Electric car era is coming?

Every time a new announcement such as Tesla and Volvo makes a new announcement, people's doubts about electric cars will diminish. Tesla last week to start a mass model of mass production, a few days later Volvo announced to be eliminated before 2019 fuel trucks.

However, this progress in electric vehicles has two important issues to note: First, the sale of electric vehicles rely on a wide range of state subsidies; secondly, it will lead to global warming caused by carbon dioxide emissions contribute negligible. If electric cars are to replace petrol engines without government help, they will have to innovate constantly, but also over fossil fuels that are also rising in productivity.

Electric cars have made great progress. They are no longer so ugly as in the past, thanks to technological progress, their prices are no longer so unattainable. According to Bloomberg's data on new energy finance, technological advances have resulted in a significant reduction in battery storage costs from $ 1,000 per kilowatt in 2010 to $ 273 per kilowatt-hour last year.

However, that means 75 kilowatt hours of battery (250 miles of battery mileage required for mileage) or will increase the car to about $ 20,000 cost. How does the electric car sell it? State subsidies helped a lot of busy.

The United States provides up to $ 7,500 in tax relief for each of the top 200,000 electric vehicles or plug-in hybrids sold by the manufacturer. In addition, the electric car also enjoy the state government tax relief, charging infrastructure subsidies, priority traffic and parking spaces priority, access to government procurement, and do not have to pay petrol tax. It can be said that the taxpayer pays a portion of the funds for the purchase of every electric car on the road.

What happens if the tax credit is canceled? In April this year, Hong Kong on Tesla car about $ 55,000 tax relief to substantially reduce the car's sales followed by stagnation. In Georgia, electricity sales fell 80% in a month after the $ 5,000 tax relief was lifted.

Once the tax credit is canceled, Tesla will find a large number of wealthy new sellers for its high-priced cars. But for the entire electric vehicle industry, the hybrid car is a lesson. From 2005 to 2010, some hybrid car buyers enjoy a tax relief of $ 3,500. According to Edmunds.com data, in 2013, hybrid car sales continued to rise after the abolition of tax credits, reaching a record high of 487,000, accounting for 3.1% of total vehicle sales, when the average price of gasoline per gallon of $ 3.51. This year, thanks to hydraulic fracturing technology, oil supply soared, resulting in gasoline prices fell sharply to $ 2.36 per gallon, hybrid car market share fell to only 2.1%.

When is the price competitive?

Many people who are optimistic about the electric car that the cost of battery down, means that electric vehicles will inevitably replace the internal combustion engine car. Last week, Bloomberg estimates that in the absence of government subsidies, electric vehicles will have 8 years after the internal combustion engine with the "price competitiveness."

But this situation depends not only on the cost of the battery, but also on the efficiency of oil prices and competitive models. Three economists Thomas Covert, Michael Greenstone and Christopher Knittel wrote for the Journal of Economic Perspectives, The article estimates that the cost of the oil per barrel is $ 300, and the price of electric cars will be the same as gasoline cars. If the cost of the battery drops to $ 100 (Tesla CEO Yilong Muske's goal), the average oil price is $ 90.

It could happen. But Kevin Book of ClearView Energy Partners, a consulting firm, points out that "people who are optimistic" ignore the compensatory effects of existing technology. "He said, for example, hydraulic fracturing makes it possible for natural gas prices to fall sharply The Global oil reserves have repeatedly surpassed the industry's contraction forecast, as industry innovation has expanded the amount of oil available. In addition, the internal combustion engine efficiency is usually increased by 2% per year.

ClearView said that in the battery costs from now on an annual decline of 10%, gasoline per gallon from the $ 5 optimistic situation, the electric car will become competitive after 5 years. If the battery cost is only 5% per year, gasoline per gallon from 2.25 US dollars, that electric car to be 20 years after the competitiveness.

The implementation of electric vehicles is also to improve the climate and environment, but the specific contribution to how much depends on other factors. Electric cars are usually charged at night. Three economists Joshua Graff Zivin, Matthew Kotchen and Erin Mansur in the Journal of Economic Behavior and Organization 2014 Published an article that the power of the evening is likely to come from coal. They estimate that in the middle of the central and western parts of the coal-fired plant, electric vehicles actually produce more carbon dioxide per mile than existing cars; in most parts of the United States, electric cars actually produce more carbon dioxide per mile hybrid car.

Federal regulators further weakened the impact of carbon reduction by providing additional tax credits for each electric vehicle to manufacturers that meet the average fuel efficiency standards. Therefore, every sale of an electric car, the manufacturer sold several high fuel consumption of the car, but also to be able to achieve the average fuel efficiency standards.

These subsidies clearly fulfilled a goal: they did not have the incentive to invest in the private market, they accelerated the technological innovation of electric vehicles. However, they may not be the most effective way to combat carbon emissions. For example, regardless of oil prices, carbon dioxide taxes will stimulate energy and alternative fuel development.

As the current situation is unlikely to happen, from the Chicago University Energy Policy Research Institute of Greenstone and Sam Ori (Sam Ori) and Harvard University Cass Sunstein (Cass Sunstein) proposed to cancel the current Of the fuel efficiency standards for car manufacturers to assign each car's tradable emissions limit. This will make alternative options like a more efficient gasoline engine or a diesel engine in an equitable competitive environment with electric vehicles. We should share the risk to prevent electric vehicles from reaching people's high expectations.