Two Hundred And Twenty Billion New Reasons To Be A Plug-in Vehicle Skeptic
On April 8th the Electrification Coalition, a recently formed industrial lobby comprised of top-level executives from Cisco Systems (CSCO), Aerovironment (AVAV), NRG Energy (NRG), Rockwood Holdings (ROC), Nissan Motors (NSANY.PK), FedEx (FDX), A123 Systems (AONE) and a gaggle of private companies released a slick but wholly unenlightening white paper titled, "Economic Impact of the Electrification Roadmap." I haven't seen so many finely sculpted curves and unspoken assumptions since the tax shelter forecasts of the early-80s. The only clear message is that electric drive will be little more than a footnote in automotive history unless the powers that be agree to provide $121.1 billion in direct subsidies and incur another $100 billion in unspecified budget deficits over the next decade. Then, if everything goes according to plan and nobody develops a better personal transportation alternative, we can start thinking in terms of cost recovery and potential benefit to society.
I'd love to be able to provide an in-depth analysis of the assumptions, but they're conspicuously absent. For me, that fact alone makes the analysis about as worthwhile as a call to the psychic hotline. While I hate to be a stick in the mud about history, I think it's always worthwhile to remember other transportation technology schemes conceived in the halls of government and sold to investment markets as the next big thing, including:
|25 years ago||Methanol|
|15 years ago||Electric Vehicles|
|10 years ago||HEVs and Electric Vehicles|
|5 years ago||Hydrogen Fuel Cells|
|3 years ago||Ethanol and Biofuels|
|Today||Grid Enabled Vehicles|
Given the sweeping technological change I've witnessed over the last thirty years, I have to chuckle when anybody is naïve enough to suggest that any technology can ascend to dominance and hold that position for the next thirty years. On balance, I see the forecast decade of sunk-costs as realistically achievable but view the forecast cost recovery and long-term benefit decades as highly suspect.
To their credit the Electrification Coalition has always been upfront about the enormous challenges that electrification of personal transportation entails, including:
- The current high cost of batteries;
- The current lack of reliable access to refueling infrastructure for GEVs;
- Regulatory and coordination problems that will complicate interface with the electric power sector; and
- Consumer acceptance issues.
One - $13.75 billion
||Establish tax credits for installing automotive grade batteries in stationary applications to help drive scale||Giving utilities credits for
using uneconomic automotive batteries in uneconomic grid applications
is like buying eggs for a dime, selling them for a nickel and trying to
make up the difference on volume.
|Policy Two - $10.00 billion||Establish loan guarantees for
retooling automotive assembly lines and manufacturers of GEV components.
||Last time I checked, $10 billion
in loan guarantee costs can add up to $50 to $100 billion in government
liabilities if the borrowers default.
|Policy Three - $9.70 billion||Establish a guaranteed residual
value for used large-format automotive batteries.
||Doesn't anybody believe the
happy talk about the future resale value of used EV batteries?
|Policy Four - $74.10 billion||Modify electric vehicle tax
credits to make them variable such that the upfront cost of a new PHEV
or EV is equal to a comparably sized conventional vehicle.
||I thought consumers were lining
up around the block to pay a premium price for less utility,
performance and flexibility.
|Policy Five - $12.60 billion||Establish business tax credits
equal to 75 percent of the cost to construct public charging
||Risk money is hard to find in a
chicken or egg situation.
|Policy Six - $0.80 billion||Extend consumer tax credits for
home charging equipment.
||Home charging stations are part
of the car cost.
|Policy Seven - $0.18 billion||Establish utility tax credits
for up to 50 percent of the costs of the necessary IT upgrades to sell
power to electric vehicle consumers.
||Why is pocket change IT spending
even an issue?
Hole Policy Costs
||The unexplained $100 billion gap
between the $121.1 billion in line item costs and the $220 billion
cumulative increase in the Federal deficit by 2019.
||What's a $100 billion between
When I consider the electrification coalition policy initiatives, it's easy to see why the members are eager supporters of a proposal to convert huge piles of taxpayer money into operating revenue. I have a harder time, however, with the tacit admission that electric drive has no real future without government intervention to force the issue. The wheels really come off the bus when I consider the duplicity of suggesting that we can expect quantum leaps in battery powered electric drive technology, but must ignore the likelihood that some other nascent technology will gain enough ground over the next decade to give battery powered personal transportation a run for the money.
At its core, cleantech is an ethical system based on the responsible application of technology to optimize the use of natural resources, moderate global warming, secure energy independence, offset rising energy costs and increase the well-being of the six billion people that live on this planet. There has never been an industrial revolution led by a technology that promised to deliver less economic benefit at a higher economic cost. Shifting the burden from consumers to taxpayers is like re-arranging the deck chairs on the Titanic, a hollow subterfuge that does nothing to eliminate the burden of unconscionable waste masquerading as conservation.
Were I made of sterner stuff I'd short them all. Fortunately, experience has taught me that the market can remain irrational longer than I can remain solvent. So I'll just watch the predictable train wreck from the sidelines.