Do low oil prices+Recession = No market for electric cars?

[GliderGuider]

With oil trading at a third of its recent peak price, gasoline appears to have regained its economic attractiveness for consumers. In addition, the economic downturn means that people are keeping their old bangers, as evidenced by the accelerating slide in automobile sales.

So long as conditions keep going in this direction (oil stays cheap, money continues to tighten), is there any incentive for automobile makers to invest in e-car R&D and production facilities? I'd suspect the answer is no. I don't see how even government investment in the industry is going to make buying a new electric car an attractive value proposition for the average consumer.

The interesting question for me is what happens as a result of that if oil prices suddenly spike again in 3 to 5 years? At that point we will be well and truly into the net export decline phase of peak oil, and probably past the actual global peak as well. If there has been no infiltration of e-cars into the global fleet, the combination of oil supply constraints and a global economy struggling to recover could push gasoline prices to significant levels (personally I think $20+ per gallon is conceivable within the next 5 to 10 years).

If economical used ICE cars are still available, what conditions or influences could prompt consumers to accept the additional cost of switching to an electric car before the next oil price spike?

[n2doc]

1. I think yes. Because prices will not stay down

We need to be ready. If that means subsidizing electric car production/refinement over the next few years, that is worth doing. Oil will not stay at these levels when the global economy gears back up. And on top of all of this, we absolutely need to work on reducing/eliminating CO2 emissions. With electric cars the emission problem becomes a point source issue addressable with a variety of tech.

Frankly, if I can come up with the money, I will seriously be looking at a Volt when it comes out. I don't care if I could buy an SUV for the same amount. And I am not alone.

[wtmusic]

2. When interest in e-cars gains momentum

all oil has to do is lower prices. Because of the development time lag this is an effective long-term strategy for keeping electric cars off the road (it's worked for over a hundred years).

Not all consumer demand is economics-driven, however. It's going to be up to environmentalists to "prompt" consumers to not only demand e-cars, but demand cheap ones. There is no technical reason why mass-produced electric cars should cost more.

[Tandalayo_Scheisskopf]

3. Maintaining a desire for solutions...

Is a function of leadership and its use of the Bully Pulpit. Right now, we have no effective leadership, just a bunch of shitty-diapered brats.

We will soon have a real government, with more than two neurons to rub together.

[Citizen Number 9]

26. After 8 years, it almost seems unreal...

"We will soon have a real government, with more than two neurons to rub together."

Almost makes me giddy to think about it, actually.

[Anywho6]

4. Moot point right now

I would bet the majority of Americans are worried about their jobs and what's left of their retirement and they can't even fathom buying a car right now and if they can, it's a used car. I think The Big Three are so behind the curve on this that they missed their window of opportunity. Yes, I believe there will still be a market for fuel efficient/new tech cars, but not for several years due to economic and financial/credit conditions.

[Citizen Number 9]

27. Middle America might not be ready

But there are a lot of people who still have money and who would buy a reasonable electric car.

I know a dozen people alone, who could and would buy an electric right now.

If we can get the .gov to push this forward, these kinds of initial sales could catalyze the industry.

I know dozens of retirees who are active and living longer than they expected and who are needing to buy another car after what they thought would be their last one has become too old.

Let's allow tax-free removal of up to $40,000 from retirement accounts for the outright purchase of such an electric vehicle. Their vehicular needs (trips to doctor, pharmacy, grocery store, social events) are ideal for the electrics we can build right now.

[Nederland]

5. I don't think so

I admit that perhaps I'm being widely optimistic.

However, my reasoning is this: the cost of electricity and the cost of gasoline are correlated to a large degree. Yes, it varies widely based upon where you live and the source of power ultimately providing you electricity, but there is enough correlation to make my next observation significant. Which is:

Electric cars are more efficient than gasoline cars. Just look at this graph:



And notice that the graph compares the Tesla against cars that aren't even in its class. They shouldn't be comparing themselves to a Toyota Prius, they should be comparing themselves to a Porsche or Corvette. When you do that, you'd see just how efficient this car really is. Why does this matter? Because a car that is twice as efficient will be close to twice as cheap to operate--regardless of the price of oil. And car that's twice as cheap to operate has a competitive advantage over others...

