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Israel Leads Quest for Electric Car
"We would never have done this if the Israeli government was not encouraging it,"
Nissan Chief Executive Carlos Ghosn announced today that his company plans to sell an electric car in the US and Japan by 2010, making Nissan the first major automaker to bring a zero-emissions vehicle to the American market. Just a few years ago, Ghosn was wary of the "green" vehicle crowd, writing off the gas-electric hybrid as a "niche product," useful only to meet strict fuel-economy and emission standards in states like California. Pollution regulations were not enough to convince entrepreneurs like Ghosn that the venture was worth their investment. But government incentives were. Before he rolled out his recent plan for electric cars in the U.S., Ghosn had been involved in a joint venture with American-Israeli entrepreneur Shai Agassi to sell electric car transportation in Israel. The Israeli Cabinet is supporting the project by subsidizing the vehicles with sharp tax cuts for consumers. Israeli Prime Minister Ehud Olmert "intends to make Israel a laboratory" in the development of the world's first fleet of electric cars. To that end, Israel is enforcing a new policy that taxes cars based on their emissions levels. Electric cars will be taxed at a 10 percent rate, compared with 79 percent on gas-powered cars and 30 percent on hybrids.
"We would never have done this if the Israeli government was not encouraging it," [Ghosn] said. "Whoever puts the most incentive on the table is going to get the technology first." The Israel collaboration will sell electric car transportation on the model of the cellphone: Purchasers get subsidized hardware - the car - and pay a monthly fee for expected mileage, like minutes on a cellphone plan, eliminating concerns about the fluctuating price of gasoline... The state will offer tax incentives to purchasers, and the new company, with a $200 million investment to start, will begin construction of facilities to recharge the cars and replace empty batteries quickly. (NYT) When Israel wanted to get serious about promoting electric vehicles, it didn't just tighten fuel-economy standards and hope for an industry revolution - it took direct government subsidies to make this project work. It goes to show that the money for energy innovation can come from a variety of sources: direct government investment in RD&D, or smart tax policy like the one Israel just instituted. 2 COMMENTS:
So the lesson is that if a government throws enough money around it can change behavior? Of course it can.
An unasked question is whether Israel could get better results for less money from other approaches than an electric car fetish.
The tax policy cited in particular is arbitrary: many conventionally powered vehicles are nearly as efficient as hybrids, a BMW diesel beat a Prius in a recent test for a British newspaper, yet the tax policy described would put these cars at a huge disadvantage. This is not a rational energy policy: this is hybrids for the sake of hybrids.
Government investment in R&D, which is not obvious at all from the article or the video, is a very different animal from government deliberately distorting the market. For instance, the Israeli government throwing money at electrics and hybrids is also a move away from new generation diesels or just more efficient gasoline powered cars that, while individually less efficient than hybrids or electrics, could be purchased faster, in greater numbers without the need for new infrastructure.
Posted by: Robert www.neolibertarian.com
at May 14, 2008 7:22 AM
Robert, just a note: Israel's policy is about incenting pure electric vehicles (or perhaps plug-in hybrids), not conventional, grid-independent hybrids like the Prius. While an efficient diesel car may compare favorably to a Prius, try to find a diesel car that compares to a PHEV or pure electric vehicle.
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