Electric Cars Become Political Football

By · September 28, 2011

Fisker Karma facility

Government loans to help U.S.-based electric car start-up companies, like Fisker Automotive, are under scrutiny by conservative factions.

It’s only Wednesday, but this week is already looking like a key one for the history of electric cars. Conservative members of Congress on Monday tried unsuccessfully to trim $1.5 billion from the $25 billion Department of Energy Advanced Technology Vehicle Manufacturing loan program. The spending bill, providing low-cost government loans for the auto industry to boost fuel efficiency by 25 percent, was signed by President Bush three years ago this week.

When I reported on this three years ago, Walter McManus, auto economist at the University of Michigan, told me, “Investing in new products and technologies takes cash. Without incentives to invest in the fuel-efficient products that consumers are now demanding, Detroit will continue to spend scarce resources to sell yesterday’s products instead of developing tomorrow’s cleaner products.” Automakers have up to 25 years to repay the money.

Such sober thinking is lost in today’s heated political environment. “Electric cars have become a political football,” said Lisa Margonelli, fellow at the New America Foundation, speaking at Green Drive Expo earlier this month in Richmond, Calif. “They are attracting tremendous amounts of negative attention. They are becoming hot.”

Boon or Boondoggle?

Nicolas Loris of the Heritage Foundation is the latest one to pile on. For Loris, it’s not enough to simply reduce the $25 billion ATVM loan program and other similar green-energy loans. They need to be gutted. “By leaving them in place at all, the House is still promoting crony capitalism, just a little less of it. The better approach is to scrap these boondoggles completely.”

According to USA Today, only about $9 billion of the $25 billion has been loaned so far. Among the loans, Ford received $5.9 billion for converting assembly plants n five states to produce more efficient drivetrains—and to convert its Wayne, Mich. plant from making SUVs to producing hybrids and electric cars. That’s projected to save or create 33,000 jobs. Nissan’s received $1.4 billion to make Nissan LEAF cars and related electric car batteries—adding a projected 1,300 jobs.

Nissan battery factory ground-breaking

Nissan CEO Carlos Ghosn at May 2010 ground-breaking of EV battery facility in Smyrna, Tenn., which could add about 1,300 local jobs. (Photo: Brad Berman).

But the companies receiving the most heat are California-based electric car companies, Fisker Automotive, which received $529 million in loans—and Tesla Motors, which got $465 million. Those companies are relatively easy targets because, at this stage, they produce luxury vehicles in low volume.

Laying the Groundwork

Unfortunately, it doesn’t help the electric car cause when fledgling EV-makers promise big, but don’t deliver. As Loris points out, Fisker said if it received the loans, it could produce a more affordable plug-in car in 26 months. That was two year ago. It also doesn’t help when government-supported programs for electric car charging infrastructure, like ECOtality’s EV Project, fall behind schedule and disappoint early customers. ECOtality was awarded $115 million in two federal grants.

Still, heated arguments against any government support of greener cars miss the larger point. As Rusty Heffner, associate, transportation practice at consulting firm Booz Allen Hamilton, told me when the Bush loan program was signed, “Advanced technologies don’t come for free. Advanced technologies lay the groundwork for bigger steps into the future. They lay a technology path.”

That’s certainly the view of Energy Secretary Steven Chu, who just yesterday released the DOE’s first-ever "Quadrennial Technology Review," saying he wants to increase funding research for electrified vehicles and supporting infrastructure. Last year, electric vehicle research received only 9 percent of the DOE’s $3 billion research budget—and just 4 percent went toward making vehicles more efficient. He wants to shift research toward vehicles.

“Today, our nation is at a cross road...We can either lead in the development of the clean energy economy or we can stand back and wait for others to move forward a sustainable energy future,” said Chu. “For the sake of our economic prosperity and our national security, we must lead.”

Meanwhile, Suffering at the Pumps

While Washington punts the EV football back and forth, Americans are suffering the consequences of stagnant fuel efficiency levels, decades of apathy toward alternatives to large gas-powered vehicles, and lack of a real an energy policy—save oil wars and calls for more drilling.

“This year, Americans are on track to spend a half-trillion dollars in gasoline,” said Margonelli, author of Oil on the Brain: Adventures from the Pump to the Pipeline. “When people talk about the opportunity of electric cars, you also have to think about that [consumer expense in] gasoline, which essentially turns into exhaust and CO2. It has worldwide effects in the places we draw it from—places like Libya and Iraq, where we are waging wars.” She advocates pushing the discussion about electric cars from one about technology, to a galvanized movement focused on ideas.

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