chance to build yourself up, not a free box of candy, and the Treasury is not putting up the money for your loan. The Treasury would put up the money to guarantee a large class of loans — and the Treasury will require that money gets paid back.

Bottom line, the e-car program would enable *many* people to buy a car by getting them qualified. A guaranteed loan is a safe loan, so finance companies will cooperate. (If they don’t we’ll get competitors to step up. The amount of business we’re talking about is *huge* and finance companies will not walk away from it.)

Finance Companies and Zero Down Payment

What if, in order to get into this whopper of a program, we mandate that finance companies must build the down payment (or most of it) into the note? Zero down could be a program for single moms or college students, and finance companies will roll with it in order to get the entire program. What if the normal down payment was made small, something like $500? Most people who need a car can come up with that, even if it takes a little saving, scrimping, a little side hustle. $500 is doable. Hit up grandma and go get a car, people.

(Remember, we’re talking about the have-nots, and with this program we have mostly removed the barrier of bad credit. We are putting a car within reach, and by doing so we are practically forcing the landscape of America to change.)

What if we further mandate that the interest will be low even with bad credit? OK — it’s government backed and we say do it that way or get out. We just whacked another ton of cost off the top, didn’t we?

The government has a great deal of leverage here! We are going to juice the auto market for millions of sales, and if such-and-so finance company wants to earn big, they *will* play ball our way. They will make these special programs, they will roll tags and title and tax costs into the loan and they will simplify qualifications down to what we say they will be.

Let’s Sell Zillions of Them!

What would happen if car makers could build *millions* of cars with pretty much guaranteed sales? The price would plummet into affordability. And it would definitely drop a lot when we *tell* the car companies to make sure of it.

Remember the VW Beetle? It started as — literally — the Folks’ Car, the Volkswagen. Cheap, sold like hotcakes. Welcome to Germany, come in and have something to drink. Can I offer you a cheap, government-mandated car?

The 1935 VW prototype

Once more, let’s remember that the government has huge leverage because of the financing program that drives enormous sales. Hey car companies: You want in on that? You do it our way or we don’t let you make sales on that program. This is a mandate offer, not negotiations.

When an inexpensive car comes out at $20,000, the price is based on projected sales of “X” cars. When those cars don’t sell during the model year, the price goes down to $17,000 — quickly. And at the end of the year they will unload them at $15K and be happy.

Well, how about we help those car companies sell three times “X”? I bet the price *starts* at 17K and drops like a rock, huh? I bet we negotiate down to $15,000 right up front, and car makers can figure out how to make a good model of that car that costs even less because they want to be the one making millions of sales.

If the Citroen Ami can be built for $7,000, why couldn’t an American entry level car that’s slightly better roll out for $10 grand? Folks, a regular mortgage calculator puts a ten year payment on $10,000 at less than $100 a month. Since there is nearly zero cost for gas, just about everyone can afford one.

Enticements to build American? Sure.

How about if the American government stood up and said there would be *NO* help programs for foreign electric cars? What do you think would happen at American car factories? This is one place that the basic idea behind tariffs actually can work, but we aren’t making a “tariff”, now then, are we? We’d simply make great incentives to buy an American entry-level car, huh?

(Yes, foreign car companies can still compete, they just have to use American labor in America to assemble cars. No custom made parts can be imported, either, so that body panels, seats, dashboards, etc., have to be made here. Only off the shelf components can be imported. We still get economical foreign parts while we spur American jobs. Win-win.)

“Here‘s your new car keys and here’s a complimentary pack of coupons for fast food and the State Fair. Buy American, am I right? Have a great day, folks, and free coffee and donuts right over there.”

Look, when the government says “we are going to change the entry level market in a big way and you are going to sell millions of cars next year” it is also saying “play ball or get cut out of this opportunity”.

And it’s not a monopoly. The program can be available to all car makers who want to play, and to all finance companies who want to play.

All right, we solved the apartment dweller and street-parking issue in the last article. And now we got the price to come down, we got nearly every able-bodied upright American into a car they can actually afford, and we’re well on the way to putting only e-cars on the road. Awesome…

Now what do we do about all those gas guzzlers that are already on the road?

That’s what we’ll tackle in our third installment, “Retrofit, Baby!”

~ Tom Walker, Climate Warrior