The electric car needs a jumpstart. It’s not unexpected and it should not be a deterrent to moving forward with production. After all, emerging technologies are more expensive than the prevailing alternatives and each has its own idiosyncrasies that must be overcome.
In the case of all-electric vehicles, it’s not just that they are more expensive than traditional cars and trucks, as well as their cousins, the hybrids. It’s also that the relative driving range makes long trips impractical especially because there are a lack of “fueling” stations where they can recharge. The plethora of potholes along the route have dented sales results.
Innovative progress is one matter. So is government involvement. It’s healthy for inventors and their financial backers to get involved in any market economy, helping to advance better products and services. But it has a become a hugely debatable as to whether federal governments ought to provide incentives to both producers and buyers of those vehicles.
Increasing the sales of all-electric cars and trucks would reduce petroleum imports and would arguably have an affect on total emissions. But increasing that marketshare via federal subsidies to car makers and tax rebates to drivers would jack up the annual budget deficit. The Congressional Budget Office estimates that all such policies will cost about $7.5 billion through 2019.
Why worry now about all-electric cars given the fact that hybrid vehicles that run on both gasoline and electricity are making headway? The budget office would appear to concur with the underlying sentiment here. It says that the average plug-in hybrid now gets a maximum tax credit of $7,500 per vehicle but that this number needs to be $12,000 per car to have roughly the same lifetime costs as a comparable conventional or a traditional hybrid vehicle.
Interestingly, General Motors General Motors is developing an electric car that it says can operate for 200 miles before it would need to be re-energized, which would exceed the range of most electric vehicles by 100 miles. It centers on improving battery technologies, where the public and private sectors have joined to double the energy density of lithium-ion batteries that has the practical effect of reducing their cost by half while increasing the driving range.
“It’s sport in some circles to poke fun at electric vehicles, especially at this early stage of their commercialization,” says GM’s Chief Executive Dan Akerson, in a speech. “But the era of using electricity to help improve performance and fuel economy is already here and the trend is only going to grow.”
Akerson says that he expects 500,000 electric vehicles, of some variation, on the road by 2017. His company is committed to them, and to cutting the petroleum consumption of its cars by 12 billion gallons by then. Meanwhile, the Obama administration is predicting the advanced battery market will expand globally from $5 billion in 2010 to $50 billion in 2020.
Sales of the all-electric versions, though, are slow: Nissan Motor Nissan Motor Co. sold in 2012 about 10,000 of its “Leafs” here while internationally, it has sold 50,000, say news reports. GM, meanwhile, sold last year 24,000 of its Chevy Volts. At the same time, “Better Place” is struggling. Its networks are employed to change out batteries as opposed to using batteries that need to be “filled up.”
Those lackluster results are on top of the declared bankruptcy in 2012 of A123, an electric car battery maker. Its troubles have been less about its technologies and more about the economics of car buying. Moreover, it had a contract with Fisker Automotive to supply $100,000-plus luxury electric cars. However, a glitch caused A123 to recall those batteries.
Fisker, itself, is on shaky grounds. The U.S. government gave it access to a $529 million loan in 2009 but that the spigot was turned off two years later. This past week, government regulators swooped in to recover part of the $192 million that it did provide the plug-in car maker. Critics are saying that it is okay if Fisker tries and flops. But it’s not alright to take such risks on the taxpayers’ dime.
Advocates of government involvement are pointing out that the failures of such companies that received federal help should not be viewed in isolation. They are saying that Fiscar and Solyndra are two investments in a loan portfolio of several dozen companies — most of which are viable entities that are creating new jobs.
Furthermore, the administration wants to expand the nation’s transportation possibilities. The incentives that it is spearheading are necessary to grow the electric market and to create economies of scale that would improve technologies and decrease prices. Consumers would then be attracted and subsidies would cease.
“Electric drive cars and trucks reduce air and other pollutants and reduce fuel costs,” says Brian Wynne, president of the Electric Drive Transportation Association. “Powering a vehicle with electricity can be done at a fraction of the cost of gasoline. And while we are establishing a new energy security, we will also be growing our global competitiveness with development and manufacturing of advanced vehicle technologies.”
The all-electric car market is slow to accelerate. But this does not spell doom and gloom for that technology, much less the promotion of new ideas within the alternative vehicle sector. Hurdles exist, namely the high cost of such options along with the fledgling infrastructure to support them. Public-private partnerships, however, are seeking to sidestep such barriers, although if they are to succeed, better due diligence is necessary.