GM vs. Tesla: The Bailout Consequences No One Saw Coming

Source: General Motors

While the TARP bailouts probably saved over one million jobs in the auto industry, the U.S. Treasury ended up $12 billion short on the $50.7 billion it handed out to General Motors back in 2008. Some seven years later, this event might seem like ancient history to Americans, but the actions of GM against taxpayers’ interests continue to amaze critics, beginning with the automaker’s lobbying efforts against Tesla, an emerging force in U.S. manufacturing.

We won’t debate the merits of bailing out GM when the corporation was crumbling due to mismanagement, poor products, and staggering debt levels. However, we will suggest that the government assistance, funded as it was by taxpayer contributions to the treasury, came with an obligation — a debt, if you will — to the interest of American workers and society as a whole.

In its move to get Tesla banned from Indiana, GM’s lobbying efforts (estimated at $9.1 million last year) came out against domestic manufacturing in force. GM-sponsored legislation in the Indiana legislature would end Tesla’s right to sell its electric cars in the state, and the clear target is the Model 3 expected to compete with the Chevy Bolt EV in 2018.

Comparing those two future products reveals a reliance on foreign manufacturing in the case of the Bolt EV, produced in a partnership with South Korea’s LG Electronics. While GM has not released the origin of parts that will make up the Bolt when it appears in late 2016, the Korean-made Chevy Spark EV shows how the automaker’s electric cars have been produced in the past.

Source: General Motors

According to the Kogod Made in America Auto Index, only 36.5% of the Spark EV can be called American, making it a foreign car for all intents and purposes. (It ranked 52nd out of 83 vehicles analyzed.) LG’s heavy involvement in the next EV, including development in Korean labs, suggests the Bolt EV will have its own troubles in claiming domestic origins. On the other hand, the Tesla Model S ranked 13th on the index with 75% of its parts development, labor, and corporate offices in America.

As Tesla furiously builds out its Gigafactory in Nevada, we can see the upcoming Model 3 getting an even higher score than the Model S on the Made in America list, and every sale the California-based company made would offer the potential for more U.S. manufacturing jobs. If GM’s lobbyists have their way in Indiana and other states, fewer Model 3s will make it to market, and that will stunt the California company’s growth.

We’re guessing many American taxpayers see this move as a betrayal by a corporation so recently propped up by the same people, but the story doesn’t end there. As Tesla continues building out its Supercharger network for customers, GM has gone on the record saying it won’t make similar investments because they don’t benefit “all [its] customers.”

That’s a neat way to avoid providing EV charging infrastructure for vehicles that reduce pollution and, therefore, benefit communities around the country. Tesla’s Elon Musk has noted how industry-wide competition would serve to boost growth of EV adoption, but GM is actively working to keep the top electric vehicle maker in its place, thereby keeping the segment down with it.

Seven years and change isn’t so long we can’t remember why The General exists and who paid the bill. These are consequences no one saw coming when GM got the massive bailout it never repaid. We suggest a lighter approach, one that allows people to hope the same GM won’t block a rising force in the American workplace. That would be so ungrateful.

Follow Eric on Twitter @EricSchaalNY