Just my optimistic $0.02.

[dem91203]

6. America's survival

You Said:

With oil trading at a third of its recent peak price, gasoline appears to have regained its economic attractiveness for consumers. In addition, the economic downturn means that people are keeping their old bangers, as evidenced by the accelerating slide in automobile sales.

So long as conditions keep going in this direction (oil stays cheap, money continues to tighten), is there any incentive for automobile makers to invest in e-car R&D and production facilities? I'd suspect the answer is no. I don't see how even government investment in the industry is going to make buying a new electric car an attractive value proposition for the average consumer.

The interesting question for me is what happens as a result of that if oil prices suddenly spike again in 3 to 5 years? At that point we will be well and truly into the net export decline phase of peak oil, and probably past the actual global peak as well. If there has been no infiltration of e-cars into the global fleet, the combination of oil supply constraints and a global economy struggling to recover could push gasoline prices to significant levels (personally I think $20+ per gallon is conceivable within the next 5 to 10 years).

If economical used ICE cars are still available, what conditions or influences could prompt consumers to accept the additional cost of switching to an electric car before the next oil price spike?

Now is the time to kick off the electric hybrid era of autos. If one notes the recent actions of the Former Soviet Union[/b>] , Hugo Chavez and Amadinejad they are trying to close in for the kill on the United States Of America. They are hoping to create a short squeeze on oil and grain in an attempt to paralyze the United States Of America and render our military industrial complex impotent and isolated, because of our dependence on imported oil. Time to under cut these dummies and leave them hopping around on their knees.

[GliderGuider]

7. Mmmmkay...

Do you realize we're all at the beginning of a global depression?
Do you also realize that "America's survival" in any hegemonic sense will depend on a lot more than a few electric cars?
Or that America imports 2/3 of its oil and that only one of your international suppliers (Canada) is fully under your control?
Do you know what the phrases "net oil export problem" or "Export Land Model" mean?

[lurky]

8. If we leave it up to chance, I think failure is pretty likely.

But the govt can create an incentive model to ensure that there is a market.

Jane Hamsher from The Nation posted about this subject the other day:
http://www.thenation.com/blogs/passingthrough/386733/forget_gm_s_plan_where_s_the_government_s_plan?rel=hpbox

[Independent_Thinker]

9. Not sure about that...

Do we want the same yahoos that are working in the DMVs designing the next generation of cars? How again to senators have any experceince running a car company.

I think the demand will be there for well built cars that fulfill the need of the customer. If an electric car can do the same things that my SUV can then I will probably purchase an electric car. We should not think that the answer is the government. They tend to screw things up more than help. The $4/gal gas I think scared a lot of people and they will remember it for a long time to come. The public has come to demand more efficient vehilces along with other items like better building materials and more sustainable building designs.

[lurky]

11. Hmmm... Did you read the article I linked to?

And sorry, the whole Libertarian/Conservative "Let the market run free and everything will magically work out" philosophy has been thoroughly discredited by recent events. You'd better come well armed with data and citations if you want to start dropping those talking points.

[Independent_Thinker]

15. You missed my point

do you think that those in Government know better than those in the industry? I think not. My point was not lazzie-faire but that industry will respond to the market demand. My point is that the market has seen what $4/gal looks and feels like. And that industry will respond faster to the market demand than government forcing a response. Who should the big three please? The market or the government that gave them the loan? Government is not made up of brillent business leaders, but lawyers. And those that can grant this bailout/loan are also the receiptants of huge campaign donations. Some totaling over $800K. Doesn't that sound a little incestous? If a republican received funds from say Exxon in that amount and then Exxon came to the hill desiring a bailout, wouldn't we cry foul?

[lurky]

16. Bailouts? Campaign finance? Are we even talking about the same thing?

The one thing I can tell you is that industry without oversight has committed economic suicide in pursuit of short-term profits (Big 3, AIG, Lehman Brothers). These disasters were all foreseeable and preventable, and totally due to reckless and stupid obedience to unregulated market forces. Senators are mostly lawyers, yes. That is why they have large staffs of analysts, and why we need input from economists, scientists, industry experts, and many others when crafting these policies.

