Electric Cars: ‘Not Ready for Prime Time’

William O’Keefe, CEO of the George C. Marshall Institute, has a report out on the government’s intervention in the electric-car market. His conclusion:

Political forces, not the market place, are pushing PHEVs into the market through large subsidies in the form of rebates, tax credits, aggressive CAFE standards and perhaps a little coercion. Without subsidies and political pressure, it is doubtful that there would be much demand, except by the wealthy early adopters who want to make an environmental statement.

Using tax dollars to push this technology into the market results in a misallocation of resources, makes it more difficult to reduce the federal deficit, and is not sound energy policy. As noted at the beginning of this paper, there are better ways to address energy, climate and security issues than through technology forcing.

The Chief Executive of Ford Motor Company, in an interview with CEO Magazine, stated “the internal combustion engine has a lot of room for improvement.”21 He went on to mention direct-fuel injection, turbo-charging, integrated electronic, new light weight materials, and improved air flow. J.D. Power and Associates identified other ICE improvements, such as variable valve timing, cylinder deactivation, and start-stop technology. Together these technology improvements could result in a 40% reduction in oil use, according to the NAS. The newest generation diesel engines, although more expensive than ICEs, could also increase miles-per-gallon efficiency by 30% or more.

The government’s track record with technology forcing is not encouraging. A 1983 article in Science reviewed the lessons from government industrial innovation policy. Although the assessment is almost 30 years old, nothing in the intervening decades has changed the validity of its conclusions. In the case of the government “picking winners” or identifying projects that will be winners, the authors conclude, “the historical record seems, for a change, unequivocal. Unequivocally negative.” They go on to say “try(ing) to identify projects that will be winners in a commercial market competition, is always seductive, but the evidence, from our studies and others, suggests that such strategy is to be avoided.”22

Some try to make the case for government intervention by pointing to its role in developing the internet. But, that is a poor analogy. The internet was developed by the Department of Defense to meet specific communication needs. Only then did it move into the commercial market. In the case of the EV, the government is attempting to push a product into the market and use gimmicks to get the consumer to purchase it. That is a dubious strategy.

None the less, the federal government keeps trying. DOE provided Nissan Motors with a $1.4 billion loan to help with the cost of manufacturing the Leaf. If Nissan is convinced that the Leaf is a next generation vehicle, it should be willing to use investor money to demonstrate that, not taxpayer dollars.

The government’s push for electric cars at the expense of supporting a portfolio of technology strategies and its distrust of market forces is a big gamble that goes against history and the power of consumer choice. Whenever the government engages in top down manipulation of the marketplace, there are unintended consequences. And there surely will be this time, even if they cannot be identified at the outset.

The entire report is available here [PDF].

Most Popular

Politics & Policy

Students’ Anti-Gun Views

Are children innocents or are they leaders? Are teenagers fully autonomous decision-makers, or are they lumps of mental clay, still being molded by unfolding brain development? The Left seems to have a particularly hard time deciding these days. Take, for example, the high-school students from Parkland, ... Read More
PC Culture

Kill Chic

We live in a society in which gratuitous violence is the trademark of video games, movies, and popular music. Kill this, shoot that in repugnant detail becomes a race to the visual and spoken bottom. We have gone from Sam Peckinpah’s realistic portrayal of violent death to a gory ritual of metal ripping ... Read More

Romney Is a Misfit for America

Mitt’s back. The former governor of Massachusetts and occasional native son of Michigan has a new persona: Mr. Utah. He’s going to bring Utah conservatism to the whole Republican party and to the country at large. Wholesome, efficient, industrious, faithful. “Utah has a lot to teach the politicians in ... Read More
Law & the Courts

What the Second Amendment Means Today

The horrifying school massacre in Parkland, Fla., has prompted another national debate about guns. Unfortunately, it seems that these conversations are never terribly constructive — they are too often dominated by screeching extremists on both sides of the aisle and armchair pundits who offer sweeping opinions ... Read More

Fire the FBI Chief

American government is supposed to look and sound like George Washington. What it actually looks and sounds like is Henry Hill from Goodfellas: bad suit, hand out, intoning the eternal mantra: “F*** you, pay me.” American government mostly works by interposition, standing between us, the free people at ... Read More
Film & TV

Black Panther’s Circle of Hype

The Marvel Cinematic Universe (MCU) first infantilizes its audience, then banalizes it, and, finally, controls it through marketing. This commercial strategy, geared toward adolescents of all ages, resembles the Democratic party’s political manipulation of black Americans, targeting that audience through its ... Read More