Electric vehicles: Rorschach card for election year?

EVs tangled in debate over government, technology

Phil Carson | Jan 04, 2012

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We've always had an uneasy relationship between our pursuit of capitalism and its expressed ideal—rarely achieved—of "free markets" and our vision of the role of a federal government designed to accomplish what we as individuals cannot hope to achieve, but collectively seek.

Take the electric vehicle market, for instance. This sector will be instructive to watch this year as Americans consider the product itself and assess politicians' and pundits' arguments for and against government policy towards that market. Will sticker prices inhibit sales? Will related government subsidies and tax incentives for cars and chargers fall under the budget ax? Will Americans respond to arguments on either side of the political spectrum for or against a government role in fostering the electric vehicle market?

In a sense, this aspect of the emerging EV market is somewhat akin to the notion that "smart" interval meters and advanced metering infrastructure got traction by dint of the cost-sharing grants made under the controversial American Recovery and Reinvestment Act.

What's the smart grid connection? Clearly, uptake of EVs may impact utilities and so they have gone to great lengths to prepare for short-term impacts of clustered ownership. Longer-term, at least in the view of some utilities, strong EV uptake could cement centralized power's relationship with residential end-users. 

Let's look at a handful of recent headlines and reader comments to illustrate my perhaps too-obvious point about our ambivalence towards government involvement in clean energy solutions.

In a New Year's Day editorial titled "Overcharged," The Washington Post editorial board declared that, like ethanol subsidies, the $1,000 tax credit for defraying the installation of a 220-volt home charger, which expired at the end of 2011 should stay dead, and the $7,500 tax credit for purchasing an EV should expire. Readers responded.

"Our government is out of control and needs to be reduced at every level ."

"I test drove the Volt and was very impressed. I wanted to buy one. But even with the $7,500 credit it is still a $36,000+ nut to crack when you add in taxes and fees."

"You can buy a lot of gas with the $20K you'll save purchasing a comparable gas-powered car."

"Let's see how you feel about green energy when the melting tundra starts releasing millions of tons of methane (27 times more potent greenhouse gas than CO2) into the atmosphere!"

"When will we ever get the lobbyists out of our energy policy!!!???"

"The article is correct about the market-distorting effects of the ethanol subsidies and the EV subsidy. Now let's get rid of the oil and gas industry tax breaks and perhaps farm subsidies as well."

"Venture capital investments are risky, but it's even riskier if we stick with what we knew: fossil fuels."

In an article yesterday in The New York Times, "U.S. Auto Sales Ended 2011 With Strong Gains," numbers courtesy of J.D. Power & Associates seemed to establish that individual Americans (as opposed to government fleets, etc.) were indeed busy buying cars last year, just not the forecasted quantities of the new plug-in electrics. Again, the hand of government was the subject of reader commentary, but the tone generally was positive, perhaps because of the quantifiable effects of revived American manufacturing on job creation.

"State-supported industry is working very well in other countries. Doesn't this seem like a practical, hybrid solution?"

"Another successful 'socialist' enterprise, assisted by the government, which actually owned the [auto] companies for a brief period, but quickly took them public, at a profit."

"The recently ratified contracts between the United Auto Workers and the Detroit Three are already bringing work back to America and are expected to create 180,000 jobs in this country."

A few more recent headlines in this sector help establish the thesis that EVs embody Americans' mixed emotions about the cost of new technology and public and private roles in bringing it to market.

In The Press of Atlantic City's "Electric Cars Make Slow Start in Market," the lead packed it all in: "Plug-in electric cars have been on the market for a full year, but they are still sparse on the road, hampered by limited production, premium price tags and consumer uncertainty."

The Orlando Sentinel's "Orlando Goes Green, Replaces Trucks with 3 Electric Cars" stated that the city bought three EVs for $90,000 and that "the savings in gasoline costs should cover the higher price tag," and that the move "showcased the city's twin priorities of promoting energy independence and reducing Orlando's carbon footprint."

