That was essentially the answer given by General Motor’s CEO, Rick Wagner, when he proposed that a gas tax hike was “worthy of consideration.”
Let’s consider the logic behind this. When gas reached (and exceeded) four dollars a gallon last summer, drivers were redlining. Toward new automobile purchases, however, they responded by buying hybrid vehicles. Thus, the GM’s logic is that by forcing Americans to pay a higher gas tax and maintaining gas prices at a minimum four dollars a gallon, car buyers will once again flock to the beloved hybrid.
Not coincidentally, increasing hybrid sales fits perfectly into GM’s roadmap, “around 2015” predicts GM Vice Chairman Bob Lutz, “we’re going to have to sell a ton of hybrids whether people want them or not.” (emphasis mine). GM, whose stock has dropped 94% since June 2007, has already begun implementing its program. During the height of the gas extravaganza, Wagner promised, “If you want to talk hybrids; we are introducing four more hybrids in the US this year. In fact, counting the new Saturn Green Line, we are introducing sixteen hybrids in the next four years. That’s one about every three months.”
But that gas has dropped to below two dollars a gallon, hybrid sales have fallen just as hard as GM’s stock.
Meanwhile, GM is on life support. And, of course, the government is generously providing enough capital to weather the financial storm. One string attached to the bailout though is the requirement that GM submit a viability plan to prove that GM will not be an utter failure. One can only wonder if Rick Wagner’s statement proposing a gas hike is an effort to please Uncle Sam. But if GM’s best response to demonstrate its future profitability is by suggesting a raise to the gas tax so Americans buy hybrids (“whether people want them or not”), then I fear to the car company has lost touch with basic economics and thus deserves what probably inevitable: failure.