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Electric Car Subsidies As Handouts For the Rich
Atypical Geek writes "Charles Lane, writing for Slate, argues that subsidies for electric cars are an example of 'limousine liberalism' — a lavish gift for well-off Americans to buy expensive cars for the sake of appearing green. From the article: 'How rarefied is the electric-car demographic? When Deloitte Consulting interviewed industry experts and 2,000 potential buyers, it found that from now until 2020, only "young, very high income individuals" — from households making more than $200,000 a year — would even be interested in plug-in hybrids or all-electric cars.'
Lane also takes issue with the billions of dollars in subsidies offered to automakers for the manufacture of batteries, arguing that research (warning, PDF) concludes that the money will not help in jump-starting the economies of scale that will drive down prices. At least, not as much or as quickly as the President has argued."
The billion dollars are there to drive research for better technology, which hopefully will drive down prices. And when compared to subsidies that other industries get (e.g. the big oils), that few billion dollars is just a drop in the bucket. Look, a few $B may be a lot of money for an individual, but when talking about a whole industry, it's not a lot at all. If anything, it's underfunded.
Rebates are stupid. It's the most regressive tax spending possible. If I can afford a large portion of something, I get the rest for free? If I can't afford that much, I get nothing? Um, something is wrong here.
If the government wants to encourage electric cars, why doesn't it buy them? Switch the entire damn postal service over to start with. Give grants for local comunity to switch their police cars and mass transit over.
If corporations are people, aren't stockholders guilty of slavery?
Most new technologies end up in the hands of the rich first, mainly because of the costs of production. Over time, if the technology ends up proving itself and becomes cheaper to produce, it starts to permeate itself into the rest of the market, it's just simple economics. Just look at the PC, most families couldn't afford one until well into the late 90's.
I don't know where they are getting their demographics from, but I have many examples where they are wrong.
My first Prius was purchased around 2003 and was the older model. I was not super high income at the time (100k per year). Cost came in around 26k I think and I was paying $400 per month for it. I would think any car with a price point below 30k is not being marketed to the young and rich.
I sold my first Prius to a gentleman from Southern California who was an appraiser. He most certainly did not seem young or rich either, but needed it for the lower operating costs due to the high mileage he was going to put on it.
Now, I did purchase a Hybrid Highlander with a price tag of around 50k about 3 years afterwards. A luxury purchase to be sure, but once again, I did not represent anywhere near 200k per year in income when I made that decision. I just wanted my SUV back while also reducing my consumption of oil.
In addition to my own personal experiences, I know at least a dozen other hybrid owners personally. With one or two exceptions, none of them are exceeding 200k per year (even with combined incomes).
Just ordinary working professionals. So I would say out of the 15 or so hybrid owners that I know of, maybe 10-15% meet the articles assumptions about hybrid car purchasers, or plug in hybrids.
I realize the article is not talking about hybrids, but pure electric, but the Toyota model is only 35k from what I have heard. Far from a Tesla, or some other luxury hybrid or electric (such as the Hybrid Highlander I owned).
Sounds to me like this article is creating an issue that does not exist to attack "limousine liberalism". I will tell you this... it's about fucking time there was some subsidies for electric/hybrid cars in price ranges below 50k. Unless we just want to forget the nearly $1 billion dollar subsidies for the Hummer?
They're claiming to be able to predict vehicle buying patterns 10 years in advance, not just the technology, but the income level of customers who will buy cars that won't even be on the drawing board for 5 more years.
Then it recommends diverting the flow of money spent trying to improve EV's into improving gasoline powered vehicles. Wow, that solves all our problems!
This sentence no verb.
These cars make no economic sense because the cost adder for the hybrid/plugin drivetrain never pays for itself in saved fuel compared to a reasonably-priced econono-box like the Mazda3 or Ford Fiesta. Therefore, only wealthy JEWS wishing to appear green to their snobby rich JEW social elitist friends will buy these.. It's easy when you don't work for your money and have no sense of value.
It's funny how you can just go on and on with any kind of delusions as long as you remember to use the magic "liberal" word. I changed your quote to show that it's the same as classic anti-semitist stuff: just say that they have lots of money, don't have to work, and form strange networks and you don't need to base anything on facts.
Also notice how these "liberals" should buy really small fuel-efficient cars instead, but so-called conservatives can drive whatever they want. Also notice how it is implied that no one "conservative" is ever a slacker born into wealth. After all, that has never happened.
I'm not from the US. Where I'm from, there's no liberal/conservative dichotomy. This means we on average have a better grip on reality. Of course, the article with its "limousine liberal" thing is a huge trollbait in itself, so nothing good will result.
Electric cars make no economic sense at this time, which is why we don't drive them.
Electric cars would make economic sense in a truly free market. Unfortunately, the market is quite distorted.
There are huge externalities with fossil-fuel vehicles—air pollution, climate change,oil spills, etc. These are effectively subsidized by everyone, lowering their price far below what it should be.
