Patience and policy needed on drive toward sustainability

I recently responded to a question on the National Journal blog, “What ‘s holding back electric cars?”

You can read more on the original blog post and other responses at the National Journal.

Here is my response:

We shouldn’t be discouraged about the future of electric vehicles because some early movers are not meeting expectations.

The recent decision by advanced battery maker A123 Systems to seek bankruptcy protection is evidence the company made missteps and perhaps grew faster than it could handle, which is not unusual in high tech. But having a veteran auto industry supplier like Johnson Controls move to acquire A123’s auto battery business sends a strong signal to the market that the technology has long-term viability.

We also shouldn’t lose sight of the transformative opportunity these vehicles present by focusing on the early bumps in the road. The development and introduction of these vehicles will benefit both the economy and the environment by using energy more efficiently. Electric cars also hold great potential to wean us off oil and reduce the greenhouse gas emissions that are causing climate change.

A car is the second most expensive thing many of us will ever purchase, so we won’t move to entirely new propulsion systems such as electric drive powered by fuel cells or batteries overnight.

We must allow more time for the public and private investments we’ve already made to bear fruit. Early investments by Toyota and others in hybrid-electric drivetrains have paid dividends as automakers distribute this technology across their product line. The same will happen with plug-in electric cars.

Ultimately, market forces must drive sales of plug-in electric vehicles (PEVs). But for now, public policy plays a critical role.

Washington has already done a lot to support the electric vehicle industry, including tax incentives, loans, and extensive use of the bully pulpit. The new 2025 fuel economy standards are also driving investment in vehicle efficiency technology. But it’s not practical to expect much additional public investment given competing priorities.

To help define the respective roles of government, business and consumers, we convened the PEV Dialogue Group, a group of public and private experts whose recent Action Plan lays out a number of ways to facilitate a real national electric car market. We’re now working with officials in 20 states and the District of Columbia to implement the group’s recommendations.

At the federal level, the group recommends keeping the existing vehicle tax credit, which is essential despite what others have been saying. A vehicle tax credit helped grow sales of hybrid vehicles, such as the Toyota Prius, by nearly 70 percent from 2005 to 2007, and has helped electric cars sell at twice the rate as hybrids when they were at this stage in their history. Policymakers should consider making the credit a direct rebate to encourage government- or nonprofit-operated fleets to switch to electric cars.

As laid out in our Action Plan, electric utilities, other businesses, all levels of government, and NGOs need to work together to make this happen. Most of the steps recommended by the group can be taken outside Washington, at the state and local level. These include:

  • Facilitate regulatory reform, such as rules that encourage drivers to charge when power is cheapest to produce. The existing electrical grid can support millions of electric cars so long as drivers charge when demand is low, which is also when electricity is cheapest to produce.
  • Establish and share best practices. Across the country, groups of all kinds have been facilitating the introduction of electric vehicles and charging infrastructure in new markets by establishing codes and standards and educating consumers.  We should collect and share what is being learned to create a consistent and compatible market for these vehicles in all 50 states.
  • Optimize deployment of charging infrastructure. The PEV Action Plan addresses the “chicken-and-egg problem” of coordinating the expansion of vehicles and charging infrastructure. But this is much less challenging for electric vehicles than, for example, for hydrogen vehicles since charging at home is relatively straightforward. Existing research and experience indicates a dense, publicly funded infrastructure is not needed to spur vehicle sales. However, home charging, including for those who rely on street parking, is essential. The PEV Action plan includes simple measures, such as having dealers notify electric utilities when new electric vehicles are purchased in their service territories.

Electric cars have suffered from hype from all sides. Automakers, government, and the media touted these cars as a panacea for a struggling domestic auto industry. The true role for electric vehicles is to help us move down the road toward a sustainable transportation system.