EV isn’t EZ

U.S., Germany walk back 1M electric vehicle goal

Nissan Leaf / AP
October 19, 2012

The U.S. and Germany have quietly walked back their ambitious goal to put 1 million electric vehicles on the road in their respective countries, despite considerable government subsidies and consumer incentives.

President Barack Obama pledged in his 2011 State of the Union Address to put 1 million electric vehicles on the road by 2015, while Germany vowed to do the same by 2020.

The Obama administration pumped roughly $5 billion into the electric vehicle industry. Sales are underwhelming despite the efforts, barely reaching 5 percent of the president’s target. Fewer than 50,000 electric vehicles were sold between the start of 2011 and the end of September.

Rather than admit its goal was unrealistic, the Obama administration subtly moved the goal posts and declared success. "By 2015, the United States will be able to produce enough batteries and components to support one million plug-in hybrid and electric vehicles," stated a progress report on the administration’s green energy initiative.

Germany, too, has walked back its electric vehicle goals despite giving itself an extra five years. A German newspaper reported in September that the country was going to scrap its 1 million electric vehicles goal.

A spokesman for the German Environment Ministry told Dow Jones Newswires, "We are sticking to the goal of one million." The spokesman did not specify what year the goal would be reached, and noted "further efforts are necessary."

"The problem is the cars are not a good economic option for consumers," Jim Motavalli, an environmental and automobile writer, told the Washington Free Beacon. "The cars are not really up to it. If you look at something like the Nissan Leaf, without the subsidy it’s a very expensive car. Even with the tax break it’s borderline."

The Nissan Leaf sells for a base price of $35,000. The Toyota Prius Plug-In costs at least $32,000, and the Chevy Volt starts at nearly $40,000. Buyers receive a $7,500 tax break for purchasing an electric vehicle.

Meanwhile, China has set a less ambitious goal of putting half-a-million plug-in cars on the road, and rather than attempting to subsidize demand, it is investing in making the cars themselves more appealing. The Chinese State Council Development Research Center Enterprise Institute released a "policy white-page" in September describing the state’s goals to improve the performance of electric car batteries by increasing range, decreasing charging time, and lowering cost.

The U.S. has also attempted to prop up its electric battery industry, but the results have not been stellar. Lithium-ion battery-maker A123 Systems, which was approved for more than $250 million in government funds, declared bankruptcy Tuesday. Ener1, another battery-manufacturer that received a $118 million grant from the federal government, declared bankruptcy in January.

The high-profile bankruptcies were political fodder for Republicans, who have been staunch critics of the Obama administration’s green energy initiative, saying it is an improper and ineffective use of taxpayer dollars.

Motavalli said that was not always the case.

"[George W.] Bush was a big fan of electric and hydrogen cars and subsidized that quite a bit," he said. "If you look at the record of A123, it was funded by both the Obama and Bush admin. so the whole story isn’t quite so clear cut."

Whatever the story, all parties are in agreement that there are not likely to be 1 million electric vehicles on the road in the near future.

"I don’t think it’s likely to be a million in three years, but I do think perhaps we’ll see a million in six-to-eight years," Elon Musk, the co-founder and CEO of electric vehicle company Tesla Motors, has been quoted as saying on Sept. 21.

"I think the goal of 1 million cars is unlikely to be reached," Motavalli said. "Exactly what the pace is going to be based on what happens with batteries, whether battery range and price comes down, and what happens to gas prices."