The Ultimate Free Car: An Update

On Tuesday, July 26, 2016, U.S. District Judge Charles Breyer, who presides over the Dieselgate litigation, granted preliminary approval to VW’s buyback/fix proposal for its 2.0 liter diesel emissions-cheating cars.

I outlined the details of the deal in my earlier post about how I “speculatively” bought an affected VW TDI in late April when the rough outlines of a settlement became public. I also outlined how you, fair reader, could take advantage of this very special situation for juicy profit. And I now kindly remind you that, yes, you still can.

To summarize what arbitraging this can be worth, here’s a nice graph from Bloomberg, from an article entitled “The Only Winners in Volkswagen’s Diesel Mess Are Drivers”:

Bloomberg VW Buyback Value Graph
Bloomberg VW Buyback Value Graph

My little foray into farfegnugen country has been good for:

  1. Roughly $3,000 in sweet profit.
  2. A zero-depreciation LibreWagen I can use/abuse like a rented bedpan until around December 2018.
  3. Super utility, luxury features and Muggsy Bogues-low operating costs along the way.
  4. The power to limit the environmental impact of a car that spews more noxious pollutants than Cheech Marin at an Amsterdam coffee house.

When I bought the car in April, because the particulars and approval of any settlement were, well, unsettled, I went for a VW that not only would speculatively return us some profit. I also went for one that would service our family’s utility needs.

This latter part wasn’t speculative. In a Graham-ian construct, it could be viewed as our “margin of safety” on the investment.

So, now that the speculative component of the investment looks like it’ll definitely pay, it’s worth looking at how the other half is working out.

The biggest operational test to date happened over the course of last week.

Lady Libre, Little Libre, Lobo Libre and yours truly piled into the pile and scooted a few hours to some pristine, gorgeous beaches not yet spoiled by hordes of turistas.

The drive was varied. Over and around mountains, along coastline. Two-lanes, four-lanes, stop-and-go, breezy downhill. You name it. Mostly shine. Some sprinkle. All conditions. Aside from a brief stretch of outerbelt where we got the thing up to around 80 mph, we didn’t hit freeways; our speeds mostly hovered around 60, and we did a lot of 45-50.

VW TDI: ATM On Wheels
VW TDI: ATM On Wheels

How’d LibreWagen handle the journey? Could its smoggy little 4-banger cope with mountain passes and traffic merges? Would the TDI live up to its eco-cool hype?

Great. Yes. And definitely.

But what comes next for us and our ATM on wheels?

First: Journeyin’

The car’s pretty tricked out with comfort features. We’ve (stupidly) driven douchey BMWs in the past. Which don’t hold a licht to the ‘nugen.

The pano sunroof provides endless entertainment for backseat buddies Little and Lobo.

The front seat heaters are more Lady’s thing than mine, but they’re pretty nifty on chilly mornings.

The radio’s got a jack for MP3 tunes.

And stowage capacity makes you wonder what the hell people could ever need super-sized SUVs for. Little Libre’s off-road stroller-cum-Humvee, various sundries, feasting throne, diaper bag, etc., etc. all fit easily – along with my backpack (all I’ve ever traveled with) and Lady’s backpack (all she’s ever traveled with) and Lobo Libre’s bed and food and stuff. With room to spare. Which makes me ask, yet again, why in hell are people driving around these cruise ships on Goodyears known as SUVs?

So, yeah, the Wagen journeyed strong. Uber-comfortable, even during the couple of stops we had to make for Little Libre to breastfeed in the front seat.

Second: Powerin’

Ok, so the thing’s not going to win any drag races. It’s zippy enough around town, and the diesel engine spins out torque more easily than the talented Mr. Ripley spins yarns. But from a cold start, LibreWagen’s kinda pokey.

It’s got a Car & Driver 0-60 rating of, like, “usually,” and passing slow traffic with anything even approaching authority means at least two downshifts.

Oh, and the Wagen’s a wagon. Which I’m pretty sure means it’s aerodynamically engineered to impose maximum resistance against acceleration.

Having said all that, the last time I tried to get a car to do its max 0-60 sprint, I was in high school. And gas cost under a buck a gallon. And all I knew about economics was that it had some vague relationship with money. Which I used primarily for dates and whey protein and dates and, well, gas.

