Is Obama Playing God With the American Electric Car?

Is Obama Playing God With the American Electric Car?
by Brian Merchant, Brooklyn, New York on 05.27.09

It was pretty good news for clean energy enthusiasts when Obama announced $2.4 billion in funding for electric vehicles. Sure, like the high speed rail plans, it didn't seem like enough money, but a couple billion can go a long way. So what's the problem? Decisions as to who gets the funding will be decided by Obama, his team, and state governments--meaning the gov will have a huge hand in deciding which electric cars succeed or fail. Will Obama decide the fate of the American electric car?

The funding will largely go to developing the electric car batteries--meaning the government will find itself charged with decided which battery will be most cost-effective, most marketable, and most economically viable. But are they best equipped to make the decision that could determine the future of the electric car in the US?

Over at Green Biz, Marc Gunther dives into the problem:

Much as I admire Steven Chu, the energy secretary, do we really want to entrust him and his staff to decide which battery technologies are likely to succeed and which companies can most wisely spend that $2.4 billion?

One thing to consider is whether or not the electric car will be deemed mass marketable by the administration:

Some of these batteries, by the way, could well find their way into cars like the Tesla (sticker price:$109,000) and those made by Fisker Automotive, a California firm that plans to sell $88,000 luxury-hybrids next year. So tax dollars collected from working people and the middle class go to subsidize rich boys and their toys.

So if not Obama, and co, who'd be better fit to make the call?

Please don’t get me wrong. I think electric cars are a great idea. The faster they arrive, the better. But judgments about which battery-makers to finance should best be left to venture capitalists, investors like Buffett (who bought 10 percent of BYD), big investment banks and the like. They may be no smarter than the people at the DOE but at least they are putting their own (or their investors’) money on the line. If they’re wrong, they’ll be held accountable, or at least they should be. You can be sure that some of them will be wrong, and that’s fine.

It's an interesting perspective to be sure, and free market capitalists (even pro-green ones) are probably cringing a little at what could happen to the electric car industry. Then again, some pretty strong arguments could also be made for better regulatory guidance on industry at the moment . . .

More on Obama and Cars
Obama Kills Hydrogen Car Funding
Obama to Automakers: Make Greener American Cars or Go Under
Obama to Issue National Auto Emissions Standard: All Cars Must Get 42 MPG by 2016

Thirsty for more? Check out these related articles:
GM Defends the Volt, Attacks Smaller Electric Car Start-Ups (Tesla, Fisker, etc)
Did You Know Saving Water = Saving Electricity?
Finally! Norwegians Take to the Streets for Electric Cars (and Get Electric Car Sharing!)
Waxman-Markey Bill To Move Forward, After Arrests and Speed Reading

Comments (16)
um.... isn't that kind of his JOB? it's called the EXECUTIVE branch for a reason....

i'd rather him make the decision than mccain, palin, bush, cheney, or even clinton.
May 27, 2009 5:06 PM | flag a problem
aaron says:
um.... isn't that kind of his JOB? it's called the EXECUTIVE branch for a reason....

i'd rather him make the decision than mccain, palin, bush, cheney, or even clinton.
May 27, 2009 5:24 PM | flag a problem
aaron says:
@Brian

{sarcasm ON}Yeah cause trusting big corporations is better than trusting the President ...........{/sarcasm OFF}
May 27, 2009 5:27 PM | flag a problem
Anonymous says:
No... that is not his job. If Congress decides to pass a law stipulating that the government will choose the best battery, he can sign it into law. He can make big pushes to one battery or the other.

Honestly, I would like the market to decide. I don't want to have a cheap piece of junk, or a really expensive battery shoved down my throat. If you want to spur innovation, have a contest and set the standards. First to achieve it gets a boat load of money. A donkey will move a lot better with a carrot than whipping it with a stick.

But I shouldn't be surprised. Obama is expanding governmental role in a lot of things, why would this be any different
May 27, 2009 5:44 PM | flag a problem
Anon says:
The "playing god" bit is hyperbole. He's making exactly the kind of decisions that he's supposed to be making. That's not playing god, that's acting as the President.

The logic of venture capitalists being better at deciding who gets the money is weak. Is he suggesting that Obama give the money to venture capitalists? Is he suggesting that the government not invest the money at all and just let private investors do it? I think he's missing the whole point of what the President is trying to do.
May 27, 2009 6:11 PM | flag a problem
Jason M. Bryant says:
Aaron:

No, it is not the job of the chief executive of the federal government to be the chief executive of the automobile industry.

Maybe you are right that Obama will do a better job deciding which car companies should live and which should die than would Bush, McCain, Clinton, etc. The issue, however, is whether ANY president should be making that decision.

As in every other industry, we should be making that decision. We make decisions about which companies live and which die every day through the purchasing decisions we make. If Electric Car company A makes a better car than company B, we will buy more cars from company A.

The free market is not perfect, of course. Because we don't directly pay for the environmental impacts of cars in the purchase price, we are underpaying for non-electric cars. The government's $2.4B is supposed to equalize that, in theory. The problem is that it seeks to do it by giving it to individual companies. If the government subsidizes the wrong company, then we will be buying the wrong cars.

