Despite years of government support of electric vehicles, not much ground has been gained.Simply put, EV technology is not good enough yet: The best developed electric cars have a range of about 100 miles and take several hours to recharge, making them fit only for city driving.
According to a new report from the Information Technology & Innovation Foundation, that is because governments around the world are taking the wrong approach.
In “Shifting Gears: Transcending Conventional Economic Doctrines to Develop Better Electric Vehicle Batteries,” Clifton Yin and Matthew Stepp break down the standard methods for encouraging the adoption of electric vehicles into two economic approaches.
The neo-Keynesian program is to subsidise EV purchases and impose gas mileage standards, in the belief that this will spur demand for more efficient cars, which drives economic growth and, in turn, innovation.
The Neoclassical approach attacks from the other end, imposing a carbon tax to make sure that drivers who choose conventional cars pay for the damage their vehicles do to the environment.
In the paper, Yin and Stepp lay out a variety of cases in which all these tactics have been tried. It is clear these approaches do not work, because so little progress has been made.
To promote the EV industry, the authors suggest “innovation economics,” a third way that “recognises knowledge, technology, entrepreneurship, and innovation as primary factors for economic growth.” It boils down to the idea of supporting research and development, to overcome the most fundamental problem facing EVs: short battery life.
Their argument is that toying with the market works better for technology that is more advanced, where small price changes can trigger minor changes to great effect. EV batteries are in too early a stage to be much impacted. They write:
The pursuit of next-generation clean energy innovation — as in the case of electric vehicle batteries —will require radical or breakthrough technologies, often coined “pipeline innovation,” which is long term in nature and less price sensitive at the R&D stages.
To spur that innovation, Yin and Stepp suggest funding research with money that would be used to provide EV subsidies and tax credits. They also suggest improving and legislating the relationship between the Departments of Energy and defence, both of which sponsor research in the field, especially with respect to lithium ion batteries.
These policies would likely draw the ire of fiscal conservatives and free market proponents. But for those who want the government to help electric vehicles take off, and are frustrated by the lack of progress to date, they may be just the thing.
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