Sadly, your hypothesis that people will remember $4 gas when making future decisions is not supported by history. During the oil crisis of the 1970s, many people thought that the experience of rationing and long lines for gas would permanently make America a conservation culture. Within a few years, however, giant gas-sucking behemoths were all the rage once again.

Do corporate campaign contributions bother me? Of course. In fact, just about every "unsolvable" problem in this country is directly attributable to the undue influence of corporate interests in Washington. That's why I don't have much confidence that congress will do anything effective or in the national interest in the long term.

[Independent_Thinker]

18. "stupid obedience to unregulated market forces..."

Isn't that Capitalism? Isn't that the goal of all companies is to make a profit and therefore continue to exist - any employ lots of people. You make it sound like the company should do what the government says and everything will be all right.

Your examples are not equal - AIG and Lehman bros are in the mess they are in for totally different reasons than the big 3. The big 3 in terms of total avg hourly wage per employee is over twice that of companies like toyota, BMW, Mazada and so on. I reject the thinking that I see a lot, hence my screen name, that if only the big 3 were to produce electric cars then all would well. Hybrid cars are available now, they are selling well but they are not taking over like those that push electrics think they will. The current electric cars are short of power and range. Again, if an electric car can meet my needs, I would buy it in a heartbeat. But the added cost and loss of functionality is not something that I am willing to bear.

The reality is that the big 3 need to reduce that overhead in manufacturing. No amount of loan or bailout will fix this - it will only delay the inevitable. They are making good money overseas and especially in China. I was there recently and they love American cars.

Agree with you last line. We all should have little or no confidence in Congress. They have proven themselves many times over to be ineffectual and often times destructive to the market and jobs.

[wtmusic]

21. Greed is good and all that nonsense?

Cripes, where do I start.

Capitalism has been killing the electric car for over one hundred years. If you don't believe Detroit and oil companies are capable of launching a conspiracy to do so, you have obviously never heard of National City Lines.

http://en.wikipedia.org/wiki/Great_American_streetcar_scandal

If you still think capitalism will save all, go and rent "Who Killed the Electric Car".

http://www.sonyclassics.com/whokilledtheelectriccar/

See how electric cars have been practical for years and it's *because* they're practical that oil companies and car companies themselves are working overtime to make sure they never see the light of day.

btw, I use a homebuilt electric car for 80% of my driving. I pay a fraction of what you pay per mile. It goes 80 mph and goes 40 miles on a charge - more than enough to do all my errands in a day. It uses technology that is 160 years old; with modern lithium-ion batteries it could go 3x as far. If you don't think that's practical then you're in a tiny minority.

http://www.aspire-ev.com

[GliderGuider]

10. Thanks for that. Here are some thoughts on incentivizing the switch to electric

My view is this:

High gas prices, lots of disposable income (the situation last year) = lots of incentive to go electric.
High gas prices, little disposable income (i.e. the situation during a depression with a gas tax) = some incentive to go electric.
Low pas prices, lots of disposable income (the situation 3 years ago) = little incentive to go electric.
Low gas prices, little disposable income (the situation today) = no incentive to go electric.

As far as I can tell, high gas prices are the only lever we have left at this point. If gas prices could be raised even with a depression going on, there would be some incentive to switch. Given that disposable income is going to keep on falling, the key now for stimulating the incentive to go electric is to get gasoline prices back up. The best way to do that would be with a massive sudden gasoline tax to bring prices back up (say to $5.00 a gallon). However, just try and get any political support for that...

The best we may be able to hope for is for the government to subsidize the cost of e-cars and wait it out until the next price shock pushes gasoline prices up without a tax.

I don't think the environmental bully pulpit will work if a large percentage of people are having trouble paying for food and housing.

There will be massive public resistance to having the government subsidize e-cars, which will continue to be seen as "toys for the rich". We'd need some strong advertising to change that perception, and it would need to be backed up with a credible value proposition.

[lurky]

12. I think that's the biggest lever, but it can't work alone.

Something else might be tax incentives for manufacturers to make highly-efficent vehicles (without necessarily specifying the technology). Another possibility is a tax write-off for people who drive e-cars. Hell, we've been giving tax breaks to people who drive Hummers for ages, why not give them to people doing the right thing instead?

