VIEWS: Government $ for Electric Cars is Just the First Step

Dispatch from SSC Intern Paul Turaew

After enacting the $25 billion Advanced Technology Vehicle Manufacturing Program to help automakers offset the cost of retooling to build eco-friendlier cars, the Obama Administration made its first set of handouts. In addition to ensuring manufactures produce more fuel-efficient vehicles, the handouts will also help support the production and necessary technological advancement of electric vehicles.

The Department of Energy and its new leader, Steven Chu is lending $5.9 billion to Ford to retool factories in five states. Nissan will receive $1.6 billion to refurbish a factory in Tennessee to produce electric cars and Tesla Motors will receive $465 million.

These loans follow last month’s announcement that the Federal Government was raising fuel-efficiency standards from the current average of 27.5 miles per gallon to 35 miles per gallon by 2016.

Understandably, we like (and need) our cars. For whatever reason, some of us like big, gas-guzzling cars and believe all cars of the future will be able to fit inside most walk-in closets. However, public opinion, perception and preference can be swayed with reality. Thanks to Government funding, forward-thinking companies like Tesla and its Model S sedan are showing Americans that they can have their large car and be fuel efficient too.

Clearly, the current Administration wants to change the way we think about clean transportation. Throwing money around to spur such advancements will no doubt help the auto industry produce more efficient vehicles. This is a short term win. What about the long term? In order to make sure the electric vehicles (not to mention other new technologies) have a fighting chance, the government must not sit back on its wallet and give out money without setting clear and well-thought out rules and principles to guide the industry.

This is not to say the government should run the industry, however, it should make policy that demands manufacturers not remain stagnant – something GM, Ford and Chrysler have done for decades. Raising the fuel-efficiency standards is a good start but there is a long road ahead (pun intended). One simple point for comparison - Europe’s current efficiency standard is 43.3. We might not be there for the next seven years.