Electric cars are a strategic weapon

Israel taxed Better Place cars for 27 percent of the car and battery, adding almost $10,000 to the purchase price.

June 2, 2013 21:27
4 minute read.
BETTER PLACE CEO Evan Thornley (Left)

BETTER PLACE CEO Evan Thornley 370. (photo credit: Courtesy Better Place)

Bankruptcies of electric carmakers – Better Place in Israel and Fisker in the United States – are setting back the movement many years. Current owners are left with worthless vehicles, closed charging stations, repossessed batteries, bank loans still in force, and buyers are scarred by the experience.

The electric car (plug-in electric vehicle, or PEV) is not just another green-tech project; it is a weapon in the fight for global security with the potential to free industrialized nations from fossil- fuel dependence. Cartel oil producers and refiners tinker with prices at will and have sparked international recessions, threatening core national interests of economic planning, national security and environmental health. Oil is the mother’s milk of terrorist sponsoring countries and is more a controlled substance than a free-market commodity.

Cars, trucks and buses emit 27 percent of greenhouse-gas emissions. They are responsible for 70% of petroleum consumption (400 million gallons per day) in the US. The focus is on increasing miles-per-gallon to reduce oil consumption, but gallons- per-mile is the problem. Treating PEVs as part of a national defense strategy will change the transportation dynamic in a decade.

According to a University of Indiana report, electric-car ownership will increase with high energy prices, lower battery costs, convenient recharging infrastructure and progress with PEVs compared to competing technologies.

Here is what needs to be done:

• PEV sticker prices are coming down, but too slowly on too few model choices. The target is a five-passenger vehicle in the $25,000 price range. Tesla’s new sedan is $69,000 – an alternative choice to their staple car, which starts at $100,000. Going in the wrong direction, Israel taxed Better Place cars for 27% of the car and battery, adding almost $10,000 to the purchase price.

Washington and Virginia want an annual $100 tax on electric cars to replace lost fuel taxes.

• Perspective changes of selling points to PEV buyers stress lower energy costs of $1,400 annually, maintenance and insurance.

Buyers often suffer range anxiety. Currently, daily driving ranges are 110 kilometers to 150 km. per charge. Quick battery exchange stations built around Israel and Denmark meant drivers never exited their vehicles. Batteries were robotically replaced in less time than it takes to fill a traditional car with gasoline. Tesla wants super-charging stations stretching from New York to Los Angeles.

• A culture of shared experience would challenge the lack of awareness about PEVs through in-your-face ad campaigns such as those used to sell fossil-fuel cars. Inventories and model choices must be expanded. Tesla sold 21,000 new sedans, while more than 500,000 new gas-powered passenger cars were sold in the same period. More PEVs on the roads for other drivers to see stimulates buyers into believing they are part of something larger, enticing others to buy, akin to VW Beetle owners who honk one another in a cult of camaraderie.

• The US government lent Tesla $460 million – a lot of money, but a pittance compared to China’s $15 billion investment in PEVs. According to Shai Agassi, Better Place’s founder, the company “generated approximately half a billion of taxes for the State of Israel but did not receive a single penny in government assistance in its deployment of a ‘strategic infrastructure to replace oil.’ Nothing!” Tesla repaid the federal loan from public stock offerings, but it will have to build charging stations from cash flow and private investment. It will delay necessary infrastructure development needed to spur sales for years to come.

• Only government can afford to build PEV infrastructure quickly, if significantly reducing dependence on fossil fuel is the priority. It is no less legitimate than airports, dams and electric power grids.

Lawmakers can encourage private investment in R&D, similar to what is done for pharmaceutical companies, and provide tax incentives for first-time PEV owners, as it does for first-time home owners.

• Require 25% of the 19,000 cars bought each year by the US government to be PEVs. Producing more PEVs will lower production costs and therefore selling prices. Offer significant tax incentives to fleet purchasers, such as Enterprise, with more than 500,000 vehicles. According to Agassi, taxis in urban centers such as Chicago with 7,000 vehicles drive 20%-40% of the miles driven in the city on any given day by all vehicles.

Israel Aerospace Industries Ltd. was poised to lease several dozen Better Place cars beginning this May because, as IAI’s Ya’acov Goldstein told Globes, the agreement will reduce air pollution and “will bring the company financial savings.” Better Place has joint ventures with Nissan, Renault, a Chinese company and a Japanese taxi company, but on the cusp of greater sales, shortsighted officials want to liquidate Better Place.

• Auto-industry analysts are prolific trendsetters but splenetic about electric-car development. One labels government subsidies a waste, warning: “It had better use some of the money to buy a large parking lot to store all those unsold cars.” Not a word about the $400b. a year for imported oil that accounts for nearly half the US trade deficit.

• The PEV represents a long overdue shift to reason, sanity and national security, after the internal combustible-engine delirium of the past century. “Unless someone like you cares a whole awful lot, nothing is going to get better. It’s not,” says Dr. Seuss.

Dr. Harold Goldmeier is the managing partner of Goldmeier Investments LLC and an instructor of business and social policy at the American Jewish University in Tel Aviv.

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