[Citizen Number 9]

24. I think we are right at the point

where the market ceases to make all the decisions.

Read the signs. We have a good opportunity right now to push the auto industry towards functional electric vehicles.

With 5-8 million vehicles sold per year, it would be a huge project to shoot for even a million electric vehicles per year.

However, we will not get started in that direction without a huge impetus from government.

Now is the time for that impetus.

[The2ndWheel]

13. Yeah, love stinks

Oh, you were talking about cars.

"You cannot create an effective business plan if you cannot project what the market for your product will be."

So we should live in a corporate state where our lives are incentivized to meet the demand of the corporate state?

[lurky]

17. Not really,

I was talking about using economic carrots and sticks to get corporate America to behave like responsible corporate citizens. And I was also talking about creating incentives so that it is in somebody's economic best interest to use environmentally sane transport. I'm open to other proposals. :shrug:

[Independent_Thinker]

20. But who will decide?

Who will decide what is in the best economic interest of the company? Shouldn't that be the shareholders of the company itself?

What should happen is that we need to bring back consequences. If you run your business in a poor manner, you fail and you go out of business. Someone comes along behind you and purchases the pieces and put together a better company.

We are trying to remove consequences for poor managment.

[bananas]

14. NYC used to shut down for days because of smog

and that was a big motivation for pollution controls.
There are now more cars in NYC and much less smog.
China is going through that now, they are going to have to do something to reduce smog, and e-cars could be a big part of that.
Mass production for China will make them competitive with ICE cars.
That's without CO2 considerations.
Europe has a high tax on gasoline already, they are going to enact stricter CO2 emissions, that will create demand for e-cars there.
The US EPA can now regulate CO2 emissions, with the new congress we are definitely going to see this, so there will be demand for e-cars here.

[excess_3]

19. countries with high gasoline tax will like the electric car ..n/t

[tinrobot]

22. Raise the gas tax and put it towards alternative energy.

Since gas is so low, the extra few cents per gallon won't hurt as much.

[GliderGuider]

23. A few cents a gallon won't do it.

There was a fellow on GD who suggested that we use this opportunity to tax gas back to $4.00/gal. That's what it would take to change driving habits. He defended that position quite strongly, and got booted off DU.

I personally think a gas tax of $2.00 a gallon would be a fantastic idea, but it will never fly politically, and since I like posting here I'm not about to defend it. :-)

[Citizen Number 9]

25. Booted off DU? For an idea?

Will I get booted off for promoting a $1.00/gallon tax on gasoline? Make the consumption of gasoline pave the way for alternative and electric.

It would generate $140 billion a year. We could offer a tax credit on a basic amount of gas to each family - say bring that amount down to $100 billion total revenue. Hoggish gas users would bear the brunt of the tax. Good. Someone has to.

Elsewhere I offer a plan that shows the cost of getting a serious start on the road to electric vehicles at about $100 billion in the first year.

[Nihil]

28. Not here (in E/E) but you probably would if you tried it in GD

That's where the chap proposed it and was promptly set upon by a mob of morons
who eventually got him tombstoned. That was the point when I realised that DU
(as a whole) was every bit as stupid, selfish & short-sighted as any forum full
of right-wing Americans ... quite a disappointment when you've spent a lot of
time here in E/E ...
:shrug:

[jpak]

29. The Doom is always Darkest....before the DOOM!!!!1111

and I disagree with self-fulfilling prophesies...

Invoking the Shock Doctrine and the New Deal, now is the time to massively subsidize the production of all manner of electric vehicles AND renewable energy systems to power them.

$4.25a gallon gasoline and $4.75 a gallon fuel oil are not abstract numbers to the American public - they experienced these prices this summer and know all too well the impact they had on their household budgets.

The current credit crunch and 6.7% unemployment is not an abstract concept to them either.

People understand that $43 a barrel oil is just a temporary respite - and that $147 a barrel oil can come roaring back at any time.

Now is the time mass produce and subsidize electric transport, wind and solar electric technologies.

Jobs + energy security + transportation = good

DOOM = bad

[kristopher]

30. No.