October 25, 2012
By Bernard L. Weinstein
Simply put, what’s holding back electric cars is a lack of demand.The Chevy Volt has been a marketing bomb, despite the $7500 Federal income tax credit, and the Nissan Leaf has racked up fewer than 12,000 sales worldwide this year—suggesting it’s not just Americans who are generally uninterested in electric vehicles.
Here again, we have another example of government policymakers betting taxpayer dollars on an unproven technology without doing any meaningful market or cost analysis. For example, in 2010 Nissan received a $1.4 billion loan from the Department of Energy to help it install enough capacity to produce 150,000 electric cars and 200,000 batteries at its Smyrna, Tennessee plant.Even with miniscule sales, Nissan—a huge global corporation—should be able to repay the loan.But that won’t be the case with A123 Systems, a battery manufacturer with a $249 million Federal grant, who filed for bankruptcy last week.
It’s true the average American drives only 29 miles per day.But the average doesn’t matter.Even if I’m taking only one road trip a year, I’m going to drive a vehicle that can cover the distance without subjecting me to “range anxiety.” A high purchase price, even with the tax credit, and concerns about reliability also make the prospects for electric passenger vehicles problematic.
Rather than spending billions on electric cars, the public interest would be better served by investing in the infrastructure to support natural gas powered vehicles.America is awash with natural gas as a result of the shale revolution.Production has become so prolific that prices have dropped 75 percent from their highs a few years ago.Indeed, prices are so low that gas is being flared at well sites and rigs are moving to more productive oil plays.
An energy policy focused on natural gas as a vehicle fuel would represent a sounder investment of taxpayer dollars than electric cars while at the same time reducing America’s oil import bill.Coupled with a push to export liquefied natural gas, prices would then recover to levels that can sustain the shale gas revolution.What’s more, building natural gas vehicles and the requisite fueling infrastructure would create tens of thousands of new domestic jobs, far in excess of the numbers currently supported by electric vehicles.
What role should Washington play to boost the number of electric cars on the road? None.