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Electric Car Subsidies As Handouts For the Rich 589

Atypical Geek writes "Charles Lane, writing for Slate, argues that subsidies for electric cars are an example of 'limousine liberalism' — a lavish gift for well-off Americans to buy expensive cars for the sake of appearing green. From the article: 'How rarefied is the electric-car demographic? When Deloitte Consulting interviewed industry experts and 2,000 potential buyers, it found that from now until 2020, only "young, very high income individuals" — from households making more than $200,000 a year — would even be interested in plug-in hybrids or all-electric cars.' Lane also takes issue with the billions of dollars in subsidies offered to automakers for the manufacture of batteries, arguing that research (warning, PDF) concludes that the money will not help in jump-starting the economies of scale that will drive down prices. At least, not as much or as quickly as the President has argued."
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Electric Car Subsidies As Handouts For the Rich

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  • by francium de neobie ( 590783 ) on Sunday August 01, 2010 @05:42PM (#33103926)
    The billion dollars are there to drive research for better technology, which hopefully will drive down prices. And when compared to subsidies that other industries get (e.g. the big oils), that few billion dollars is just a drop in the bucket. Look, a few $B may be a lot of money for an individual, but when talking about a whole industry, it's not a lot at all. If anything, it's underfunded.
    • by Pharmboy ( 216950 ) on Sunday August 01, 2010 @05:49PM (#33103990) Journal

      Good point. VCRs and internet access used to only be for those with too much money (my first ISP cost me 80 per month for 80 hours, way back when), but that is what drives the costs down, as you state. Considering the end goal is lower dependence on our "friends" in the middle east, plus a somewhat cleaner environment, seems like a balanced approach to me as well.

    • by elwinc ( 663074 ) on Sunday August 01, 2010 @05:54PM (#33104064)
      Hear hear!

      Somebody (I'm too lazy to find the link today) calculated that Big Oil is getting hundreds of billions of dollars per year in subsidies; here's a related link http://www.economywatch.com/economy-business-and-finance-news/spill-highlights-oil-industry-double-game-re-taxes-and-subsidies-06-07.html [economywatch.com]

      I have no qualms with a little of that subsidy being shifted to electric vehicles. If we don't jumpstart the industry, the Chinese certainly will, and it's a damn sight better having production on our shores rather than overseas.

      The original article's claim only makes sense if you ignore how economies of scale ramp up and how costs ramp down.

      • Look to France (Score:3, Insightful)

        by bussdriver ( 620565 )

        I believe it was France which came up with a better solution:

        By the class of car:
        Tax cars by how much gas they use then take that money to lower the price of cars that use less gas.

        It creates a market condition the car makers will adapt to over time, pays for itself. How you create this equation is a little tricky; but I'd not worry much about the transition since its the long term process that is the goal and the price "shocks" will quickly fade out.

        One could also try a carbon tax; but that is impossible

  • And? (Score:2, Insightful)

    by Toonol ( 1057698 )
    This seems very obvious. Electric cars will begin to dominate the market when they make economic sense for the majority of the market. Obviously, that time isn't here yet, and attempts by the government to manipulate the market by dumping money into rebates won't be sufficient to make the difference.

    Honestly, I think the government has very little role to play here; but if it does, it's in ensuring that the cost of gasoline isn't kept artificially low, making sure the infrastructure can support electri
    • They can't just force the market, not without hurting the market.

      Well, say electric cars cost $70,000 if you make a limited run of a few hundred cars. Nobody will buy it for $70k.

      But if you can sell a few thousand, the per-unit cost can get down to $35,000? Now people can afford it and the market takes off.

      The initial investment to get it off the ground may be too high for failing American auto makers to assume, requiring the government to step in.

      • by 0123456 ( 636235 )

        Nobody will buy it for $70k.

        But if you can sell a few thousand, the per-unit cost can get down to $35,000? Now people can afford it and the market takes off.

        The Volt is supposed to be below $35k with subidies.

        But if you're that concerned about gas prices, why would you buy a Volt for $35k rather than a Civic or Fiesta for $20k?

      • Re: (Score:2, Insightful)

        by Jmanamj ( 1077749 )
        Thats precisely the point toonol was trying to show as erroneous. Even if the government brings the price of the cars down to $10,000 a piece, and people are fighting for the few thousand cars in the production run, the technology wont take off because the technology is not ready, and the infrastructure isn't in place to keep the price at $10,000. The only way to keep it there is if the government continues to spend money on subsidies.
        • Re: (Score:3, Insightful)

          by cgenman ( 325138 )

          The only way to get infrastructure in place is to spend the money and develop it. The only way to develop the technology is to get industries behind it researching better and more advanced forms of tech. And if we can develop it domestically, we might have an actual sustainable car market here in the United States.

