Should the U.S. Government support purchasing of electric cars

University Degree Business and Administrative studies

Should U.S. Government support purchasing of electric car?

Introduction

In the article “Is electric car era finally dawning in U.S.?” which appears on CBS News (June 20, 2011), the Correspondent Ben Tracy points out several controversial issues of electric vehicles (EV) nowadays. EV supporters believe that electric vehicle would become popular and help reduce the dependency on foreign oil. However, others argue that consumers are still concerned about electric car’s price and performance. They don’t see many benefits from it. [1] Although government rebate would make EV relatively more affordable and some electric car company claims that they cannot survive without government help, considering those electric vehicle’s current disadvantages, should EV business continue to receive government support and will the expense be worth the return? The following are three important perspectives (business, society and government policy) in terms of electric car’s future.

From the perspectives of business

The electric car has been defined as a high-risk environment-friendly new product and generally more expensive than regular gasoline cars. Because of the high cost of the giant battery packs, which can account for half the cost of an electric vehicle, most business knew well that it might not give any immediate . High cost batteries might not only make it difficult for electric car to turn a profit, but also make a tough sale for electric car. Even with federal tax breaks, some type of EVs will still cost almost twice the starting price of the similar traditional car.

However, manufacturing electric cars can be profitable. Historically, people have been making money out of electric vehicle for over 110 years [2], although there have also been bankruptcies in the electric vehicle business in most of those years, just like other high-technical industries at their era. As the supply of electric vehicles increases, mass production would make the cost much lower. According to Nissan, the first versions of the electric compact car LEAF won't make money, but the car will be profitable when the company begins mass-producing the battery units in 2013. [3] Similar patterns are expected to happen on other automobile companies.

Nowadays, the automotive industries are facing environmental burdens heavier than ever in the history. Although the electric cars are environmental friendly, the process of producing the electricity is believed to be a source of pollution. According to the , “while electric cars do reduce some CO2 emissions they also create more upstream emissions in the process.” Some may worry about that the electric cars are just shifting the pollution to the power plant. However, the fact is that batteries are one of the most highly recycled products in the country and 99% of them are recyclable. And it is always easier to control the pollution from a few large stationary facilities than from millions of individual small moving sources. For example, with the proper control of pollution, the battery factory at Sudbury has successfully made great progress in fixing pollution problem. [4] In addition, the use of electrical energy can be much more efficient than petroleum energy. It would be reasonable to assume that the total pollution can be reduced effectively if electric cars can take advantage of the surplus energy produced by the power plants. According to the World Resources Institute, even all electric cars are recharging from coal-fired plants, they will still reduce CO2 emissions in the country from 17 to 22 percent. [5]

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Others may argue that the production of new electric cars will reduce the assembly line job positions for the traditional cars and threaten the survival of many existing gas stations. On the contrary, the electric car industry would create considerable amount of new job positions in United State. 40,000 new jobs should be on their way by 2020 because of electric cars, according to the chairman of DTE Energy. GM has also invested nearly $1 billion in electric vehicles. They expect that plant is going to produce 40,000 electric cars for U.S. by 2013. That will also create more than 200 blue-collar and managerial positions, along with hundreds more assembly line jobs when the plant starts production. [6] In addition, New Jersey State has made effort to build a network of charging stations for plug-in electric vehicles. This new network will provide an economic boost to the state through creation of new green jobs in research and production of electric cars and electric vehicle infrastructure. [7] Generally speaking, the electric car industry would provide many Job opportunities for United States and more US dollars would stay at home.

From the perspectives of Society

Modern life would be impossible without cars. Today, the majority of cars are still running on rock oil. Depending on an individual driver's needs and short-term trends in the price of gasoline, the additional cost of an electric car may not be offset by its fuel savings in the following few years. The electric cars are also criticized for their performance and safety issue. Most EVs on today’s market are only designed for a 100-mile range and needed to be plugged in overnight to fully charge, which makes traditional car more convenient for customers. [8] Furthermore, the technology used to build electric cars is relatively new. Although these vehicles can be thoroughly tested, there can be unforeseen issues regarding their reliability, durability and maintenance. Electric cars run on high voltage electricity stored in batteries. Some believe that a malfunction could cause electric jolts of more than 500 volts, which can be fatal. If the electric vehicle is in an accident, it may be difficult for police and department to determine if the vehicle is safe to approach to save accident victims. [9]

However, battery technology has improved tremendously. If government can provide more help, the research and development of new batteries definitely would make the electric car safer and easier to maintain than ever. Moreover, petroleum, which traditional car has relied on since the 19th century, is a non-renewable resource. They can't be made again. Once they are gone, they're gone. According to , total U.S. oil consumed in barrels was over 19 million barrels a day in 2010. The United States has been one of the world's biggest consumers of oil and nearly 60 percent of all petroleum used in the United States is imported. With supply of petroleum become more and more limited, the gasoline prices would reach record highs. Soon the internal combustion engine may be a luxury that society simply can't afford. Therefore, Electric cars could help us spend less money at the pump and decrease our reliance on petroleum-based fuels.

