Washington Post: Government Subsidies for Electric Cars Are Corporate Welfare


Tuesday November 2nd, 2010   •   Posted by David Theroux at 2:02am PDT   •  

In a new article in the Washington Post, “Obama’s electric-car cult,” Charles Lane reveals how the massive subsidies for electric cars by the federal government “serve no particular purpose, environmental or economic”. The article cites:

[A] new, 72-page report by J.D. Power and Associates, “Drive Green: The Global Automotive Industry Outlook” that confirmed, in devastating detail, what many other experts have found: Electric cars still cost too much, even with substantial federal subsidies for both manufacturers and consumers, to attract more than a handful of wealthy buyers—and this will be true for at least another decade.

What little gasoline savings the vehicles achieve could be had through cheaper alternative means. And electrics don’t reliably reduce greenhouse gas emissions, since, as often as not, the electricity to charge their batteries will come from coal-fired plants.

The Obama Energy Department has suggested that, with the help of federal money, manufacturers can ramp up mass production and bring the price of electric-car battery packs down 70 percent by 2014 – thus rendering the cars more affordable.

But J.D. Power is skeptical. “Declines of any real significance are not anticipated during the next 5 years,” the report notes, adding that “the disposal of depleted battery packs presents yet another environmental challenge.”

Nor are industry and government close to resolving the lack of a nationwide recharging infrastructure—or the vehicles’ poor performance in cold weather or on hilly terrain.

Fine print on the Volt ad promises just “25-50 miles of electric driving in moderate conditions.” Translation: Much of the time the car will be running on gas, just like ones that cost far, far less than the four-seat Volt’s price of $33,500 (after a $7,500 federal tax credit).

In short, the Obama administration’s commitment of $5 billion in loans and grants for electric cars is the biggest taxpayer rip-off since corn-based ethanol. It benefits no one but a few well-to-do car buyers and politically connected companies. Any “green” jobs these rent-seeking firms create will vanish when consumers reject their products and/or the subsidies cease. . . .

For a president who claims to make policy based on “facts and science and argument,” lavishing subsidies on electric cars is an intellectual scandal. The J.D. Power study is hardly an outlier. It jibes with similar work by Deloitte Touche, Boston Consulting Group, Roland Berger Strategy Consultants, professor Henry Lee of Harvard’s Belfer Center for Science and International Affairs, and the Massachusetts Institute of Technology’s Energy Initiative. . . .

For the full article, please click here.




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