This current phase of EV adoption is exponential. While this article talks about current EV sales are just 3% of car sales in the US – there is no doubt this is an area of exciting creativity and product launches. I agree government should incentivize and initiate the charging infrastructure. As part of VW’s dieselgate scandal it was required to build a nation-wide electric charging network- which it has. The development of a ubiquitous charging infrastructure for all EV’s is critical to unlocking the next phase of growth.
It seems odd to me that Ford and GM are asking for incentives when Tesla did it all with only minimal credits to buyers. They built a nationwide charging infrastructure – and sold over half a million cars last year. That’s what government incentives should be for – to help new competitors enter the market – provided they can build cars that people want. Government incentives should not be required for big, existing multinationals who already have scale economies and the earnings capacity to make these investments themselves.
But if there’s a place to send incentives, it’s to the customer. To the extent there is still a premium for buying electric (the green premium) the government can help here. EV’s are already at the point where total cost of ownership is comparable or lower over the life of the vehicle – so helping consumers with slightly higher purchase cost can be a good thing. The key reason for this is that 4 or 5 years into the EV’s life – the carbon benefits start to pay off compared with a conventional vehicle (initially making batteries is more carbon intensive than for non EV cars). Any incentive here accelerates carbon reductions 4 or 5 years from now and in perpetuity for the life of the vehicle.
Bill Gates’ book talks about the green premium and it’s true that EV’s are initially more expensive than conventional internal combustion engine vehicles (ICE). But with gas prices in the US being artificially low compared to many European countries – the US consumer isn’t paying the price of the carbon emissions. There is more work to be done in this space over the coming years.