A MODEST PROPOSAL: BUILD A PEOPLES’ CAR FOR THE 21ST CENTURY
Written by James Greenberger on July 16th, 2010
On June 22, 2010, Kathryn Clay of the Alliance of Automobile Manufacturers (AAM) testified before the Senate Energy Committee on the proposed Promoting Electric Vehicles Act of 2010, S. 3495 (PEVA). In a shock to many observers, the AAM declined to support the PEVA. Ms. Clay said that the PEVA’s emphasis on electric vehicles is misplaced. Government support for advanced automobiles, she stated, should be spread among a wide array of alternate technologies and not concentrated on electric vehicles. The members of the AAM are BMW Group, Chrysler LLC, Ford Motor Company, General Motors, Jaguar/Land Rover, Mazda, Mercedes-Benz USA, Mitsubishi Motors, Porsche, Toyota, and Volkswagen Group.
The conspiracy theories, of course, are already making the rounds. Detroit never really wanted electric cars; it is the EV1 all over again, the critics say. Obama just pushed them into it. In truth, there is no duplicity in the air on the subject of electric cars. Anyone familiar with the Volt and Leaf programs knows the effort that GM and Nissan have put into them. But what is in the air is fear.
Notwithstanding Ms. Clay’s comments, it is unlikely that Detroit has concluded that CNG or fuel cell technologies are more attractive than electric drive. Vehicle electrification remains the most promising way of reducing petroleum use in the United States. What the OEM’s are seeing, however, and probably more clearly with each passing day, is the problem of selling electric vehicles that have real limitations to U.S. consumers for prices that represent no bargain. An appeal to diverse future automotive technologies is a nice way of telling Washington not to make big bets on something that Detroit worries it may not be able to deliver.
The AAM’s misgivings about electric drive should be a wake-up call for the advanced battery community and for all advocates of electric drive. The strategy of building manufacturing and recharging capacity on the assumption that consumers will buy electric cars is teetering on the brink of failure. Even the idea of providing tax incentives for electric vehicles (which the AAM favors) is a political disaster waiting to happen. It will not be long before the general public starts asking why at a time of soaring federal deficits and rampant unemployment we are giving $7,500 tax breaks to purchasers of $100,000+ sports cars. Add to that a possible 200% excess capacity at the new government funded lithium-ion manufacturing plants and a painful day of reckoning may not be far off. A new approach to electric drive is clearly needed.
A new approach must recognize two things. First, that any effort to promote electric drive must be aimed at making consumers want to buy an electric car. This is not a simple thing. Electric vehicles have real limitations. Range anxiety is a serious issue that will not be addressed comprehensively anytime soon. Consumers will only buy an electric vehicle if we give them a good reason to do so. That reason can only be price. Environmental friendliness and great performance are good selling points. But only price will inform the EV purchasing decision of most Americans.
The second element of a new approach is that it must be aimed squarely at Middle America. Providing the public with low cost electric vehicles will require a huge subsidy in some form. That subsidy must be available to all Americans, not just to the rich. If we, as a country, are going to invest a lot of money in electric drive, everyone should benefit. Basing demand for electric vehicles on subsidies that favor the wealthy is not a sustainable strategy and any industry built upon it stands on shaky ground.
The PEVA proposes a prize for building an electric vehicle with a 500-mile range. I have a more modest proposal: Our goal should be to build an electric Peoples’ Car. That vehicle would be a 21st Century Volkswagen with an upfront price of $10,000 that runs on cheap electricity. The vehicle will have a limited range and will not be suitable for all applications. But if we can produce such a car, we will be giving consumers a vehicle they might want to buy. And at a minimum we will be able to tell American taxpayers that they got something for their money.
Just how we produce a $10,000 electric Peoples’ Car is a subject for a future newsletter.
