Guest post by Bjørn Lomborg
I’ve said electric cars get subsidized too much. Turns out I was wrong.
In California, they are subsidized ridiculously too much.
Tesla gets $45,000 for each car it sells in state and federal subsidies. The Tesla S starts at $69,000, so about 40% of its total cost is subsidies (Tesla isn’t making any big profits).
This is because the California Air Resources Board has mandated that zero emission vehicles should comprise 15% of new-car sales by 2025 — up from less than 1% now. This forces other car companies that can’t comply to pay for credits from Tesla.
“At the end of the day, other carmakers are subsidizing Tesla,” says one analyst.
Remember, the Tesla avoids perhaps 10 tons of CO2 (more likely, with its large battery pack it avoids nothing or even *increases* total CO2 emissions). That means Americans pay at least $5,000 per ton of CO2 avoided – about a thousand times more than the price in the European Trading System.
It also avoids local air pollution (which is presumably the Air Resources Board’s objective), but over the entire lifetime of the car, this is worth around $500.
Source:
Air pollution costs:
For Europe:http://ec.europa.eu/transport/themes/sustainable/doc/2008_costs_handbook.pdf, p57, air pollution for new gasoline cars is about €0.001/km or $150 for 150,000 km;
For France:http://www.internationaltransportforum.org/jtrc/DiscussionPapers/DP201203.pdffor France, p26, shows €634
Danish numbers: DKK 1500 (or about $300) for 150,000km, p147http://www.dors.dk/graphics/Synkron-Library/Publikationer/Rapporter/Miljo_2013/Trykt/M13.pdf
We subsidize electric cars too much:http://online.wsj.com/article/SB10001424127887324128504578346913994914472.html
http://articles.latimes.com/2013/may/05/business/la-fi-electric-cars-20130506
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I’m a big fan of Elon. Been following him and SpaceX for over 10 years. He is the one person who I have no problem supporting with my tax dollars. He didn’t write the CA laws but like someone else said the subsidy’s are available to anyone. I’m glad that an American company is taking advantage of them. Also I should add that Elon put up most of his own money to make Tesla happen and for a while it looked like he might lose it. Ditto SpaceX. He has also stated that he will pay the government back early.
One last thing he made kind of a cryptic tweet on may 9th. Can’t wait to hear what he has up his sleeve.
: Elon Musk @elonmusk 9 May
There is a way for the Tesla Model S to be recharged throughout the country faster than you could fill a gas tank.
Dr Delos says:
May 12, 2013 at 4:53 pm
Here you go, Frizzy: http://www.delawareonline.com/article/20130505/BUSINESS08/305050030/Fisker-may-little-left-value-bankruptcy
RayG says:
May 12, 2013 at 6:09 pm
Frizzy, it took me less than one minute to find a piece in the NYTimes and several others. The following article seems to be the most detailed and includes links to most of its sources.
http://finance.townhall.com/columnists/maritanoon/2013/04/28/fisker-free-to-make-flashy-cars-in-finland-n1580841/page/full/
Thanks folks but neither of those (or any other article) says that “This [last] week Fisker filed for bankruptcy”. Yeah there have been scads of articles for months about Fisker being near bankruptcy, thinking about bankruptcy, being nearly worthless in a bankruptcy, hiring lawyers for a bankruptcy, but they did NOT in fact file for bankruptcy this past week.
It is good to see that California continues its rush to total financial collapse. When the collapse happens we can debate whether California will get a bailout. That is a debate that we have needed, desperately needed, since the Sixties.
I get a less extreme figure than $5,000 for cost per ton of CO2 avoided,
because I see CO2 avoidance being more than 10 tons.
I start with an assumption that a typical average Tesla and its battery
in California will last 7 years and drive 100,000 miles in the process. At
33.33 MPG for a gasoline-powered alternative, this avoids burning of
3,000 gallons of gasoline. Using 2,2,4-trimethylpentane as a proxy for
gasoline, 3,000 gallons (11,356 liters) has a mass of 7.86 metric tons, of
which 6.62 metric tons of carbon. (Using Wikipedia’s figure for density,
and a molecular mass of 114, 96 of which is from 8 carbon atoms.)