          I don't know. If the technology was mature, the market mass, and the price sufficiently low, why would anyone need to step in and help develop it? Just let things take off on their own. It's

  • Maybe if they would put out an attractive offering then consumers would be interested. Why would somebody outside of the >200k bracket buy a electric car when buying a normal car and gasoline is vastly less expensive?

    Normally I would be sympathetic to the idea of forcing market expansion to get a new process off the ground, but we're way off from a viable electric car, and until then it's just going to be a waste of money.

  • Rebates are stupid. It's the most regressive tax spending possible. If I can afford a large portion of something, I get the rest for free? If I can't afford that much, I get nothing? Um, something is wrong here.

    If the government wants to encourage electric cars, why doesn't it buy them? Switch the entire damn postal service over to start with. Give grants for local comunity to switch their police cars and mass transit over.

    • by RingDev ( 879105 ) on Sunday August 01, 2010 @06:06PM (#33104188) Homepage Journal

      New York city is actually doing just that. Working with cab companies to replace their fleets of 12 mpg crown vics with high efficiency and hybrid vehicles.

      I'm slightly skeptical on this research as well on three fronts:

      1) A fully loaded Prius with range extender batteries (allowing for full electric 30-50 miles depending on kit) comes in at right about $31k. The new Volt comes in at $41k. But the Volt has a $7500 federal rebate and some states are putting up another $1-4k rebate. Which puts it's price right in line with the Prius. You don't have to been in the $200k/year income bracket to be interested in that.

      2) I am very interested in the full electric, the only reason why I haven't persued it is because I commute 40+ miles on interstate/highways twice a day. Full electric is unbeatable for surface street driving, but up on the interstate, Diesel is king. There's no way a Prius/Volt will recoup the savings when compared to a VW TDI pushing 50+ MPG on the highway. And I am noooooo where close to $200k/year. Heck, many of my friends have also stated their interest. To the point where a few folks have been pestering me to convert the old Fiero to full electric. There is significant interest in the electric market from the $100k/year bracket. There would be even more if they could get the market price down to $25k.

      3) A full electric can easily out perform and present a ROI in the life of the car over econoboxes when driving to their strengths. Again, up on the highway, electric isn't going to be all that great, but if you do nothing but stop and go commutes for short ranges every day, the full electric is going to pay off big time over even a decent mpg econobox.


    • Re: (Score:3, Interesting)

      by noidentity ( 188756 )

      If the government wants to encourage electric cars, why doesn't it just force us to buy them?

      There, corrected that for you.

  • by Berkyjay ( 1225604 ) on Sunday August 01, 2010 @05:48PM (#33103984)
    Most new technologies end up in the hands of the rich first, mainly because of the costs of production. Over time, if the technology ends up proving itself and becomes cheaper to produce, it starts to permeate itself into the rest of the market, it's just simple economics. Just look at the PC, most families couldn't afford one until well into the late 90's.
  • by Ironchew ( 1069966 ) on Sunday August 01, 2010 @05:49PM (#33103988)

    You can retrofit an old Volkswagen bug to be all electric for less than $7000 [e-volks.com]. I don't see what the big push is for the added complexity of a hybrid gasoline/electric engine if you only need one to go more than 60 miles on a trip. Electric vehicles shouldn't be SUV-sized. For the few times you need an SUV or need to go on a long trip, the world's petroleum supply should be enough. It would be nice to see all-electric vehicles for less than $10,000 someday, because the technology is there to do it.

    • I don't want to pay insurance and registration on two vehicles when one will do the job. I'm not going to buy a 60 mile limited electric when a gas vehicle will go 60mi or 600mi.

    • Re: (Score:3, Informative)

      by WGFCrafty ( 1062506 )
      As Jon Stewart said:

      I need my SUV to pull the boat I don't own, up the mountain I don't live by.

