Season 5, Episode 13
On this week’s episode of Freakonomics Radio:
In 2014, Tesla’s Model S became the best-selling car in Norway ever for a one-month period. Not bad for a luxury electric vehicle whose base price in Norway is over $100,000. What’s behind this Tesla boom?
And then, hear our interview with the physician/anthropologist Jim Yong Kim. He used to advocate dismantling the World Bank; now he’s running it — and is eager to apply the insights of behavioral economics to development policy. Read More »
A new study by Bradley W. Lane, Natalie Messer-Betts, Devin Hartmann, Sanya Carley, Rachel M. Krause, and John D. Graham on why governments promote electric vehicles finds that the environmental benefits of the vehicles have little to do with politicians’ motives for supporting the industry. Perhaps not surprisingly, “Government Promotion of the Electric Car: Risk Management or Industrial Policy?” (gated) finds that the economic benefits of the industry are the primary motivator for most governments. From the press release:
Contrary to common belief, many of the world’s most powerful nations promote the manufacture and sale of electric vehicles primarily for reasons of economic development – notably job creation – not because of their potential to improve the environment through decreased air pollution and oil consumption.
This is among the main findings of a study by researchers at the Indiana University Bloomington School of Public and Environmental (SPEA) and University of Kansas that analyzed policies related to electric vehicles (EVs) in California, China, the European Union, France, Germany, and the United States – political jurisdictions with significant automotive industries and markets for EVs.
“Billions of dollars are being invested despite doubts that some express about the viability of electricity as a propulsion system,” said John D. Graham, SPEA dean and co-author of the study. “The objective of many of these national and sub-national governments is to establish a significant position – or even dominance – in the global marketplace for these emerging, innovative new technologies.”
A small (?) bad-news item about electric cars:
Electric cars face new scrutiny after a fire in a Chevrolet Volt prompted a federal investigation into lithium ion batteries, even after U.S. regulators said their own crash test likely led to the blaze.
And a big bad-news item about electric cars:
Accounting for more than half of the about 216,000 new cars sold sales in Israel by leasing to corporations, rental agencies are balking [at buying electric vehicles] because of uncertainty regarding the cars’ resale value. Mr. Bar said that he fears vehicles with switchable batteries might lose as much as 70% of their original value in four years instead of the typical 40% loss by gasoline-powered vehicles over the same period.
“It’s going to be a nice niche, a gimmick, for people who are environmentalists, and corporations who want to show they are saving the environment, but I don’t see a savings in costs,” Mr. Bar said.
Electric cars are all the rage today, but some of the smartest people I know believe that moving towards electric vehicles is a terrible idea. Looking casually as an outsider at the unappealing economics of electric vehicles (the need for a new and immensely expensive infrastructure, cars that cost much more than either traditional gas engines or hybrids, limited ranges and long recharging times), I find it hard to understand why the Obama administration is pushing electric cars.
One argument I’ve heard is “national security,” the idea being that electric vehicles would make the United States less dependent on imported oil. Be careful what you wish for, however, because if electric cars become a mainstay, we may be trading one dependence for another that is even more troubling. Ninety-five percent of the world’s output of rare-earth metals today comes from one country: China. By some estimates, demand will outstrip supply within five years. At least with oil we know there are fifty years of oil reserves readily available. Moreover, oil is produced all over the world, limiting the monopoly power of any one country. Read More »