Second Thoughts on Electric Vehicles

One of the problems with making purchases based on “the greater good”—as opposed to the direct benefits and costs—is that your estimate might turn out wrong. For example, many people simply assumed that electric vehicles were “good for the environment” and so were willing to spend more, and put up with more hassles, thinking that they were helping future generations. Yet some recent studies suggest that the environmental case for electric vehicles is more dubious.

Electric Cars Can Create More Carbon Dioxide Emissions Than Gas Cars

In June 2011, an auto-enthusiast blog found a British study finding that electric cars may not necessarily reduce carbon dioxide emissions:

[E]lectric cars can create higher emissions over the car’s lifetime than their gasoline-powered equivalent, partly due to the pollution created from the factories that manufacture electric car batteries…

[The study] found that while in the past, tailpipe emissions have been used as the main measure of an electric car’s carbon footprint, when the emissions from the car’s total lifespan are taken into consideration, including the car’s production and disposal, some of the CO2 savings made from driving the car are offset. The study contends that “overall electric and hybrid vehicles still have lower carbon footprints than normal cars.”

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The study found that compared with 24 metric tons for a gasoline-powered car, a mid-size electric car produces 23.1 metric tons of CO2 over its lifetime. But an electric car would have to drive about 80,000 miles before it would start saving more CO2 than a gasoline-powered car. Many electric cars will never reach 80,000 miles in their lifetime[;] electric cars get less than 90 miles on a charge, so they’re typically driven only short distances…Additionally, electric car batteries must be replaced after about four years. When the emissions connected with replacement batteries are added in, the total CO2 from producing an electric car increases to 12.6 metric tons, compared with 5.6 metric tons for a conventional car. Because recovering and recycling the metals in the battery consumes a great deal of energy, disposal produces double the emissions.

We may be witnessing the beginning of a process similar to what happened with ethanol: Initially beloved by environmentalists, ethanol soon fell into disfavor once people took into account the full consequences of turning food into fuel.

Alt-Energy Analyst Admits: “I Was Wrong About Lithium-Ion Batteries”

In addition to new doubts on the superior environmental bona fides of electric vehicles, it seems that consumers just aren’t that eager to support a transformation of the vehicle sector. An alternative energy analyst, in a refreshingly candid post, admitted recently that he had been wildly optimistic in his assessment of the demand for batteries for electric vehicles:

In February 2010 I wrote an article titled “Why I Don’t Expect A Lithium-Ion Battery Glut” that’s shaping up as one of the worst predictions in the history of my blog. This week Lux Research published a report titled “Using Partnerships to Stay Afloat in the Electric Vehicle Storm” that has me convinced that the capacity glut in lithium-ion batteries will be massive for at least a decade.

I humbly and sincerely apologize to any readers who bought shares in lithium-ion battery developers based on my starry-eyed optimism for the EV battery market.

The basic premise of my February 2010 article was that while plug-in electric vehicles would almost certainly die a slow and agonizing death from the congenital birth defects that have doomed every generation of EVs to the scrap heap of history, booming sales of electric two-wheeled vehicles, or E2Ws, and Prius-class hybrid electric vehicles, or HEVs, would be enough to absorb the slack. With eighteen months of history to look back on, it’s just not working out the way I thought it would.

As I expected, plug-in vehicles are drawing breathless reviews from the press and EVangelicals, and indifference or outright scorn from the car buying public.

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Can you believe it? Cheap is beating cool. Who could have predicted such an outcome in the depths of the worst financial crisis since the 1930s?

Here too we see a familiar pattern: Proponents of electric vehicles (as well as energy sources such as wind and solar) keep assuring everyone that they just need government support to get over the next little hump…then they will be profitable and self-sufficient. Yet they’ve been saying that for thirty years.

Why Don’t Consumers Like Electric Vehicles?

The simple fact is that electric cars right now are very inconvenient compared to gas-powered cars. Consider the journal entry of the BBC’s Brian Milligan who drove an electric car from London to Scotland, charging it only at public stations:

It took 4 days, some serious thermal underwear, and copious amounts of waiting.

But my electric car and I finally made it to Edinburgh.

There were plenty of nervous moments, and a rather low-key entry to the Scottish capital.

After all, I was driving at 30mph and was shivering with cold.

On the last leg I’d got suddenly over-confident, and had a serious dose of range anxiety.

It has been a slow journey but Brian and the mini finally made it to Edinburgh

At one point my range indicator showed 48 miles charge left on my battery, with 50 miles still to go.

Hence the slow speed, and the lack of heater.

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Including the time spent both charging and driving, I managed an average speed between London and Edinburgh of just 6mph.

With reports such as these, we can see why electric vehicles need a shot in the arm from a carbon tax or other government policy.

Government Can’t Pick Winners and Losers

The point here isn’t to relish in the floundering of a particular sector—people make mistaken forecasts all the time. A market economy works when investors try to pick the most profitable area to plow their money. Sometimes they hit it out of the park, and other times they strike out. Successful investors will make more money, and will have more influence over time on the allocation of scarce resources. On the other hand, investors who consistently make bad calls will eventually run out of money and will no longer pose a threat.

The one exception to this rule is government. When resources are directed through the political process, we have little reason to expect success. After all, policymakers haven’t earned their position through past profitability (the way rich investors in the private sector have). Even worse, the political authorities don’t stand to personally gain or lose, based on the success or failure of their “investments.” This is why government spending is so often seen as a corrupt boondoggle.

To take one example, consider the fate of Green Vehicles:

A Salinas car manufacturing company that was expected to build environmentally friendly electric cars and create new jobs folded before almost any vehicles could run off the assembly line.

The city of Salinas had invested more than half a million dollars in Green Vehicles, an electric car start-up company.

All of that money is now gone, according to Green Vehicles President and Co-Founder Mike Ryan.

The start-up company set up shop in Salinas in the summer of 2009, after the city gave Ryan a $300,000 community development grant.

When the company still ran into financial trouble last year, the city of Salinas handed Ryan an additional $240,000. Green Vehicles also received $187,000 from the California Energy Commission.

Salinas Mayor Dennis Donohue said he was “surprised and disappointed” by the news. City officials were equally irked that Ryan notified them through an email that his company had crashed and burned.

Conclusion

We don’t know what the efficient vehicle will be 20 years down the road. Perhaps at that point, most new cars really will be electric or hybrids. Yet we ostensibly live in a free society with a market economy. Government officials aren’t supposed to make these choices for us; let consumers spend their money without being influenced through the tax code or direct subsidies. Finally, if consumers are basing their decisions partly on feelings of saving the planet, they should do some research first to make sure their actions really are helping.