Are Electric Cars Friends?*
As instability in the Middle East pushes oil prices past $100 per barrel and gasoline prices toward $4 a gallon in the U.S., the need to find better ways to fuel our vehicles has never been more urgent. Some advocates see electric cars as the most promising solution and are urging policymakers to ensure their widespread use through federal subsidies or regulation, such as a requirement that all automakers offer a certain percentage of plug-in vehicles in their fleets. Skeptics argue that electric cars are too expensive, that taxpayer money should not be used to stimulate the purchase of luxury goods, and that market forces alone should determine the future of electric cars.
We believe that the right policy lies between these positions and that there is a clear path to test whether electric vehicles can be viable on a mass scale. The U.S. Department of Energy — in partnership with automakers, car dealers, electric utilities, universities, and local governments — should coordinate a national demonstration program of 500,000 to 1,000,000 electric vehicles in 10 to 20 designated communities from coast to coast. That was the chief recommendation of a recent in-depth study, in which we participated, that was conducted by a group of national experts on electric vehicles. These experts said that by concentrating the many pieces needed to create a viable market for electric vehicles — a variety of cars and trucks for lease and sale, a robust network of charging stations, state and local policies to make home recharging easy — these demonstration projects would give the country a clear sense of whether electric vehicles will play a significant role in the nation’s transportation future.
At first glance, the market outlook for electric vehicles seems bright; when compared on an energy-equivalent basis, electricity prices are 60 to 80 percent lower than gasoline prices. Yet the future of electric vehicles is far from assured. Will the high price of batteries come down sufficiently as economies of scale kick in? Will oil prices fall again as new reserves and drilling technologies are discovered, as has happened with natural gas? Will other technologies — such as hybrid cars or vehicles powered by natural gas, ethanol, or hydrogen — win the competition against electric cars?
Such questions may not be answered in the near future, but a well-planned national demonstration program for electric vehicles can help determine the promise, limitations, and costs of this technology. And once the demonstration is over and the facts gathered and disseminated, electric cars should be forced to compete in a technology-neutral marketplace where other promising alternatives are also considered.
*With apologies to Gary Numan.