      Anyone remember when wealthy business owners were buying the Hummer H2 'for their business' then turning around and giving it to their wife. It weighed more than a certain weight so it was considered a 'heavy truck' and could be written off on your business' taxes. I wonder how many businesses will get new "green" cars, then turn around and give them to family members.
  • When they can make a pure electric vehicle that can go maybe 400 or 500 miles on a full charge, and is possible to recharge to 80% capacity or better in under 5 minutes, and can do respectable highway speeds for a few hours at a time, as long as there was also some sort of infrastructure similar to existing stations where a person could pay a fee to recharge their vehicle, I think that the mass production that would be necessary to meet the demand for such cars would inevitably drive prices down... Gas powe
  • by EdIII ( 1114411 ) on Sunday August 01, 2010 @05:51PM (#33104008)

    I don't know where they are getting their demographics from, but I have many examples where they are wrong.

    My first Prius was purchased around 2003 and was the older model. I was not super high income at the time (100k per year). Cost came in around 26k I think and I was paying $400 per month for it. I would think any car with a price point below 30k is not being marketed to the young and rich.

    I sold my first Prius to a gentleman from Southern California who was an appraiser. He most certainly did not seem young or rich either, but needed it for the lower operating costs due to the high mileage he was going to put on it.

    Now, I did purchase a Hybrid Highlander with a price tag of around 50k about 3 years afterwards. A luxury purchase to be sure, but once again, I did not represent anywhere near 200k per year in income when I made that decision. I just wanted my SUV back while also reducing my consumption of oil.

    In addition to my own personal experiences, I know at least a dozen other hybrid owners personally. With one or two exceptions, none of them are exceeding 200k per year (even with combined incomes).

    Just ordinary working professionals. So I would say out of the 15 or so hybrid owners that I know of, maybe 10-15% meet the articles assumptions about hybrid car purchasers, or plug in hybrids.

    I realize the article is not talking about hybrids, but pure electric, but the Toyota model is only 35k from what I have heard. Far from a Tesla, or some other luxury hybrid or electric (such as the Hybrid Highlander I owned).

    Sounds to me like this article is creating an issue that does not exist to attack "limousine liberalism". I will tell you this... it's about fucking time there was some subsidies for electric/hybrid cars in price ranges below 50k. Unless we just want to forget the nearly $1 billion dollar subsidies for the Hummer?

    • by Nidi62 ( 1525137 )
      I don't know about you, but most people I know would not consider 100k as "not super high income". You individually were making roughly double the median household income for the US in 2003.
      • Re: (Score:3, Informative)

        by EdIII ( 1114411 )

        I did not write 100k "exactly" though. What I wrote was "less than" 100k, but Slashdot stripped out the symbol. My income at that time was much closer to the median household income for 2003, trust me.

      • Re: (Score:3, Informative)

        by Urkki ( 668283 )

        I don't know about you, but most people I know would not consider 100k as "not super high income". You individually were making roughly double the median household income for the US in 2003.

        Be that as it may, the summary specificlally talks about those making over 200k.

  • Just to clarify - appearing green to most people is much, much more important than actually being green.
    There are people living utterly sustainable lifestyle with very little societal support.
    News Flash: that sort of lifestyle is more than a full-time job for an entire family.
  • by Posting=!Working ( 197779 ) on Sunday August 01, 2010 @05:53PM (#33104044)

    When Deloitte Consulting interviewed industry experts and 2,000 potential buyers, it found that from now until 2020, only "young, very high income individuals"--those from households making more than $200,000 a year--would even be interested in plug-in hybrids or all-electric cars.

    They're claiming to be able to predict vehicle buying patterns 10 years in advance, not just the technology, but the income level of customers who will buy cars that won't even be on the drawing board for 5 more years.

    Then it recommends diverting the flow of money spent trying to improve EV's into improving gasoline powered vehicles. Wow, that solves all our problems!

  • Apparently they didn't actually *look* at real EV drivers. I suggest they go to some EV group meetings, and not look at just Tesla drivers. If only I were young again, or *ever* made even half of $200K... Not that I'm a big fan of subsidies, even when they benefit me, but they probably are helping to kickstart a market that is finally starting to become viable...

  • R&D costs money. Looking at computers, the first ones were so expensive only governments or rich companies could use them.

    Why not sell to the rich? They're buying, and cars depreciate like crazy so in a few years a poor schmuck could buy used. With all the problems that early models have, the whole system of maintaining these cars costs so much that the industry will not set up en masse to sell to the masses. They will get their feet wet with a few toys for the rich and find out what it takes to move in

  • This is one issue on which I have to disagree, be unpopular, and say that these kinds of subsidies are necessary. If we leave everything to the cheapest and most affordable existing technology (so that the poor could afford it), we will never get out of being slaves to oil. Having energy/vehicles too cheaply is what is keeping us in all this mess.

