Today's Electric Car Deals Will Move Tomorrow's Transportation Sector

Electric cars are taking some time to power up. But for how long and do they actually have a permanent place in the domestic transport sector?

It’s a wise investment not just for the American economy but also for the global environment, the White House says, adding that the nation spends trillions on the importation of oil. It acknowledges that the market for those vehicles is slow to develop, noting that there is a lack of infrastructure and that the cars are too expensive relative to the easy-to-fuel gasoline-powered cars. 

To that end, public-private partnerships are now working to facilitate the electric car and advanced battery technologies, says Energy Secretary Steven Chu, who recently spoke before the Washington Auto Auto show. Such collective efforts, for example, have resulted in the doubling of energy density for lithium-ion batteries that would have the practical effect of reducing cost another 50 percent while increasing the driving distance with no “fuel” to 300 miles, says Chu. 

The energy secretary goes on to note that President Obama’s goal of getting 1 million electric cars on the road by 2015 is likely unrealistic. Obvious reasons: the vehicles are expensive while their driving range is limited, which for now is hard to master given the lack of “filling” stations. 

Those market dynamics have impacted electric car sales: Nissan has sold about 10,000 of its “Leafs” here while internationally, it has sold 50,000, say news reports. GM, meanwhile, sold last year about 24,000 “Volts.” At the same time, “Better Place” is struggling. Its networks are employed to change out batteries as opposed using batteries that need to be “filled up.” 

All this comes atop the declared bankruptcy in 2012 of A123, an electric car battery maker. It’s troubles have been less about its technologies and more about the economics of car buying. Moreover, it had a contract with Fisker Automotive to supply $100,000-plus luxury electric cars. However, a glitch caused A123 to recall those batteries. 

For its part, the Obama administration has been subsidizing the electric car market by giving buyers tax credits worth as much as $7,500, as well as by awarding companies loan guarantees that are intended to be repaid. Meantime, it has provided outright grants totaling $2 billion. 

Environmental Questions

Advocates say that the administration is trying to get past the dinosaur age of fossil fuels and into the modern realm. The incentives are necessary to grow the market and to create economies of scale that would improve technologies and decrease prices. Consumers would then be attracted and the subsidies could cease. 

But it is not banking exclusively on the all-electric car. It has interests in array of alternatively-fueled vehicles that range from those that can run on natural gas and even hydrogen, not to mention the hybrids that use both electricity and gasoline. The administration expects that the advanced battery market to expand globally from $5 billion to 2010 to $50 billion in 2020. 

“Electric drive cars and trucks reduce air and other pollutants and reduce fuel costs,” says Brian Wynne, president of the Electric Drive Transportation Association. “Powering a vehicle with electricity can be done at a fraction of the cost of gasoline. And while we are establishing a new energy security, we will also be growing our global competitiveness with development and manufacturing of advanced vehicle technologies.”

Skeptics of the federal spending are arguing that the market knows best. The internal combustion engine has survived all of these years not because of a lack of creative thinking but because it works better than anything else. Cars that run on gas can travel much longer distances than those that are powered by electricity.

Further, two Oxford University scholars have tried to address whether the electrification of the automobile would be environmentally beneficial. Reed Doucette and Malcom McCullocha authored a paper that says battery electric vehicles have the potential to reduce carbon emissions but that if the power is generated from coal, then that goal could fall short. They expressed specific concern about China and India, which are heavily reliant on coal. ? ?

“Therefore, unless countries with power generation of a high CO2 intensity significantly decarbonize their power generation, battery electric vehicles may only slightly reduce or in some cases may even increase the CO2 emissions coming from automobile transport,” they say. "To construe this as an argument against electric vehicles adoption is to miss the larger picture. Instead, this should be viewed as an added incentive to reduce the CO2 intensity of the power generation mix.” ? ?

The all-electric car market is slow to accelerate, although that does not spell doom and gloom for every alternatively-fueled vehicle. Obstacles abound, not the least of which is the legacy automobile using combustion engines. But today’s car deals are certain to move tomorrow’s transportation sector.

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