Oil Companies are Laughing All the Way to the Bank as Different Electric Vehicles Jockey for Position

February 12, 2013 | 10:03 am
David Friedman
Former contributor

I’m a big believer in competition and robust debates. Competition is at the core of America’s DNA, and the foundation of science is asking difficult questions and challenging the answers. But, when it comes to the future of electric cars, the brewing battle between backers of plug-in hybrid, battery, and fuel cell electric vehicles could leave oil companies as the big winners.

My Electric Car Is the Best

Recently, the intertubes have been filled with people pitting one electric vehicle technology against another. Reuters declared the imminent death of battery electric cars, while indicating that the Next Big Thing might be hydrogen fuel cell vehicles (others have taken it even further). Supporters of plug-in hybrids are also casting doubt about battery electric cars, something GM started to do when they first came out with the Chevy Volt. Some also pushed back with context on past failures on fuel cell vehicle progress.

All of this comes after a successful year in which battery electric car sales grew by 20 percent and plug-in hybrid sales more than quadrupled (data from Wardsauto.com, behind paywall). At the same time, there’s good news that automakers are partnering with one another on fuel cells to put cars on the road soon. But perceptions of the success and good news is fueling, not stopping the fight.

Infighting Will Doom Electric Cars

In the long run, the rivalry between electric car technologies is a fight over who gets what role in a market that has an annual U.S. revenue stream of $300-$400 billion. But electric car infighting has real and harmful consequences because the game is fundamentally rigged in favor of the incumbent: oil.

As I’ve noted before, even under conservative estimates, the U.S. oil and gas industry has been getting billions in annual subsidies for nearly 100 years. And the U.S. is not alone. The International Energy Agency (IEA) estimates that fossil fuels got over $500 billion in subsidies around the world during 2011—a big chunk of which goes to oil. That’s six times the amount that went to renewable energy.

On top of all of that, oil companies are raking in the money. You spend almost as much on gas as you do on your car. In fact, oil companies take in two-thirds of what you spend on gas—that’s $33 out of every $50 you spend at the pump—and they use it to fuel their record profits.

Yes, electric vehicles and other clean tech get some help too, and it is being put to good use. But recent stimulus funds have been the exception, not the rule. With a playing field so tilted, an oil-based outcome is almost a foregone conclusion. Leaving the oil industry laughing as different electric vehicle technology supporters fight for something only slightly better than scraps instead of working together to end oil subsidies and share a much bigger pie.

Keep Your Eye on the (Climate, Economic, and National Security) Prize

As part of a portfolio of solutions, electric vehicles can help halve, and ultimately eliminate emissions and oil use from our cars.

The whole reason we’re talking about electric vehicles in the first place is because we need real solutions to the climate, economic, and national security problems inherent in oil. It is pretty clear that electric vehicles of one form or another will need to dominate the marketplace by about 2040 if we are to meet our climate goals and effectively end the use of oil in our cars. The IEA is on the same page. And while they may not buy the goals, both car and oil companies actually agree on the path to meet them. That’s part of why I love electric cars.

At the same time, ALL electric vehicle technologies face real challenges in addition to the rigged game in which they have to play. Some face greater hurdles than others, but the big picture here is that we need many solutions to cut our oil use, starting with the goal of halving it over 20 yearsNobody knows which electric vehicle technology will win out. It may take more than a decade to sort it out and there will likely be different solutions for different parts of the vehicle market. Meanwhile, oil companies will take advantage of the uncertainty and infighting.

So, enough with the arguing. The clean car race is a marathon and there will be plenty of room to jockey for position once we get past the first few miles. Instead, let’s do something about that polluting monster-truck of an oil industry that’s trying to stop the race before it can really even get going. Otherwise, all electric vehicle technologies will be left in a constant state of uncertainty, without the popular and financial support needed to get out of the technology valley of death.