The economics of EVs and the roles of government

By 2050 there will be two billion cars on the world´s roads. How many of those will be electric vehicles? To gain a significant share of that market, EVs must be affordable to the average citizen. Implementation begins in developed nations and, as mass production lowers the unit cost, vehicles can be exported to other countries. Government has several important roles. It starts with government-financed research and development of the technologies necessary to turn the electric vehicle concept into reality. Government has also assisted EVs indirectly through GHG emission goals and continually increasing miles per gallon requirements for vehicles. The cost of batteries elevated the EV purchase price, which has been partially offset in many areas through government-funded credits or rebates at the time of purchase, plus additional perks for EV users. These include free battery charging facilities, free access to carpool or toll lanes, free downtown parking, etc. “Range anxiety” has been a marketing barrier until recently. The cost of batteries is plummeting and the range has more than tripled, with even greater improvements on the way. Another opportunity for EVs lies in the source of power. The internal combustion engine requires oil in some form for power, but EVs don´t. Clean energy is rapidly becoming cost competitive. In some areas, wind power is now cheaper than coal and the cost of large scale solar power has been plummeting. The main issue with renewable energy sources is around-the-clock availability. This problem is being effectively addressed through molten salt storage, such as the facility currently in operation near Seville, Spain. This technology is currently being replicated on a larger scale in the United States. EV market share of two billion cars in 2050 will depend on continuing governmental support through research and policies, decreasing the cost and increasing the range of EV batteries, and expanding the world´s production of- low cost clean energy.