On the opposite side of the coin, the Colorado Springs Gazette noted last week that "Electric Car Charging Stations Coming to Walgreens," part of a plan the publicly traded company has for installing 800 charging stations around the country. The article noted that such an approach dovetailed with the chain's recent trend of locating its stores at key intersections—good for sales and EV drivers—and its corporate policy of supporting green technologies and renewable energy initiatives.

Many threads here, from the public and private roles in EV adoption to the costs of EVs to prospective buyers and to taxpayers. In short, a swirl of issues that I expect will continue to drive conversation as 2012 unfolds.

Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757

 

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Comments

Let's take a realistic view of electric vehicles

Electric vehicles face a difficult road ahead and their penetration, or lack thereof, should not be a surprise to anyone who looks at it objectively.  In spite of wishful thinking, don't expect significant penetration any time this decade.  There is probably a role for EVs but it is not the widespread consumer market.  Rather, it is more likely to be various fleet applications such as delivery vehicles or limited urban transit applications.  For all but the most dedicated clean energy afficionados and hobbyists, or those who can afford a third vehicle, how many consumers can afford to pay the prices quoted in this article for a vehicle with such limited capability?  Most cannot.  And, unless there is some breakthrough in battery technology that I don't envision, that situation is not likely to improve substantially.  The current rate of improvement in battery performance and cost is not going to get us there.

Second, there is still the issue that, at least in Colorado, most of the electricity that will be used to recharge an EV will come from, yes, coal.  So, the environmental benefits, at best, are muted.

But, cost and performance aside, there is another difficulty with an electric transportation infrastructure that few seem to speak about.  If you loved Big Oil, you will really love Big Monopoly Electric Utility extending its dominance to the transportation sector.  In Colorado, the recent rate increases sought by Xcel should give consumers pause over whether they want to be held hostage to their local electric utility for necessities such as driving to work.  Gasoline prices have at least been shown to be sufficiently elastic that they respond to consumer demand.  And, within a limited range, consumers sitll have a choice of providers.  Hence, there is at least some semblance of a free market at play -- even if it is an oligopoly.  In contrast, a consumer's only choice for recharging that overpriced EV is the local monopoly utility and to pay whatever its regulator-approved rate is.  Good luck there.

So, there is a use for electro-motive transportation.  It just isn't the one everyone is talking about.

Richard Mignogna, Ph.D., P.E.
Golden, Colorado

Thanks Rich

A couple of very good points here.

First, though we'll look into the details, the conventional wisdom on battery improvements has indeed been "incremental," at least near-term.

I think the electric transportation folks would dispute that EVs running on electricity generated by 50 percent coal make no difference. I can't cite chapter and verse, but even with 50 percent coal-fired electricity, these vehicles emit or cause (secondarily) significantly less pollution. And the goal is to use excess wind overnight to power them.

However, Rich's other point is rarely if ever discussed and should be more openly debated. While there don't seem to be any checks and balances, other than outrage, on Big Oil and gas prices, Rich makes a good point that the history of rate increases approved by PUCs does not bode well for electric transportation. Unless, I suppose, you live with a muni or co-op, in which case, you might be in luck. But that's not the mass transformation sought by those who would electrify the transportation sector.

Again, conventional wisdom has it, as Rich notes, that fleets and public transportation will be the first adopters. So, let's get on with it.

Regards, Phil Carson

Batteries Are Key

Phil, a column that discusses battery technology and manufacturing hurdles, and a roadmap for surmounting them, would be useful and instructive.  Batteries that are cheaper, lighter and have more storage capacity aren't going to magically appear just because automakers want them.  what's the plan for getting there?

Jack Ellis, Tahoe City, CA

Thanks Jack

Indeed, batteries seem to be the cost- and distance-limiting factors here. I'll put such an article  on the to-do list.

If anyone feels up to sending me leads, I'm happy to run them down. Stopping occasionally, of course, to recharge my batteries.

Regards, Phil Carson

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