Study: $6 Billion Per Year Would Net 123 Million EVs by 2030

The Electrification Coalition is composed of industry leaders from companies like Nissan, PG&E, Cisco, Coulomb, A123 Systems and FedEx.

A new study says that the investment of federal funds to put millions of EVs onto American roads in the coming decades would pay significant economic and environmental dividends. The study, which was commissioned by the Electrification Coalition and performed at the University of Maryland, found that spending $6 billion per year for the next twenty years would put 123 million electric vehicles on the road by 2030. What's more, the spending is projected to actually begin reducing the federal budget deficit after the first ten years, with government savings continuing after subsidies and incentives become no longer necessary.

The Electrification Coalition, which is comprised of executives from 14 companies associated with electric vehicles and infrastructure, completed its Electrification Roadmap in November, 2009. The roadmap provides specific recommendations for how businesses and the government can work together to supercharge early adoption of electric vehicles. This most recent study compared current government incentives to those proposed in the EC roadmap and made predictions on how adopting its recommendations would impact gasoline use and the economy at large.

The main projected benefits, outlined in the report's executive summary, were as follows:

• A total employment boost of 1.9 million jobs, with 560,000 coming from the manufacturing sector and 106,000 coming from the electric and electronic component industries.
• A cumulative surplus of $336 billion to the federal budget between 2010 and 2030.
• A 2.2 percent rise in annual average household income by 2030, an increase of $2,763 dollars per household.
• An average savings of $3,687 dollars per household in annual transportation costs.
• A $127 billion per year improvement to the national trade deficit.
• A reduction of 3.2 million barrels of oil per day in the United States, with a 20-year fuel savings of 11.9 billion barrels. By 2030 the annual fuel savings resulting from the program would be about 26 percent.

The Electrification Coalition projects that market penetration of EVs could reach astounding levels—provided that the federal government commits to a major investment.

Implementation is Closer to Reality Than You Might Think

Last month, two bills based on the Electrification Roadmap and seeking to put 700,000 electric cars on the road by 2017 , were introduced in the House and Senate. Those bills match up roughly with phase one of the roadmap, which also calls for 700,000 new EVs, only by 2013.

But the biggest similarity between the proposals is how the money would be targeted. Both the EC and the sponsors of the recent legislation believe that early electrification should be concentrated in about a dozen carefully selected urban areas throughout the country. The EC argues that while national incentives are a great way to get the first Volts and Leafs off of lots and into the hands of early adopters, sales to consumers who haven't been waiting for years to purchase their first EVs will be slow unless specific communities are targeted.

According the EC, the reason for this is that public acceptance of electric vehicles will come from having more cars on the road and more places to charge them. The Electrification Roadmap posits that public charging infrastructure will be even more important to EV deployment than home charging, and the only way to build sufficient public charging infrastructures in a short period of time is to target them toward certain communities. But many EV advocates and industry insiders disagree with this logic, and argue that public charging isn't anywhere close to as important as it's made out to be.

Don't Convert Your 401k to Tesla Stock Just Yet

The findings of this report should be taken with a few grains of salt—as is the case with any research commissioned by the industry it studies. But a few of its general findings are pretty hard to argue with.

First, the basic economic rationale for rapidly increasing government incentives for EV adoption is that as spending increases, the government will get more bang for its buck. The more electric cars are on the road, the less expensive the batteries they run on become and the more affordable they are for future buyers—the same logic applies to almost any cost associated with electric vehicle deployment.

Also, few would argue that it isn't in our nation's interest to drastically cut our oil use. Whether or not you think it's possible to have 123 million EVs on the road by 2030, pretty much everyone agrees that the more of them that are in use, the lower demand will be for crude. But only time will tell how much money that will save us or how many jobs it might create.