Obama EV Goal Does Little to Lessen Oil Consumption

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Obama and Chevy Volt photoMany articles written over the past year have questioned if President Obama will be able to reach his goal of having a million electric vehicles on US roads in 2015. A more important fact has been overlooked. That is, even if we get a million EVs on the roads in four years, we will have done practically nothing to reduce oil consumption in America. To be more specific, we will reduce consumption by approximately 0.15%. Is it worth the billions of taxpayer dollars spent producing controversial vehicles like the Chevy Volt in order to lessen foreign oil dependence four years from now by 0.15%?

Let's first review how we get to the 0.15% oil reduction number. Total vehicles on the road in 2015 are estimated to number close to 300 million. Oil consumption in the US by passenger vehicles is estimated at about 40% of total consumption. Do the math on the impact on oil consumption by replacing a million vehicles with EVs and we get to the negligible number of approximately a 0.15% reduction in four years. If we can get to five million EVs on the road in ten years, a reasonable number, we still have not even reduced oil consumption by 1%! To further grasp the folly of spending billions of dollars to electrify America's auto fleet, consider the hypocrisy of those in the Obama camp who, years ago, refused to pursue drilling for new oil because it would take a few years to get the oil to market. Yet somehow, reducing oil usage in ten years by less than 1% by pursuing a strategy to promote EV usage at the cost of billions of taxpayer dollars makes sense to these people.

There are also those who think electric cars are good for the environment and will help stop the scarring of Mother Earth caused by oil drilling. Unfortunately, the lithium based batteries (charged mainly by coal burning power plants) which are being produced on the taxpayers' dime require that same scarring to obtain the main element of the volatile power source. The volatility of the batteries is coming to light as Chevy Volts are being investigated for spontaneously combusting days after being crash-tested. Disposal issues for the poisonous batteries also have not been considered. I imagine that billions more will be spent to develop recycling facilities for the batteries. And you can bet that the good old taxpayer will be on the hook for that as well.

So, given the negligible benefits of a subsidized EV industry, why has so much money and effort been spent to reach a goal that reduces oil consumption by less than 1% in ten years? Is it a herd mentality derived out of a politically correct green agenda gone mad? I tend to think it is more likely the epitome of crony capitalism. As is often the case, one can follow the money to see what motivates such wasteful spending of taxpayer money. Start-up electric car makers like Fisker and Tesla are politically connected and donate heavily to those that approve the gifting out of taxpayer funds. Green hype master Al Gore helps lead the charge at Fisker. And what about Obama's pal Jeff Immelt at GE? GE has committed to buying 25,000 Chevy Volts at a time that Government Motors is desperate to prove high demand for the vehicle. GE then gets to sell the charging stations, again at the expense of taxpayers, of course. And the nation's electrical grid will not be able to keep up with increased demand from EV charging, so I'm sure GE will be willing to help with the upgrades as they bilk the public for more money.

Another unanswered question regarding EV madness is why the auto manufacturers themselves are hyping the vehicles. General Motors spends a disproportionate amount of money promoting the Volt, which loses money on every sale. In addition to the high cost of production for the Volt, GM must keep specially trained workers on the payroll to respond to accidents involving air bag deployment. Is it any wonder that GM operates at shrinking margins? Losses will increase when Volt batteries (which will cost thousands of dollars each for GM to replace) start wearing out before the eight year, 100,000 mile warranty expires. The Chevy Volt is not a vehicle that could exist without a lot of taxpayer funding, which includes a $7,500 federal tax credit as well as state credits for each vehicle sold. Even with these subsidies, many sales are slated to go to localities (once again operating with federal grants) at reduced prices or to crony corporation, GE.

One possible answer to why a company like GM would risk so much credibility on a car like the Volt that loses money is the belief that the vehicle acts as a "halo" car to lure consumers into showrooms only to sell them more conventional vehicles. Maybe it's all the taxpayer grants and subsidies the company gains by producing the vehicle. Or, it could be that manufacturers need to produce cars that tout high MPG ratings just so that they can meet increasing cafe standards. Whatever the reason, the benefits to the taxpayers are not coming close to the costs.

The Chevy Volt fire investigation should bring forth a debate on whether or not lithium-ion based electric cars should have been rushed out to the public without a careful analysis of the risks versus the rewards. At the least, safety protocol should be established before selling a vehicle based on a volatile new technology to the public. If anyone can justify spending billions of dollars on a potentially dangerous technology that is too costly to succeed in the free markets without taxpayer subsidies, I would like to hear the reason. Let's not just settle for a lame apologist's view that we must wean ourselves off of oil, let's look at facts like projections on how much EVs will affect oil consumption for years to come. American's should not have to pay $7,500 to Leonardo DiCaprio for buying a $100,000 Fisker or to Jay Leno for buying a $40,000 Volt. We should rethink the costly EV plan that enriches cronies at the expense of taxpayers while doing little for the common guy.

Mark Modica is an NLPC Associate Fellow.