No matter how you slice it, the American taxpayer has gotten precious little for the administration’s investment in battery-powered vehicles, in terms of permanent jobs or lower carbon dioxide emissions. There is no market, or not much of one, for vehicles that are less convenient and cost thousands of dollars more than similar-sized gas-powered alternatives — but do not save enough fuel to compensate. The basic theory of the Obama push for electric vehicles — if you build them, customers will come — was a myth. And an expensive one, at that.
In my recent Cato paper on corporate welfare in the federal budget, I discuss the efforts undertaken by Democratic and Republican administrations to develop “greener” automobiles:
The Department of Energy’s Advanced Technology Vehicles Manufacturing (ATVM) Loan Program provides subsidies to companies to develop “greener” automobiles. Companies that have received assistance from the ATVM program include Ford and Nissan. In a 2009 article in Wired magazine, Darryl Siry, a former executive with Tesla Motors, which received an ATVM loan, wrote that startup companies applying for energy subsidies “have admitted that private fundraising is complicated by investor expectations of government support.” Siry notes that the government trying to pick winners distorts the market for private capital, which “will have a stifling effect on innovation, as private capital chases fewer deals and companies that do not have government backing have a harder time attracting private capital.”
The ATVM program is just the latest at-tempt by policymakers to create greener cars. In 1993, the Clinton administration launched its Partnership for a New Generation of Vehicles. This program handed out $1.2 billion over eight years to U.S. automakers for the development of hybrid cars. The program was widely panned, but instead of eliminating such subsidies altogether, the George W. Bush administration replaced it with a new initiative called FreedomCar. This program focused on developing automobiles that would run on hydrogen fuel cells, and it cost taxpayers about $2 billion. The Obama administration announced in 2009 that the government was “moving away from funding vehicular hydro-gen fuel cells to technologies with more immediate promise.”