The Cost Of Electric Cars


The Washington Post has an article today about the charging station obstacle standing in the way of the much anticipated electric car revolution. Of course, this problem will likely be solved just like the electric car problem itself: the government will end up footing most of the bill. And that's what I found most notable about the article -- the incredible investment that the government will have to make for electric cars to happen in the near-term. I find it quite troubling.

The Post explains:

On Monday, a coalition of companies that includes Nissan, FedEx, PG&E and NRG Energy issued a report calling for billions of dollars in government aid to support the transition of the U.S. vehicle fleet to cars that run on batteries.

The group is asking for $124 billion in government incentives over eight years including $13.5 billion for tax credits to build public charging stations.

And realize: consumers will still, then, have to pay for those cars -- more than they do for gas guzzling vehicles. A while back, I noted this problem of additional expense for the upcoming Chevy Volt. Electric car owners will also still have to pay for the charging, which may or may not be cheaper than gasoline turns out to be.

Those costs are on top of the $124 billion more that these companies need, for just eight years -- over and above tax incentives already in place for consumers.

I think the idea of high-tech electric cars whizzing around, emitting less carbon sounds pretty cool. Yet, I just can't help but ask: is it really worth the cost right now when the technology is so primitive?

I'm not so naïve to believe that it's unusual for industries to rely on corporate welfare in order to thrive. Just ask farmers, the auto companies or Wall Street. The government doing its part to make sure U.S. business thrives is not novel.

What I find a little more unusual is that the government wants to sort of force technology's hand in this case. The general course of technological innovation is that it starts extremely expensive, so few can afford it. But in time, further advancements are made, bringing down costs. Eventually, that technology becomes cheaper and widespread.

Such incredible government investment in a technology that can't walk on its own seeks to sort of skip a step. But here's the problem: some technology takes longer than expected to become cheap, and other times it turns out not to work at all. What if either of those is the natural path for electric cars?

For example, what if the rare earth metals required to make electric car batteries turn out to be scarcer than we think? The price may never come down to where the technology can be utilized by the masses. Or what if consumers just turn out to hate electric cars?

Products utilizing emerging technology, really more than any other products in the market, need to follow their own path, because they're far less predictable than established products. For that reason, I've very concerned with the government investment in this technology. I might be less concerned if we were talking about a few billion -- but $124+ billion to start just seems insane for a technology with a future that's still uncertain.

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Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.
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