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Energy Explained to Governments – Part 2 (EVs)


Electric Vehicles, or EVs, are already here, and gaining market share every day. EVs are so popular that General Motors (GM) recently announced an all-electric lineup by 2035, with 40% of their vehicle production being electric by 2025. While many of us believe this goal is ambitious, it demonstrates the commitment made by Americans to fundamentally change the way we travel.

Today, GM has yet to increase profitability by even one cent with electric vehicles. Given today’s cost structure, GM loses money on every VOLT produced and sold. VOLT is the only electric vehicle (EV) produced today by GM, and I doubt TESLA feels threatened by VOLT’s current (pun intended) paltry market share. After all, look at previous GM forays into the EV market; the Electrovair and EV1, which were both disastrous.

Before internal combustion engines became the norm, electric vehicles were very popular. By 1900, about 1/3 of all vehicles on the road were electric. Sales remained strong for a few years, during which gasoline engines began to gather market share. However, increases in the availability of electricity to consumers also fueled (again, pun intended) the EV market.

The biggest factors in the popularity of gasoline cars were road building, the discovery of oil in West Texas, which drove gasoline prices down sharply, and World War II. When WWII ended, Americans tasted freedom afforded by private vehicles, and the Great American Love Affair with personal automobiles began. The rest, as they say, is history.

Or it was until the 1960s and 1970s when gasoline shortages began to drive prices higher. Additionally, 1970 saw the creation of the Environmental Protection Agency, or EPA, triggering renewed interest in EVs, viewed as environmentally friendly. General Motors, American Motors, and NASA all did pioneering work in EV development. GM’s earliest foray into the EV market was the Electrovair, which was based on the 1966 Corvair. Ralph Nader essentially doomed the Electrovair, along with the Corvair, with his 1965 book, Unsafe at Any Speed. Although Corvair was declared safe by the National Highway Traffic Safety Administration (NHTSA) in 1972, it was too late to save the model.

GM re-entered the EV market in 1996 with the first production EV, dubbed the EV1. Produced until 1999, EV1 was only offered for rent. In an action that remains controversial to this day, GM recalled every EV1 in 2002 and destroyed them all. Today, any number of car buffs would pay hefty sums to have an EV1 in their private collections.

In the middle of the EV1 era, Toyota’s Prius went into production in 1997. Many of us found the Prius’ appearance unconventional and confining. As thousands of owners have learned over 2+ decades since Prius is an excellent hybrid vehicle that performs as advertised. Worldwide sales are approaching 2 million, and larger new models have made Prius practical for families.

Other hybrids and EV ventures are commonplace, with TESLA leading the way, and proving the viability of EV cars. Competition is producing more and better options and at increasingly affordable pricing.

As a society, we are moving in the direction of electrified travel, both personal and commercial. However, electricity doesn’t magically appear in America’s wall outlets. Increasing demand for electricity will put the brakes (yeah, another pun) on the popularity of EVs unless we confront looming energy supply problems.

Environmentalists are doing their best to eliminate the use of “fossil fuels,” but they have demonstrated no ability to meet the rapidly increasing demand for electric power. Governments, both here and abroad, must come to grips with a requirement for a sufficient uninterruptable supply of electric power, now and in the future. Until that is accomplished, we should authorize new nuclear plants, as well as ending tax subsidies granted to buyers of electric cars. Allowing free markets to work, through traditional supply and demand, is the surest path to our electrified travel goal.

Van Wie Financial is fee-only.  For a reason.