The Nissan Leaf is scheduled to debut with the price tag of around $32,000. I wouldn't call it cheap but I wouldn't call it a prohibitive luxury good. With federal and state tax subsidies, it makes it cheaper and a working incentive to go electric
Meanwhile a Civic will cost you around $20k and can drive more than 100 miles without waiting hours to refuel.
Even if you don't need to travel long distances, $12k will buy you a lot of gas.
The thing really needed is more research, which hopefully will *really* drive down prices.
You mean like the DOE program for battery R&D? Granted it is only a third of a billion per year, but it's not like they're not funding R&D. Besides, if the DOE does it, the car companies won't have to do as much redundant R&D.
So I am curious, did Charles Lane have a whining rant to publish in 2002 when Bush signed off on a $30,000 tax credit for monster trucks?
And by that, I mean that when the government offers a $5K rebate on something, whomever is selling that something raises the price by $5K. The consumer doesn't actually get that money. Whenever the government artificially increases the demand for something, the supply artificially shrinks and drives up the price by a corresponding amount.
This is why college costs $35-50K/year now - there's so much cheap government money to pay for it that natural market forces have made it all but impossible to afford except for either the very wealthy or the very poor who qualify for the government money.
Those of us stuck in the middle end up graduating with a "second mortgage."
My first CD writer cost $45,000(!) and came in a rack with its own PC - and the blank disks were $60 each when bought in quantities of at least 100. Clearly this isn't going to catch on.
My first home network connection was a 110 baud acoustic coupler that cost $250. 6 months later I upgraded to a 300 baud modem that cost the same amount. It takes an hour to download a 10KB file from my local BBS. And they call this an improvement?
My first Windows mouse cost $220 including the board that you needed to run it in a PC. Damn, this will NEVER, EVER catch on.
And that double speed NEC CD reader that I bought for $450 was a real bargain.
Oh, and I remember when RAM switched from core to semiconductor memory, and the price came down to a million bucks per megabyte. We thought we were in heaven when our company bought 3 systems with 2 megabytes each.
I can come up with many, many more examples of costs that have dropped incredibly over time. I don't know if electric cars are in that category, but I think there's an excellent chance that they are.
Money spent on R & D is not money wasted. Yes, you have to be certain that there's a real chance of success, but if you wait until that chance is 100% then someone else will have already done it.
Exactly which liberals told anyone except the very rich to make any sacrifices?
The Nissan Leaf is scheduled to debut with the price tag of around $32,000. I wouldn't call it cheap but I wouldn't call it a prohibitive luxury good. With federal and state tax subsidies, it makes it cheaper and a working incentive to go electric
Meanwhile a Civic will cost you around $20k and can drive more than 100 miles without waiting hours to refuel.
Even if you don't need to travel long distances, $12k will buy you a lot of gas.
Lets run some number. At $4 a gallon, $12,000 will by you 3000 gallons. At 30 miles per gallon that will get you 90,000 miles. So you will need to drive a Nissan Leaf for 90,000 miles to break even and that's not including the cost of electricity to recharge it, the cost to replace the batteries after they lose their capacity or the cost of rental cars when you need to make trips beyond the 100 mile range of the leaf.
I don't know what data Deloitte Consulting was looking at, but I follow market research on EVs as part of my job, and it's not "Young people wealthy people" who are generally determined to be the most likely buyers for electric vehicles. Like with hybrids, it's educated, middle aged, upper-middle class people (EV buyers average slightly younger, but not much). I could conjecture that they primarily looked at the market for Tesla Roadsters to reach their conclusion. But the Tesla Roadster is nothing like, say the Nissan Leaf.
"99 dead duelists of Dios on the wall. 99 dead duelists of Dios! Take one's ring, pass it around..."
Isn't it a little disingenuous to compare a Prius to a bottom-of-the-barrel car like the Ford Fiesta? Why not compare apples to apples, like a Prius to a Honda Civic/Ford Focus, or a Ford Fusion to a Honda Accord?
"...always new atoms but always doing the same dance, remembering what the dance was yesterday." -Richard Feynman
Just curious, how much of that was government subsidized? This isn't against your post, but a number of posts above seem to think government subsidies for early-adopters are going to work regarding electric vehicles. Instead I think it's clearly a demand issue. As your post does point out, companies desperately needed storage space and the ability to transfer data from point to point quickly. They were willing to shell out $$$ for the tech to do it. This seems clearly different, as now we're trying to replace an old and established industry with a new one, whereas in your examples, these were emerging technologies from an emerging industry.
That economies of scale is a red herring argument. Right now electric cars are expensive because the basic technology is expensive.
The technology is only expensive because it is not yet done on a mass scale. None of the materials involved are prohibitively scarce. None of the manufacturing processes are grueling or unusual.
Bringing more buyer allows more efficient methods, factories, and basic econometrics of scale to be applied.
That being said, giving tax-break subsidies to buyers is absolute the wrong way to go. Just as all college tuition rises to absorb the available scholarships, EV prices will remain high as long as there are funds or tax breaks available.
