I have told him that he can quit his job and we'll cover his insurance, but he must follow our stipulations. He is allowed to go out three evenings a week and Sunday afternoon. His curfew on the weekend is midnight. On Wednesday it's 7:00pm. His free time is to be spent doing homework and things at home. He is to improve his GPA to at least a 3.0. He will spend his summer working a part-time job to help pay the car insurance during that time. If he fails to meet these requirements, the car will have to go.
Should I have stuck to my original plan and taken the car away from him because his grades fell?
This reward/punishment agreement does not encourage responsibility. It has only increased his disaffection with school.
My advice is to take this car out of the picture all together, admitting that the gift of the car and the rules attached to it was your mistake. I am most concerned about your son's seemingly chronic dislike of school and his recently stated hatred of life. I want you to consider the fact that your son may be suffering from ongoing depression and/or an anxiety disorder. Get your focus off of trying to control him with your rules and this car. I'd like to see him get an opportunity to talk to an experienced therapist who treats many adolescents. Your boy is struggling emotionally and he's having a very difficult time facing each day and seeing why he should make an effort at all. Perhaps you hsould consider seeing a therapist yourself to get some unbiased, objective advice and support about helping your son. Thanks for listening.