With gasoline being diluted by adding ethanol, I would reduce this to
~6.4-6.5 metric tons of carbon. 6.4 metric tons of carbon is in 20 metric
tons of CO2. (A CO2 molecule has molecular mass of 44, 12 of which
is from the carbon.)
I would suggest avoiding appearance of exaggeration, since a more
conservative figure for cost per ton of CO2 avoided can still easily
make a case that subsidizing the Tesla is not a bargain.
California won’t get the memo until the states around it will stop selling them electricity. Then it will all be wailing and gnashing of teeth.
Darren said:
May 12, 2013 at 5:09 pm
It’s Nikolai not Nikola
——————————–
Nope, it’s Nikola
Those subsidies are paid in part by state sales taxes. We have the poorest of the poor subsidizing a novelty for the rich. Despicable.
Quote:
This is because the California Air Resources Board has mandated that zero emission vehicles should comprise 15% of new-car sales by 2025.
______________________________________
But they are not ‘zero emissions’ – in the USA they run mainly on coal.
We had the same problem in the UK with the Nissan leaf. The advert originally said: “what if you could drive with zero emissions”.
So I made a complaint to the Advertising Standards Office, and Nissan was forced to change the advert. So now what Nissan says, in the UK, is: “what if you could drive, with no exhaust pipe”. But I notice that when I go abroad, Nissan are still using the original advert, with the phrase ‘no emissions’ in it.
Time to get complaining, guys and gals – write to your authorities about product advertising misrepresentation.
.
How’ this for a headline?
“Governments could flatten your batteries and leave you powerless in the morning.” Apart from using electric vehicles to balance the “Grid”, multiple cycles are also detrimental to battery life.
http://www.enn.com/sustainability/article/45913?utmsource=feedburnerutmmedium=feedutmcampaign=Feed3AEnvironmentalNewsNetwork28EnvironmentalNewsNetwork29
Ever wonder where the money went?
http://capoliticalnews.com/2013/05/05/the-balancing-act-following-fiskers-folly/
http://www.greenerideal.com/vehicles/0510-inside-the-failure-of-fisker-automotive/
Waiting for Fiskers demise is like waiting for the chimney to fall. N.B. North Americans should note that Fred Dibner hailed from Bolton, Lancashire.
Cordially,
Perry
Jake2 says: May 12, 2013 at 4:14 pm
Catcracking says:
>> “We should not spend one penny on an electric
>>car until we have a viable battery.”
Kind of a chicken and egg game there, isn’t it?
_____________________________________
Not really. If the government gave a $1 billion prize, for discovering a new battery, do you think we would not discover one?
Look at what the X-prize gave to space technology.
http://www.youtube.com/watch?v=BqCELhkXtsY&list=PLC474234E124B5213&index=1
No wonder California is going bankrupt.
I must say that I really like the idea of an electric car. Quiet, quick and much fewer parts wearing out. I wouldn’t mind the shorter range if recharging was fast and stations ubiquitous. What I do disagree with is subsidies for the vehicle. Subsidise R&D by all means, particularly batteries, but use the normal research grant funding models but first prize is always investors using private cash.
The arguments for pollution and CO2 are all a bit hollow as all that happens is that the effluent is sent somewhere else rather than out of the exhaust pipe.
So, if they are no more expensive and at least as attractive as IC and don’t need tax dollars for their survival then go for it I say.
Donald L. Klipstein said (may 12, 8:13pm) “this avoids burning of 3,000 gallons of gasoline”
What did you assume for the fuel source for the electricity? As others have pointed out, you have to account for that plus transmission and charging losses. Also the 3,000 gallons of gas ran the wipers, headlights, etc for free. With an electric car those all cost extra.
I’ve heard the cost of converting a car to nat. gas is 1/4 of the electric car subsidy and having a pump installed in a home with a gas line is the same. In terms of combating smog it seems like there’s a real opportunity for big cities in North America with current prices. It may even be better than electrics depending on the energy source.
DaveR says:
May 12, 2013 at 7:25 pm
One last thing he made kind of a cryptic tweet on may 9th. Can’t wait to hear what he has up his sleeve.