However, waiting for more research has never proven to be a cost effective method either. How long would we have waited for a Droid-X or an iPhone if someone wasn't willing to buy a those old Analog Motorola half clam shell phones?.
You have to field something that is less than perfect in order to obtain revenue, attract customers, develop support infrastructure, and build manufacturing capacity.
Nothing in the real world is developed beyond prototypes in the lab before it is marketed. Government funded research is best used as seed money. We are well past that stage now.
Progress is slow because everyone is sitting on their patents.
Sig Battery depleted. Reverting to safe mode.
Tesla Roadster production began in 2008 MSRP- $109,000
Chevy Volt production began in 2010 MSRP- $41k
Nissan Leaf production began in 2010 MSRP- $32.8k
With only three models of electric vehicle on or close to the US market, it'd be difficult to make a call as to the impact of the subsidies. Considering that the $7,500 credit brings the cost of the Volt and the Leaf from the cost of a new luxury vehicle down to the average cost of a new mid-end vehicle, it definitely looks like they could make the difference for many individuals considering buying one.
These certainly aren't 0-emission vehicles (grid power isn't 0-emission), but it shifts the economies of efficiencies so that relatively small gains at central facilities can have tremendous trickle down impact. The pressure this will create to shore up infrastructure will drive the creation of local jobs and local expertise in the long run while reducing our reliance on foreign sources of power. Win-win, I'd say.
Why did you think that we pay less than $3/gallon for gas and Europeans pay $7-$8.
As many others have answered, it's because the Europeans distort the market (via taxes) even more than we do. That's not particularly interesting; it's commonly known.
The more interesting question is, now that you know that, whether you'll refrain from using that example again? I suspect you won't, and that you will continue to make that point when you feel it will score you a point in an argument. Many political opinions don't change in response to new information.
"In California, where something like 90% of electricity is generated from burning natural gas, electric vehicles in California would essentially be running on natural gas."
Umm, no.
http://energyalmanac.ca.gov/overview/energy_sources.html
Natural Gas 46.5%
Nuclear 14.9%
Large Hydro 9.6%
Coal* 15.5%
Renewable 13.5%
Where California's NG comes from
In State 12.9%
Canada 22.1%
Rockies 24.2%
Southwest 40.8%
How much was earlier US high tech driven by Federal subsidies? Most of it. Who were the early adopters? Bank home offices, process controls at big refineries, and defense/aerospace... lots and lots of defense/aerospace. Even if it was used for commercial aerospace, only by the fat of defense work were Boeing, Bunker Ramo, CDC, Convair, Douglas, HP, Hughes, IBM, Lockheed, Raytheon, TRW, et al, able to fund the purchase and/or development of ever more advanced automated controls, data processing, and networks.
Given how the US economy has been structured since the mid-Depression, I doubt we'd be having this electronic discussion, or even know why we weren't having it, without the Federal intervention that helped get the ball rolling.
It only seems different, this time, because this sort of automotive subsidy isn't driven by a defense or NASA contract.
Luke, help me take this mask off
Gasoline at least cuts out the middle man, by allowing fairly direct use of the energy of burned fuel.
However small internal combustion engines are horribly inefficiant. Plus they only deliver usable power and efficiancy and can't deliver torque at stall at all so a complex drivetrain is needed to go between the car and the wheels.
IF the electricity is coming from CCGT plants then i'd expect the increased efficiancy of the power plants over an internal combustion engine to make up for the transmission, distribution and storage losses. Coal power plants are less efficiant but coal-oil conversion isn't exactly efficiant either.
The best pursuit out there is that of a hydrogen powered vehicle, that runs with water as it's fuel.
Umm making water into hydrogen would use up more energy than you would get from burning it so it's only worth it if you are storing the hydrogen (essentially using it as a form of battery).
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
"Even if the car is electric, they still will not save money in terms of the total cost of ownership, over buying a regular old car that's fuel efficient. Look at things like the Chevy Volt versus a Toyota Corolla. Even assuming no gas, ever, the Corolla is still more affordable."
Same could be said about the Prius but look how well they're selling.
2010 Prius MSRP = $22800 to $28070
2010 Corolla MSRP = $15,450 to $20,150
Price difference = $7350 to $7920 = $7635 average
Prius mpg = 51/48 = 49.5 mpg average
Corolla mpg = 26/34 = 30 mpg average
195,000 miles / 49.5mpg x $3 average per gallon = $11,818 dollars
195,000 miles / 30mpg x $3 average per gallon = $19,500 dollars
$19,500 - $11,818 = $7682.
So basically, you'd have to drive 195,000 miles in a Prius to break even compared to the price of a Corolla. Until you surpass 195,000 miles the Corolla would have saved money.
This also doesn't figure the interest you could make on $7,682 while you're driving your Prius to reach 195,000 miles. If it takes 10 years to reach 195,000 miles that $7,682 at 5% interest would be $12,513.17.
In summary, the new Corolla will always be better than the new Prius. Of course this is assuming you're deciding between the two cars comparing gas prices only, not size of vehicle, status, smugness, etc.
my karma will be here long after I'm gone