Market Making: Electric Car Policy

An email I received recently from Statista (the source for the chart accompanying this story) pegged the Atlanta metro area as the fastest growing electrical vehicle (EV) market in the U.S.

In the past year, Atlanta has seen a 614 percent increase in EV sales.

What gives?

Statista lists three specific reasons:

  • Georgia offers a $5,000 tax credit to EV buyers
  • EV drivers get automatic access to carpool lanes
  • EV drivers can use toll expressways for free

These are three very specific pricing mechanisms that Georgia is using to lower the cost of EV adoption and build the market for EVs. The measures appear to be working.

This report from the University of Central Florida lists other barriers, besides cost, to EV adoption:

  • Vehicle mileage between charging
  • Vehicle maintenance and, in particular, battery life
  • Availability of charging stations
  • Charging time
  • Infrastructure, standards, and permitting
  • Public knowledge and education

To address these barriers, the federal government in March 2012 announced the EV Everywhere Grant Challenge.

Looking at these barriers with marketing eyes, I see challenges in product design (charging time, mileage, and battery life), distribution (charging stations), and promotion (public knowledge and education).

I suspect some advocates of free markets and small government would argue that government should not be in the business of making markets and picking winners this way. Let the companies and consumers sort out what they want.

I think this is a narrow and short-sighted view, for a few reasons:

  • There are public interests in promoting transportation with less atmospheric and noise pollution, namely public health and climate change.
  • Efficient transportation is a vital ingredient to economic development.
  • Electrified transportation can promote energy independence.
  • Transportation infrastructure requires a long time horizon to plan, fund, and build; it’s not sufficient to merely react to market forces.

At the same time, there’s a difference between a clear policy and the shifting tides of special interest.

As a result, in part, of lobbying by the car manufacturer and labor union special interests, it seems our de facto transportation policy has been centered around the personal car, to the exclusion of public transportation and the accompanying urban planning to support it.

Maybe a more overt and dedicated car-centered policy could bring a faster EV adoption. On the hand, is car-centered policy and investment the best course to pursue? More on that in an upcoming post.

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