What Next For Electrics?

Weighing the options.

What Next For Electrics?

I recently heard an interesting radio discussion of financial realities affecting the electric-vehicle business. Businesses do not emerge from nothing. They are the joining of a business plan with, in this case, money from venture capitalists. In the normal course of affairs, venture capitalists expect to cash out when the companies they have funded "go public," making an IPO, or Initial Public Offering, on the stock market. The current trouble is that some of these companies that had planned IPOs have now withdrawn them. Why? It may sound strange in a world that nods and smiles at vague concepts such as sustainability or "green-ness," but potential investors want to make money. These companies are not doing that. Only Tesla is going ahead with its IPO.

The problem is that 1) electrics, however well proven technically, cost a lot more than the market value of their function; and 2) the infrastructure and technology for rapid recharging don't exist.

I often hear the standard apologia for the high prices of electrics. The strongest is the airy notion that "Good citizens should be willing to pay extra to save the planet." The second part is the prospect of subsidies. My problem with the first part is that the price of goods is a rough measure of the degree of environmental pressure their construction causes. If a Chevy Volt costs roughly twice as much as a Chevy Cobalt, that extra money presumably pays for extra resource extraction and processing in factories.

The second part is better: the special privilege of electric vehicle makers to effectively sell their products more than once--through subsidies. The first sale is to the end user. The second sale is to the taxpayer, through Federal subsidy. The third sale may be to residents of any states that vote their own subsidies.

I am all for electric vehicles as a market choice, just as I take pleasure in hearing the wonderful rock-crusher sound of a Ducati 1098R's valves. This is variety--the spice of life. But there are underlying realities to keep in mind.