This seems fairly obvious, doesn't it? The subsidies are intended to help spur the adoption of EVs, and if they are withdrawn, that adoption would certainly slow if not stop entirely because a typical EV costs about twice what a comparable conventional car costs.
So the question is: What is it worth for the government to subsidize EVs over other cars?
Will the country save $XX dollars in healthcare costs over the life of that vehicle? Is the difference enough to subsidize an EV over a fuel-efficient conventional car or hybrid?
What would it take for a consumer to make the conscious decision to buy an EV at $40,000 over a comparable car that gets 30 mpg for $20,000?
The goal of the government subsidary is to get the ball rolling. As popularity goes up; more products will come into the market. Competition drives price down. For EV market, there is at least 1 more factor which is charging station, or in general, infrastructure support. I believe US government is looking for better infrastructure being build by cities and by gas station owner. The challenge is with so many different type of charging specification, which one shall be built?
The EU or Asia market is different. The public transportation is very matural. A car is either luxury or leisure. Charging station at home will normaily be enough. No doubt, adding charging station by the parking meters or in the parking garage wouldn't be too much of a challenge in a well populated region.
Remove the subsidies! We can't build more nuclear plants, are loathe to drill for oil (one of the most condensed forms of solar energy), are freaked by fracking, and condemn coal plants for their emissions. Yet, we act and think like EVs are the solution. The electricity to top up all those batteries has to come from somewhere, and most likely it'll be a coal-fired plant, fed by coal mined and transported by massively inefficient and carbon-burning trucks.
Patrick: You say remove the subsidies, citing the strain on energy resources, but don't present the alternative. Transit? Bicycles? Should only the wealthy have cars? Seriously, we need new thinking -- what's your vision of transportation that makes sense?
(I ride a bike 3 times as much as I drive, and take a ferry part-way to work -- although it costs as much as driving and takes twice as long. If I had a better idea, I'd be using it.)
Hey Tom, if it were all about efficiency, a smart car, or our old favorite, the Toyota Corolla, would be a better fit, My overarching point though is to let the free market decide. We want to lower emissions, but we also need to keep the economy moving. The market will respond to both over time.
I understand that view, Patrick. But I'm not sure I agree that all government subsidies are inherently bad or that the market always chooses what is best for our society.
Two examples; If the Chinese heavily subsidize their industries (they do) and US manufacturers must compete, is that a fair game?
If it's in society's interest to shift to more energy-efficient electric cars over gas burners, is the government wrong to give the electric car makers a jump start? (pun intended)
I would agree on this: you can only subsidize to a point. If the public simply doesn't want to buy the product, there's no point in supporting it forever. And I don't think it's a bad idea to have automakers repay some of that money if sales take off.
Rich noted: [China's industrial subsidies are] certanly a bad deal for the Chinese populace (who are footing the bill), but a great one for U.S. consumers who are able to buy goods at below-market prices.
Yes, in terms of spending by the US middle class. But, partly because those manufacturing jobs are in China, the American middle class is getting poorer and has less to spend. This is a troubling cycle, economically speaking.
On the other hand, it's a good deal for the Chinese middle class, which is on the rise. Twenty years ago, who thought we'd ever hear "China" and "labor shortage" in the same sentence? Or see Detroit -- the buckle on America's industrial belt -- file for bankruptcy?
"...the American middle class is getting poorer and has less to spend. This is a troubling cycle, economically speaking."
Yes, the U.S. is going through a prolonged deleveraging process, which can be attributed to years of overspending and increasing debt (at both the individual and government level) that couldn't go on forever. Detroit is another symptom of this. True, it had to deal with a declining population and tax base (for which it was not entirely blameless), but never addressed the problems in any meaningful way until it was too late.
Any industry cannot remain forever under the support of govt subsidies. If a technology cannot become self-sustainable in a reasonable amount of time then it better be going out of circulation and back to drawing board
Well said, Prabhakar. The subsidy is intended to be a push-start for these cars. Not a permanent solution to sales. Clearly the price must come down as production ramps up, assuming demand materializes.
Subsidies won't last forever, were never intended to last forever and the effect will depend on when the subsidies are withdrawn. The article implies the only reason anyone buys an EV is the subsidy and that there will be no technical advancement to make subsidies less important and eventually unnecessary. Use of the word "bubble" is just click baiting sensationalism.
So mission accomplished, you got me to click on a pointlessly inflammatory article.
Barring a major improvement in the battery technology, what happens to EVs depends on what happens to the alternatives. Liquid fuels are unlikely to go down in price or up in energy content. EVs need more range and quick refueling. Quick refueling probably means battery swap and that would require standardization and infrastructure.
I see three drivers of PHEV / Hybrid / EV Sales: 1/ tax credits to consumers, 2/ regulatory requirements for fleet miles per gallon (MPG) ratings, and 3/ consumer demand. While direct tax credits to consumers may wane (I hope I get my PHEV first), regulatory requirements to increase fleet MPG will cause car manufacturers to sell such vehicles at a competitive price. This actually is in their long term interest because once consumers are convinced that the experimental models are reliable and achieve the reported gas savings, they'll be motivated to buy and economies of scale can begin to kick in. I bought my hybrid 8 years ago, the premium price paid for itself in 18 months but my peers were reluctant to follow suit. Now, nearly a decade later, hybrids are well accepted and commonly observed in the New York City taxi fleet. PHEV technology is now the experimental edge. We're getting there. If gas prices in the USA reflected global prices (with the increases paying for infrastructural improvements and not gasoline company profits), the process might move ahead a little faster.