Since February 2008, the government has wasted billions of dollars on high-tech vehicles–cars, trucks, buses, bicycles, electric cars, electric bikes, high-end vacuum cleaners, home electronics, high-tech kitchens, low-tech refrigerators, refrigerators, lawn mowers, gas powered generators, plumbing fixtures, automatic dryers, automatic TVs, alarm systems, oscilloscopes, automatic mops, automatic landscaping systems, automatic washing machines, automatic dishwashers, skateboards, and leaf blowers. In 2008, the federal government provided $24 billion to promote electric vehicles. Now, they’re offering $7 billion in loan guarantees for new electric car companies.
These are merely examples. The federal government is providing funds and political favoritism to manufacturers, in addition to official programs like the Better Place electric car project, in order to promote electric cars. If things keep going the way they are now, Americans will literally be trading one form of dirty transportation for another.
This government-subsidized clean energy movement has economic consequences. It will create very few jobs in this country, and plenty of jobs for manufacturing companies in other countries. An OECD study on automotive electrification found that by 2020 about two million jobs would be created by an increase in the production of light vehicles. This is a “typical” estimate and raises one important point: light vehicle production accounts for a small fraction of the automotive manufacturing jobs in this country. Most jobs in the U.S. are in major automakers and parts producers. Automotive parts production is supported by several large export markets. China, Korea, Japan, Germany, and the United Kingdom, and by the Industrial-Research organizations in many of these nations.
China and Korea have already begun exporting electric vehicles, causing large layoffs in Detroit. The United States is having problems importing electric motors from Japan, and, so far, tariffs have been “basically ineffective.”
China, Taiwan, Malaysia, Thailand, Korea, India, and other Asian nations are investing heavily in motor production, and have led the world in producing electric motors. These nations have a captive audience, because they are forced to use electric vehicles, because they have poor or non-existent public transportation systems, or because of climate change.
Other countries have done well in exporting cars to the United States.
Honda has invested billions in the U.S. and imported 1.5 million automobiles, last year, which accounts for much of the very profitable Honda car company. The North American market is an increasingly important part of Honda’s sales volume. Brazil has exported electric vehicles for many years, and California is the largest market for Volkswagen cars. Many of the best producing automakers produce cars and vans in the United States, but they assemble their vehicles in other countries. These vehicles that are assembled here often have a high foreign content. Since many industries face high foreign content requirements, it is not necessarily efficient for automakers to shift their production to the United States, given the politically important foreign content requirements that local governments require from manufacturers.
At its highest level, the stimulus package was about creating jobs. Many of these projects have been achieved. The stimulus package paid about 97 percent of the bills for the projects, and all over the United States, people are working.
However, there is no indication that any of these jobs are directly in the transportation sector, the area that leads to most of the high-paying jobs in the United States. If the American economy is to strengthen, the government needs to shift to a very different approach to promoting economic recovery. We need to encourage real economic growth by supporting both traditional and clean energies. We need to protect the vitality of energy production and consumption.
But now we’re spending $100 billion on electric vehicles. If this is such a great idea, why are we not even talking about creating energy efficiency programs?
With a pro-growth agenda, the U.S. could easily sell American-made products abroad and generate tens of thousands of high-paying jobs at home.
Arthur D. Freeh is a former deputy director of the Federal Bureau of Investigation. He has written extensively on clean energy and is the author of Clean Energy Futures: A Plan to Solve Energy Security (University of Chicago Press, 2016).