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Why Plug-In Vehicles Are a Luxury No Nation and No Investor Can Afford
JP: I’ve been away from the blogosphere for many months. Good to see you’re still at it, but sorry to see that you’re still having to contend with the same counter arguments. Thanks for the insights on ENS and XIDE.
At risk of mentioning something that’s come up before… if you've never seen this 2008 paper, you should; you’ll love it: The History of U.S. Alternative Energy Development Programs: A Study of Government Failure.
Basically the author, Peter Z. Grossman, an economist at Butler University, reviews the history of our government’s attempts to insert itself in the business of energy innovation, going back to nuclear power under Pres. Eisenhower, including synfuels, nuclear fusion, clean cars, etc). The initial fanfare and optimism of these projects were no less than we’re getting now about plug-in vehicles. Yet, that history is one of consistent failure by the government to achieve anything commercially viable at all while spending billions in tax payers’ money in the process.
Particularly germane is his review of the Clean Car Initiative of 1993, later renamed the Partnership for a New Generation of Vehicles (
) Consortium, a supposedly model, public-private arrangement involving the big three US automakers. Like most of government energy projects, the purpose was to “correct the market’s failure" to incentivize automakers to create commercially viable, innovative cars free of undesirable externalities (high GHG emissions, low mpg, high cost, etc.). $1.5 billion later, high-mileage prototypes of gas-electric hybrids were indeed created, based on basic research from the 70s (Victor Wouk, et al; the first Federal Clean Car Initiative Program and the Electric and Hybrid Vehicle Research Development and Demonstration Act 1976). But they were too expensive and still too inefficient to be commercially viable, as was finally admitted in 2001; PNGV (apparently) died unceremoniously. US companies were unwilling -- then as now – to work on new technologies without government support.
Meanwhile, Toyota and Honda, excluded from the PNGV Consortium, on their own initiative had begun risking R&D money on hybrid technology without government timetables or benchmarks set by policy makers, but guided by the (correct) market perception that fuel prices sooner or later would inexorably rise. Fast forward, and the millionth Prius sold in 2008, and a growing hybrid market was established. But PNGV died. Government incentives masquerading as market forces failed to achieve what market incentives – based on a correct reading of market forces – did.
Today, as you keep pointing out, our government thinks we need to leap frog over gas-electric hybrid technology and jump straight to the next BIG THING, presumed to be all-electric plug ins. Grossman says, promising miraculous new technology continues to be effective politically, no matter whether it is actually achieved. Underestimating the technological challenges is a bad enough mistake. Evoking “Sputnik moments” and the Apollo project only adds the additional error of failing to distinguishing between demonstration projects and commercial development.
In short, based on the abysmal failure of government-sponsored energy initiatives to produce commercially viable results, President Obama’s newly repeated goal of a million EVs “on the road” by 2015 is another strong sign that EVs are a questionable investment. When combined with the failure of any public discourse other than your blog to see this emperor’s new clothes, it is downright frightening.
Keep up the good work. Maybe someone in the government is listening.
Feb 14 02:48 PM
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