Auto Makers Want Federal More Support for Electric Cars

The automotive industry spent just over $60 million on lobbying in 2009. General Motors alone spent $8.4 million of that, even though the firm is bankrupt. Ford Motor Co. (F) spent $7.23 million, Toyoto Motors (TM) spent about $5.3 million, and the Alliafnce of Automobile Manufacturers, a trade group, spent nearly $5.8 million. Honda (HMC) was surely in the hunt as well. The total spend is actually lower than the industry’s peak year of 2007 when it spent nearly $70 million.

Some portion of these lobbying funds are directed toward influencing legislation related to clean air regulations, including federal funding supporting alternative fuels for cars and light trucks. The ethanol lobby, for example, has been very successful at maintaining a price-enhancing tariff on imported ethanol.

Now, the nascent electric car makers are seeking more government subsidies in an effort to juice-up sales of the all-electric vehicles that will be hitting US roads later this year. The car makers are taking to heart President Obama’s goal of getting a million plug-in hybrids and electric vehicles on US roads by 2015.

The Wall Street Journal reports that it has reviewed a letter from the president of the Alliance of Automobile Manufacturers to a senior Obama adviser seeking tax credits for homeowners who install electric outlets to charge an all-electric car, federal funds to build public charging stations for the cars, and more incentives for battery makers and car buyers.

The auto makers have a point. Changing US transportation fuels from gasoline and diesel to something else won’t happen without a substantial commitment of both enthusiasm and dollars from the Congress and the President. The government has committed billions already to renovate assembly plants to build electric cars and has a $7,500 temporary tax credit in place to take the sting out of the premium buyers must pay for an electric vehicle.

What’s missing, of course, is the infrastructure to re-charge the batteries quickly, conveniently, and cheaply. Building a network of charging stations around the US will cost billions more dollars, but without that spending electric vehicles are almost certain to fail again.

For some reason, hybrid electric vehicles like Toyota’s Prius don’t figure into this mix, probably because the vehicles still rely on gasoline. But from a clean air and reduced dependence on foreign oil point of view, cars like the Prius are far more effective at both.

That is due to the relatively low-power batteries needed to power a hybrid electric. Deutsche Bank analysts have estimated total US battery-making capability of 36,000 million kWh in 2015. A Toyota Prius uses a 1.5 kWh battery pack, while a Nissan Leaf or Chevy Volt all-electric vehicle uses a 24 kWh batter pack.

In 2015, the battery industry can supply 24 million hybrid electrics or 1.5 million all-electric cars. A fleet of 24 million hybrids saves more than 3 billion gallons of gasoline and reduces CO2 emissions by over 97,000 tons. A fleet of 1.5 all-electric vehicles saves 600 million gallons of gasoline and reduces CO2 emissions by about 9.4 million tons.

But none of the car makers is talking about hybrids because all eyes are on the all-electrics. This makes no sense, either in reducing CO2 emissions or reducing dependence on foreign oil. Yet the car makers will promote it because that’s what the administration wants to hear.

Of course if every thing the government did made sense, lobbyists would have to go out and find honest work. Throwing more billions at the electric car industry is a mistake. Spending more money thoughtfully on alternative transportation fuels is the right way to frame the issue.

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Article printed from InvestorPlace Media, https://investorplace.com/2010/04/toyota-tm-ford-f-auto-stocks-electric-car/.

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