Sunday, October 10, 2010

The Urban Umbilical Cord, Part 3

Once more into the never ending wonder that is the electric car. I posted, about six weeks ago, two blogs about my take on the vehicle and how the public may receive it. I did not and will not deal with the mechanics or even the whole issue of batteries and recharging and what their real impact is, I leave this to the experts. Remember, it is nothing more than a car with a different and yet quite conventional power source; one that has been around longer than the internal combustion engine – the electric motor. (Oh by the way honey, did you plug-in the car last night?).

What I do object to is how federal and state governments are now the financiers and marketers for this form of transportation. Besides being involved with the ownership of GM, governmental agencies dangle freebies to the market in an unabashed effort to prevent their failure.

In an article in the NY Times on Thursday it was laid out simply for all to understand. These incentives include for the Nissan Leaf (due in December): a $7,500 federal tax credit, a $2,500 cash rebate from the state of Tennessee if you live there (in California you will receive a $5,000 tax credit). Also, in many states, they will install, at no cost, a home-charging unit provided by the Energy Department (some provide tax credits for this). By the way you cannot just plug this baby into your toaster outlet – it feeds on 240 volts and it will require you to rewire your garage.

These cars are not cheap, the Leaf starts at $32,780, the Chevy Volt $41,000, and for the racy Tesla Roadster – north of $100,000. These prices are well inline with the gasoline market and I am sure they will be physically worth the price. They will have leather options, cool cup holders, a jack for you iPod, and maybe even a back seat (except for the Tesla). And don’t worry about the noise issue, gas cars are so quiet now they can sneak up and bite you even with their conventional motor.

But why are our governments in the car business? The rationales include saving us from the oil companies, cleaner air, the environment, and jobs. All well and good; I certainly would rather leave the hundreds of billions in dollars we spend for fuel here at home than send it to folks who really do not like us.

The urban environment would benefit. There will still be millions of cars on city streets but they will reduce particulates and carbon dioxide by significant amounts. We will all be happier as we go to jobs in our electric mix-masters while we save the environment.

But what about apartment complexes and condominiums, how in the world will these electrical systems be integrated into this market - an important customer base? Imagine trying to rewire and accommodate these facilities. I can just see the association meetings, who is to be first and who is last. It will not be pretty and it certainly will not be cheap. I guess the gov’ment will just have to help. And what about the work place, who will cover that? (I am beginning to sound like Andy Rooney, one moment while I slap myself.)

For a product to be successful the market has to embrace it. The product must meet demand (real or perceived), be affordable to enough buyers, tease others to follow, and be profitable. The last is the most important. With all this government meddling how can the manufacturer even understand the real market and the profitability of its product? A recent affect of this governmental diddling can be seen in the credits offered to first time homebuyers. The sales dropped through the floor after these “rebates/discounts” were dropped. Homebuilding is one thing – billions in manufacturing plants and jobs is another.

The electric car is a palliative. It is a trophy to be driven, proving the driver’s worth and social concern. It is also a provocateur; it will roil the social and economic structure of the country. Is it for better or worse? This remains to be seen. But to be successful it must be profitable and that is still hidden in the fog.

Stay tuned . . . .

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