The hybrid fallacy
Government can force automakers to sell “zero-emissions” electric and plug-in hybrid cars but can't make buyers want them — or make such vehicles competitive in the market.
Nine states have followed California's lead in requiring such vehicles to make up 15 percent of new-car sales and leases by 2025; automakers face fines and potential sales restrictions if they don't. But even with subsidies such as tax credits for buyers, zero-emissions vehicles — priced far higher than conventional, nearly-as-fuel-efficient models (and hardly having zero emissions when one considers the sources of the electricity created to charge their batteries) — accounted for just one-third of 1 percent of 2013's new-car sales through May, Bloomberg Businessweek reports.
That's why lease rates have since been slashed drastically on Honda's all-electric Fit EV, Chevy's plug-in hybrid Volt and Nissan's all-electric Leaf, cutting any profits to the bone.
Says Butler's Mike Kelly, a GOP congressman and car dealer who's seen the Volt sit unwanted on his lot: “If something is not marketable, then no amount of subsidies will ever sell it. If something is marketable, then subsidies don't matter because it should already be selling itself.”
What's true for subsidies is true for these onerous state sales mandates. In March, two automaker groups filed a petition challenging California's rules with the EPA. But don't expect it to suddenly see the light.
Until government learns that attempting to command markets doesn't work, it will keep attempting the impossible task of making zero-emissions vehicles, which can't compete on their own merits, attractive to buyers.