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Blog: Government Support for Electric Cars

Nov 18, 2010 | By Laura Quigley, NETWORK Intern

If the United States is serious about maintaining its dominant position on the world stage, the government needs to increase its investments in renewable energy. As talk of climate change and running out of oil becomes more of a reality, countries around the world are turning toward renewable energy and it’s time the U.S. followed suit.

One of the best ways to do so would be through direct government subsidies to companies that make electric cars.  It’s no question that Americans love their cars, but our love of the open road is coming into conflict with concerns about sustainability. We need an alternative that allows us to keep driving without jeopardizing our future. Electric cars are the answer; they provide a solution that utilizes renewable energy and is pollution free. 

The increase in the number of hybrid cars purchased, from under 10,000 ten years ago to over 200,000 in 2009, indicates that Americans want to drive more fuel-efficient and ecologically friendly cars. With zero tailpipe emissions, no car is more ecologically friendly than the electric car. However, when the cost of a hybrid or electric can be hundreds or thousands of dollars more than a standard, people are forced to sacrifice their environmental ideals to their financial realities. Government subsidies could change that. 

If the government provides subsidies to companies that produce electric cars it would allow them to sell cars that are more affordable. The production costs would be the same – the difference is that the government will pay for some of these costs. With a lower price tag, the demand for these renewable energy vehicles will undoubtedly increase. Because companies have received government subsidies, they will be able to meet reasonable profit expectations.  Subsidies will make electric cars more accessible to consumers, which in turn will stimulate competition among car manufacturers. Already, the demand for hybrid cars has led most of the major car companies, American and foreign, to create at least one model to stay competitive in the market. The production of less expensive electric cars can further stimulate the competition.    

Although their existence is barely acknowledged in the U.S., electric cars have already created a substantial impact in Europe.  The presence of these cars can be explained in part by their compact nature that makes them ideal for navigating the narrow streets of European cities.  Increasingly, however, the abundance of these small, eco-friendly vehicles can be attributed to government intervention.  A competition has sprung up among EU countries to see which one will be able to boast the highest number of electric cars.  Governments have implemented various policies to incentivize citizens and companies to switch from standard cars to electric.  Nothing is a better motivation for innovation than competition, and as the competition wages on, more advances are being made in the engineering and technology of electric cars.  If the U.S. waits too long to get in the race, it may miss the opportunity to be an active part of the technological development, which would cause us to fall even further behind.  The U.S. government needs to copy its European counterparts and start taking action to promote and support renewable energy among the general public.  

Developing renewable energy takes more than just money. It also takes time and effort, which are costs that may not be immediately considered by those who don’t see why investing in renewable energy today is important. Right now, the need for renewable energy does not seem urgent, but that’s what makes this the perfect time to invest. If car companies receive direct subsidies now, they would be able to conduct their research and development in a lower pressure environment than if they postpone the initiative until the U.S. faces an energy crisis and the need for renewable energy sources is imminent. The longer the U.S. waits to develop electric cars, the more our physical and environmental health will suffer.  The sooner we can get electric cars onto the road and gas-guzzling cars off, the better we will be.    

If ever there were a case for the government to step in and provide subsidies to private companies, this is it.  Subsidies for electric cars would help the market by stimulating competition among car companies, allow America to regain its position as a strong competitor in the global technology competition, and lead to the reduction of pollution and greenhouse gasses world wide. The cost to the taxpayers for these subsidies will be offset by the improved environment, which will reduce the healthcare costs incurred by pollution-related illnesses. But if the public can’t be swayed by any of those compelling arguments, perhaps they can be won over by the fact that electric cars tend to be small, so parking at the mall would be made a whole lot easier.