: Elon Musk @elonmusk 9 May
There is a way for the Tesla Model S to be recharged throughout the country faster than you could fill a gas tank.
—————————————————————————————————————-
Try Trolleybus – http://en.wikipedia.org/wiki/Trolleybus
I seem to remember some years back the following definition:
‘A zero-emissions vehicle in California is one where the power to charge it is generated in Nevada..’
Brian H says:
May 12, 2013 at 5:29 pm
Tesla officially advises the ZEV credits will no longer be contributing to revenue or profit by Q4, has claimed it would be profitable without them, and makes no pricing or production decisions based on that income.
Yet they solicit the govt money, and they take the money. Go figure.
Operating range and expenses, winter and summer, have by now been rather thoroughly explored by owners from Canada to New England to Southern California, and vary by the same ratio as gasoline cars’. No surprises, no show-stoppers….
The Tesla already starts out at a range deficit to begin with. I drive a ton in winter and summer. I’ve never noticed any apprecialble differential in summer vs winter in my conventional vehicles so your premise sounds like garbage. I’d suggest that the sample size of Tesla ownership is a tad limited right now to get any kind of valid comparison.
The stock has climbed from about $38 to $76 in a month, on the basis of excellent results, and Consumer Reports’ recent pronouncement that the Model S is the best car they’ve ever tested. The nascent network of 400V fast DC chargers, free to owners…
The Chevy Volt was “Car of the year”. Who pays for the “free” EV charging?
Face it, it’s an engineering marvel.
I see massive govt subsidation, I see massive PR, and I see some gimmickry. I’m not seeing much in the way of performance or much to marvel at technologically.
Electric cars predated those with the internal combustion engine. Electric cars are a thing of the past–literally.
Regarding Tesla’s “profitability” don’t ever forget that Enron went bankrupt without ever posting a losing quarter!!
Figures don’t lie but liars figure.
Of course there will be ridiculous subsidies for decades, if not centuries.
The whole reason Google is into it is because Joe Schmo will pay all the costs of the infrastructure before letting Google trouser billions in profits squeezing out profits from supplying the cars.
Now if Google were made to pay for the infrastructure as well, perhaps we’d see how cost effective it all was……..
There are already 250,000 pure electric cars in the world, no use crying, it is not possible to collect all and crush as GM did in the past. Sorry!!!!
Californians, I’m happy to report, are ignoring the CARB order in droves.
In re Fisker, there may be a market for their vehicles still left
http://www.autoblog.com/2013/05/06/fisker-based-destino-still-in-the-works-100s-of-karma-owners-se/
Fisker-based Destino still in the works, hundreds of Karma owners seek conversion
“Wards Auto reports the VL Productions Destino is still moving forward. As you may recall, that machine takes a Fisker Karma hybrid, guts the drivetrain and replaces it with a honking 556 horsepower V8 from General Motors. Bob Lutz, while speaking with Wards, confirmed that VL Productions had obtained 20 Karma “gliders” without a battery, engine or electric motor, and that VL may purchase Karma hybrids from dealers currently looking to dump their inventory. Lutz also says that hundreds of current Karma owners have approached VL Productions about the possibility of converting their hybrids to V8 power.
That conversion could cost between $85,000 and $95,000. Right now, VL has around 100 orders for standard Destino models, each with a price tag of $185,000. Not surprisingly, much of that demand has come from the Middle East. Wards reports that the first wave of deliveries are set to begin in the third quarter of this year. Buyers can expect to find a 6.2-liter, supercharged V8 engine lifted from the Cadillac CTS-V under the hood, coupled to a six-speed automatic transmission.”
BTW, in this era where it seems not a single Democrat hack politician can go more than 12 hrs without declaring at least once that “the rich aren’t paying their fair share”, how is it that not one of them seems to be bothered by the notion of paying thousands of dollars of subsidies to people who can afford to buy cars with six figure price tags.
I read an article last week that Fiat loses $10K on every 500E (the electric version of the 500). On top of that are Fed and CA state rebates totaling another $10K. A car that costs $42K to manufacture has nearly half of its costs subsidized.