Why not give the money to buyers of electric vehicles? Then we can make the purchase decision that is right for us, and the government will subsidize the higher cost of electric vehicles across the board. Or tax the fuel consumption of new vehicles, allowing us to internalize the environmental costs of ICE vehicles and make the right decisions accordingly? There are many ways the government can incentivize the purchase of environmentally friendly vehicles without giving one man the decision of which vehicles we will buy, which is almost certain to achieve inefficient results.
May 27, 2009 6:52 PM | flag a problem
Eric says:
"When buying and selling are controlled by legislation, the first things to be bought and sold are legislators."

--P. J. O'Rourke
May 27, 2009 7:34 PM | flag a problem
Mike z. says:
""When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.""

I thought the first thing to go was the Truth.

Better be careful here, the Ministry of Love might be looking....
May 27, 2009 8:23 PM | flag a problem
Don says:
The question is tossing a card in a cocked hat. MBA's and financial wizards and investors and politicians are all completely unqualified to magage R&D projects and judge reliability and performance characteristics of batteries.

What they can do is evaluate, as a team, the market readiness and affordability of preliminary engineering cost estimates. We are years from that point yet.
May 27, 2009 9:39 PM | flag a problem
John Laumer says:
Problem? What Problem?

"Obama announced $2.4 billion in funding for electric vehicles"
. . . That doesn't sound like a problem,
. . . it sounds more like a solution!

"Obama, his team, and state governments--meaning the gov."
will have a huge hand in decided(ing) which electric cars succeed or fail.
. . . They can't be less competent then the BIG-3?

Tax dollars collected from working people and the middle class go to subsidize batteries, that will be used by everyone,
. . . including some who may be rich?

Venture capitalists, investors like Buffett (who bought 10 percent of BYD), big investment banks and the like,
. . . are still free to make judgments about which
. . . battery-makers to finance.
May 27, 2009 11:14 PM | flag a problem
ed says:
Why so shocked when you suddenly discover The Messiah is playing God? Wasn't that the plan all along?


"So if not Obama, and co, who'd be better fit to make the call?"

What? You doubt the ability of someone with all that experience under his belt as a "community organizer" to decide such a simple issue?

The fact is, no matter what amount of government meddling and taxpayer money is flushed down the toilet on this dog and pony show, there is only one place the matter is decided -- the marketplace. And the market has already decided that it doesn't care about electric cars. Nobody wants them at any price.
May 27, 2009 11:49 PM | flag a problem
db says:
I'll support electric vehicles when America stops generating electricity from fossil fuels. As far as I am concerned their is no inherent right to drive any kind of car. It would be better to encourage Americans to use public transportation.
May 27, 2009 11:52 PM | flag a problem
Frank Chavez says:
I love this article , because it show the fascism that comes with green thinking. The best quote is this one "So if not Obama, and co, who'd be better fit to make the call?"
It's interesting to me is that If Obama can't save us who will. You should remember what state Obama come from. Where pay to play is everything. I you want your battery endorse by the government,you give a few bucks to my campaign fund or in Obama's case you help me buy my house. Its a big fraud in the making. Electric cars will come to the market some day. We are heading in that direction. Don't dream about God 2.0 (Obama) to bring heaven on earth.
May 28, 2009 1:23 AM | flag a problem
Juan says:
Jeff is completely correct. The key is externalities. Corporate pollution is an externality that the cap and trade pollution tax will address. Polluters will become less profitable, hopefully.
Buyer's decisions can have externalities, too, particularly when specialized expertise is concerned. For instance, if we were all to vote on moon-rocket designs, chances are our voted collective choice would not make it off the ground. Similarly, ordinary buyers know nothing of aerodynamics and they prefer 'styled' bodies rather than 'aerodynamic' bodies. The resulting market inefficiency means that half the gas we use to move our cars from place to place is wasted just pushing air out of the way. Aerodynamic vehicles with government mandated low coefficients of drag would reduce the deficit significantly and end our dependence upon middle-eastern oil. All it is is bending the sheet metal right. Bigger cars get better, far better, gas mileage. See www.aerocivic.com for an example. All our cars should be aerodynamic as soon as possible so we can stop wasting so much fuel. Top speeds would increase. We need to add boat tails, belly pans, and enclose open wheel wells. The bodies could be heavier and still get better mileage. It ain't rocket science.
May 28, 2009 2:59 AM | flag a problem
Ross Nicholson says:
Having someone play GOD is a refreshing change from decades of White House dwellers who played SATAN.
May 28, 2009 3:05 AM | flag a problem
Joe says

I personally like the idea of having a contest and perhaps fund the best 3 or 5 ideas and concepts presented. It seems to have worked pretty well with the solar car and house concept, and the unmanned rocket program, so give it a try! I also like the idea of the Million Solar Roof project in California. The government could agree to underwrite a million solar systems to get the volume pricing and then make them available to those who are interested at a very reasonable rate thru banks, S & Ls, and credit unions. Let people finance their solar system like they do their mortgage, over 20 years. Several cities are already doing that for their residents and collecting payments each month along with the water and garbage bills. The solar system adds value to the house and when its sold the solar mortgage is sold right along with the deed to the house. It would support solar businesses, create solar employment, and kickstart the renewable energy initiatives.