    In this sense, poor people are the problem (in the sense that most of us non-rich people use gasoline vehicles). Sometimes improving things comes with an up
  • by burnin1965 ( 535071 ) on Sunday August 01, 2010 @06:12PM (#33104250) Homepage

    So I am curious, did Charles Lane have a whining rant to publish in 2002 when Bush signed off on a $30,000 tax credit for monster trucks? [usatoday.com]

  • by EmagGeek ( 574360 ) <gterich&aol,com> on Sunday August 01, 2010 @06:14PM (#33104274) Journal

    And by that, I mean that when the government offers a $5K rebate on something, whomever is selling that something raises the price by $5K. The consumer doesn't actually get that money. Whenever the government artificially increases the demand for something, the supply artificially shrinks and drives up the price by a corresponding amount.

    This is why college costs $35-50K/year now - there's so much cheap government money to pay for it that natural market forces have made it all but impossible to afford except for either the very wealthy or the very poor who qualify for the government money.

    Those of us stuck in the middle end up graduating with a "second mortgage."

    • And by that, I mean that when the government offers a $5K rebate on something, whomever is selling that something raises the price by $5K.

      ...and then someone else who also sells it raises their price by only $4k and steals all the customers [wikipedia.org].

      This is why college costs $35-50K/year now - there's so much cheap government money to pay for it that natural market forces have made it all but impossible to afford except for either the very wealthy or the very poor who qualify for the government money.

      The one I went to looks like it's only risen to $30k (UIUC, out-of-state for the college of engineering). But this involves more than just student aid, there's also the changing cultural expectations where a bachelor degree is required for pretty much everything. And there are more non-traditional / online universities springing up (increasing competition that'll bring the price back down), and some seem to be becoming actually decent.

  • by Paul Fernhout ( 109597 ) on Sunday August 01, 2010 @07:29PM (#33105056) Homepage

    http://groups.google.com/group/openmanufacturing/msg/09eb7f4c973349f2?hl=en [google.com]
    "This essay explain why luxury safer electric (or plug-in hybrid) cars should be free-to-the-user at the point of sale in the USA, and why this will reduce US taxes overall. Essentially, unsafe gasoline-powered automobiles in the USA pose a high cost on society (accidents, injuries, pollution, defense), and the costs of making better cars would pay for themselves and then some. This essay is an example of using post-scarcity ideology to understand the scarcity-oriented ideological assumptions in our society and how those outdated scarcity assumptions are costing our society in terms of creating and maintaining artificial scarcity."

    And that was without even including the benefits to load balancing the electric grid with electric vehicles when they are plugged in, or all the new jobs created in making them.

    Or this person's amazing point:
        http://www.evnut.com/gasoline_oil.htm [evnut.com]
    To extract one gallon of gasoline (or equivalent distillate): 9.66 kWh
    To refine that gallon: 2.73 kWh additional energy.
    Total: 12.39 kWh per gallon.
        Roughly one-third of the energy content of a gallon of gasoline produced from California wells is input from natural gas. Less than 2/3's is net energy (probably a lot less!).
        So I can get 24 miles in my ICE on a gallon of gasoline, or I can get 41 miles (at 300wh/mile) in my RAV4EV just using the energy to refine that gallon. Alternatively - energy use (electricity and natural gas) state wide goes DOWN if a mile in a RAV4EV is substituted for a mile in an ICE!

  • by strangeattraction ( 1058568 ) on Sunday August 01, 2010 @09:24PM (#33105916)
    " from households making more than $200,000 " - Two earners making a combined $200k in many urban areas where the car will be used are middle class. This might be hard for a writer for Slate to understand given what they pay professional writers at the moment.
  • I Don Not Agree (Score:4, Insightful)

    by b4upoo ( 166390 ) on Monday August 02, 2010 @01:59AM (#33107366)

    It is the usual and normal pattern in America that the wealthy acquire new devices before the poor. The wealthy guy can take the hit if he makes a bad choice and makes a lousy decision whereas the poor can sink under the waves from a tiny error. As the technology gets more common, is thought of as being reliable and cheap to operate, then expect people with less money to acquire such a product. In essence the wealthy are the guinea pig and after all companies usually seek the big spenders as buyers.
                            I expect a tipping point in which there will eventually be a stampede of buyers seeking electric cars. Companies that have put them selves in the right position will earn a whole lot of money.

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