The generation of electric cars also solves the following problem: regular cars pollute the atmosphere with noxious gases. Comparing to the internal combustion power we use for transportation today, the electric cars seem to make a positive impact on our environment. Unlike regular cars, electric vehicles create little or no local ozone emissions. Although minor emissions of sulfur would release when the batteries charge and discharge, electric car is still much less than the pollution caused by fossil fuelled cars. Therefore, the environmental advantages of the electric car should be quite obvious to everybody.

From the perspectives of governmental policy

Electric vehicles can be great for the environment, but the silence of those cars can be dangerous for pedestrians. To avoid those kind of accident happen, the government has took steps to set out regulations that will require these vehicles to emit sound in certain conditions to be sure that pedestrians can hear them coming. Already, the makes a sound to warn pedestrians when it is traveling at slow speeds, and the also has a driver operated chirping sound to warn pedestrians. [10]

More important, U.S. federal and state government has been played an important role in promoting electric car industry by providing subsidies. Two separate initiatives are being pursued in 2011 to transform the tax credit into an instant cash rebate. In order to promote the production and use of , several states have established incentives and tax exemptions for certain kind of electric cars. Since 2009, the EV Project has received approximately $230 million in grants and matches from the U.S. Department of Energy and its project partners. These funds are being used to place 14,000 EV chargers in 18 major cities across six states, including Washington. [11] Although governments appear willing to provide subsidies totaling billions of dollars, like many areas of government expenditure, subsidies programs are at risk of corruption and fraud that cost taxpayers millions of dollars. The more subsidies are available to industries, the higher the risk of corruption. However, if U.S. government commits reasonable resources to monitor these programs effectively, fraud and corruption still could remain under control.

Conclusion:

Despite of some disadvantages exist, electric cars still have more advantages for both business and society in the long term. For business, electric car industry can provide a lot of new opportunities for the business to meet increasing demand, fulfill the government environmental requirement and create more job positions. For society, saving petroleum, reducing travelling cost and less-pollution are attractive to everyone. While there are a few hidden dangers in electric cars, as the technology improves and human are educated on the potential hazards, the issues will diminish.

Although the need for renewable energy does not seem urgent, that’s what makes electric car the perfect time to invest. If the consumers receive incentives now, they would be more willing to purchase electric cars to support the manufactures. If electric car industry receives more subsidies, they would be able to conduct their research and development in a lower pressure environment and do not have to wait until U.S. faces an energy crisis. According The Energy Information Administration, at the current rate of growth, world oil consumption will rise 50% in the next 20 years. The alternatives of non-renewable fuel are becoming more realistic and more prevalent. Therefore, if U.S. is serious about maintaining or improving its dominant position in the world economic system, government should continue and increase investments to promote the development of electric cars.

Reference:

Is electric car era finally dawning in U.S.? In CBS news. June 20, 2011. Retrieved from http://www.cbsnews.com/stories/2011/06/20/earlyshow/main20072501.shtml
Peter Harrop. . In Living Clean With Car. Nov 04, 2011. Retrieved from
. High Battery Cost Curbs Electric Cars. The Wall Street Journal. Retrieved from
Keller, W. Recovery of Acidified Lakes: Lessons from Sudbury, Ontario, Canada. . Volume 7, Numbers 1-3, March 2007 , pp. 317-322(6)
Chip Gribben. Debunking the Myth of EVs and Smokestacks. In Electroautomotive. Retrieved from
Danielle Karson. Can Electric Cars Put A Jolt In The Job Market? In NPR. June 13, 2011. Retrieved from
Tom Johnson. Plug-In Electric Vehicles Still in the Slow Lane. In Energy & Environment .September 23, 2011. Retrieved from
. How long does it take to charge an electric car? In Tech & Transport Retrieved from
Sheila Robinson. Hidden dangers in hybrid cars. In personal safety and production. Retrieved from
Jeffrey N. Ross. 2011 Nissan LEAF Adds Noise to Warn Pedestrians. In Nissan Versa Car Buyers Guide. Retrieved from
Steve Duda. West Coast Walmarts Getting EV Chargers. In Electric Vehicles. November 30th, 2011. Retrieved from http://www.earthtechling.com/2011/11/west-coast-walmarts-getting-ev-chargers/