Subsidies for electric cars? There oughta be a revolution!

Jim Kenzie

WHEELS COLUMNIST

The spirit of the 1773 Boston Tea Party, which raged against unfair taxation and triggered the American Revolution, appears to be completely lacking in the United States today.

Otherwise, there would be rioting in the streets over the U.S. government’s subsidy of $7,500 for anyone who buys a Leaf, Nissan’s battery-powered car, which is scheduled to go on sale this fall. It’s even worse in California, where the state government is tossing in another five grand.

The price of a base Leaf will thus fall from $32,780 (all prices U.S. dollars) to just $20,280.

I tell you one thing — if I lived in California and my neighbour bought a Leaf, I’d demand to drive it every third day because I’d own one-third of the damned thing.

Why are U.S. citizens letting their governments get away with this robbery?

In an interview during last week’s press days for the New York Auto Show, Carlos Tavares, executive vice-president of Nissan in charge of the Americas, said the subsidies were necessary to bring the price of the Leaf down to a point where enough cars could be sold to develop the “economies of scale” needed to make battery and electric car production viable.

He also said the subsidies were reflections of the governments’ and the public’s support of zero-emissions vehicles.

Um, no, Carlos.

There is absolutely zero support among U.S. governments for any sort of emissions reduction.

If there were, those governments would find a way to raise the price of gasoline — if not quite to world levels, then at least to the level that Canadians pay. THAT’S how you reduce emissions.

A year ago last July, gasoline exceeded $4 a gallon in most of the U.S. — close enough to a buck a litre (sound familiar?). Almost overnight, the Honda Civic became the top-selling car in the country, as it has been in Canada for about a decade.

A few months later, gasoline prices sagged, and the Ford F-series pickup regained top spot.

Hello?

Not only would higher gasoline prices encourage people to buy more fuel-efficient cars — electrics if they so chose — but would raise enough money for Americans to pay for the health care system they finally passed a few weeks ago.

Maybe balance the budget, and bail out a few more banks too.

Politicians pay lip service to the “reduce-dependence-on-fossil-fuels” goal by instituting expensive but pointless and ultimately futile exercises like the Corporate Average Fuel Economy (CAFE) regulations, which force carmakers to build cars nobody wants to buy.

But if the governments do nothing to encourage demand for such products, carmakers are forced to flog them at deeply incentivized prices which generate no profit, a scenario at least partially responsible for the failures in the domestic car industry and the subsequent government bailouts.

It’s nuts.

These subsidies aren’t the only way the Leaf has bellied up to the pork barrel, if I may mix a metaphor. The car’s assembly plant and battery manufacturing operation in Tennessee are being built with a $1.4 billion government loan.

And of course, all Japanese manufacturers in the United States owe their very existence, not merely their profitability, to American governments’ refusal (until just weeks ago) to enact a national health care plan (portable pensions are a fading glimmer on the horizon).

This gave existing carmakers insurmountable “legacy” costs to support their older work forces, which the new arrivals could dodge (you should pardon the expression).

You don’t think Nissan, Toyota, Honda et al can compete even up? Give them a $1,200 head start, per car — at cost, remember, not retail — and they’ll eat your lunch.

And now Nissan wants another seven and a half grand? Per car?

I don’t know what the Japanese word for “chutzpah” is, but they sure got it.

The level of support among the public for emissions reduction — Susan Sarandon and Ed Begley Jr. notwithstanding — which Nissan claims to be tapping into is equally non-existent. It is, in fact, best reflected in the universally held belief among pollsters and politicians that raising the price of gasoline would be the trigger for the aforementioned rioting in the streets.

So, no support there for the only strategy that has a hope of working.

Nissan says the Leaf has generated 50,000 “hand-raisers” — people expressing interest in buying the car. Give VW Golf Clean Diesel prospects 12 grand and they’ll beat a path to your door, too.

It is completely and utterly illogical for any government to subsidize any specific technology.

Instead, if it has a measurable objective it would like to meet, it should set a performance standard based on that metric, and let the inventiveness of humankind and the magic of the market sort out the winners and the losers.

IF, for example, the objective is to reduce fossil fuel usage (for independence from foreign sources), then giving 12 grand to people rich enough to buy a 30-grand-plus third or fourth car for occasional use in the city isn’t going to shove that needle one iota.

IF the objective is to reduce emissions, well, governments ought to turn to the tree-huggers within their own midst, who will tell them that personal motorized transportation (cars and light trucks) contribute only 12 per cent to greenhouse gas emissions which may (or may not) exacerbate global warming.

That’s in Canada; in the U.S. it’s 14 per cent because — surprise, surprise — they drive bigger, thirstier cars because their gas is effectively free.

So if every single vehicle owner on this continent threw away his gasoline-powered vehicle tomorrow and bought a Leaf, it would cost the governments billions and billions of dollars, and would leave 88 per cent of the greenhouse gas emissions problem untouched (86 per cent south of the border).

This is insane.

Tavares didn’t come right out and say that Canada will have to step up to the plate with a similar subsidy or else the Leaf would not be sold here. But he did allow that without subsidies, the car cannot be competitive.

Now, whatever failings Stephen Harper may have as Prime Minister (I’m supposed to keep this to 1,000 words) I cannot see him coughing up seven grand so yuppies in Toronto and Vancouver can assuage their ecological guilt.

I’m all for electric cars. For clean diesel cars. For flywheel-powered cars. For compressed-air cars.

Whatever works.

And pays for itself. With no help from my wallet.

My Leafs haven’t won the Stanley Cup since 1968, haven’t even made the playoffs for years.

I doubt the Nissan Leaf will even make the start of the regular season.

Jim Kenzie is Wheels’ chief automotive correspondent. wheels@thestar.ca

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