So, that 0-60 time is pretty much irrelevant in life…unless you’re a high-schooler with more testosterone than brains. Likewise, passing anyone with “authority” probably means you’re driving like a dick and shouldn’t be passing anyone, or maybe even driving, at all.

All of which leaves us here: The Wagen, like all modern cars sold in the U.S., has more-than-adequate power and zippiness to do anything that any sane driver would want it to do, virtually all of the time.

This includes climbing steep mountain grades, keeping up with freeway fiends and rambling faster and faster toward the next rest area because baby’s screaming his face off from sudden-onset-infant-hunger.

Powerin’ be good, in sum.

Third: Hypin’

I saw an article recently that discussed how a surprising number of VW TDI drivers intend to use their settlement proceeds to get a Tesla.

The connection between a VW econobox and an Ironman suit? Eco-cool, baby. Bust out the Birks and hug some trees. And shimmy that checkbook out of your tie-dyed poncho while you’re at it.

It appears TDIs skew affluent, in sort of the same way Teslas do. It’s just that Tesla has marketed its cars that way explicitly. While TDIs have simply been found by the moneyed enviro-geeks.

Now, from a pure economics perspective, this really isn’t surprising. And I’ll digress to mention why just because.

For an economist, it takes about 0.57 seconds worth of thought to conclude the environment is a “luxury good.” People (and societies) generally care more and more about the environment as their income (or wealth) grows. When you’re scrimping just to eat, it doesn’t make any difference whether the burger you’re biting into contributed to the greenhouse gas problem that could screw up rain patterns and thus erode vegetation. You’re hungry. Whatever.

When your mind’s a bit more freed up from day-to-day survival, the longer-term issues migrate to the fore. Like the environment. Like how rainfall patterns and vegetation could impact your offspring. Like whether your morning run along the beach will be shrouded in smog. Et cetera.

So, it’s only natural that Tesla would target the wealthier strata of consumers. And it’s only natural that lots of the same consumers would be attracted to the (false) story of environmental efficiency of the “clean-diesel” TDI.

Anyway, how’d LibreWagen do from an efficiency perspective? Did it live up to the hype as a “cool” way to let everyone around you know you really, really care about trees?

Notwithstanding the whole emissions cheating issue, yes it did.

Our trip total MPGs, including mountain passes and lots of twisty-turny two-lane roads and stop-and-go driving along the coast, clocked in at 44.7 miles per gallon of diesel (according to the car’s on-board computer, which, for no reason whatsoever, I totally trust).

And diesel, by the way, tends to run between $0.10 and $0.45 cheaper per gallon than gas.

So, our entire trip burned about half a tank of fuel, roughing out to be worth around $18.

Maybe those enviro-geeks are onto something… Maybe being environmentally conscious and consuming less and fattening our wallets and keeping trees alive and doing other stuff good too is actually a win-win-win

Maybe what, from an economist’s perspective, is a luxury good (i.e., conservation) is actually a stealthy way to appear super-rich while actually becoming super-rich because you’re not spending like you’re super-rich. But you’re still getting the same level of life-awesomeness as somebody who’s already super-rich.

Let’s just all agree right now to nix the Birks and tie-dye while we save the environment and get rich, okay.

Anyway, yes, the LibreWagen rambled efficiently. I’m confident that getting the thing onto flatter terrain would easily let its MPGs touch 50. If only it didn’t pollute like a hot rod out of Mad Max it’d really be part of the solution. But then again, it’s all that polluting that makes it an ATM on wheels.

Fourth: Finishin’

All things considered, the LibreWagen has been a nice addition to the old portfolio and garage.

It’s an ATM on wheels, it’s a comfortable and useful car, it’s cheap to run and own, and auto insurance for it costs next to nothing. And, yes, it pollutes more than it’s supposed to.

But all that will pass.

Just like 475,000 or so others very similar to it, LibreWagen will find its way back to its maker by December 2018.

Maybe then we’ll get a Tesla. Or maybe an all-electric VW that really, actually doesn’t pollute. Or maybe we’ll move back to Europe ditch cars altogether and dial our transportation-pollution needle almost all the way down to cero. I guess something like that is what comes next.

Luchadores, what are your thoughts on the Dieselgate settlement? Too rich for the TDI owners? Not rich enough? Too easy on VW?

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