A lot conspires against the electric car. One is price of the alternatives. Only if oil would be kept above USD150. At around USD55 and pointing down to USD35, gas-powered cars are the cheapest available solution.
The infrastruture to supply the electricity (generating power plants, Transmission and distribution of electricity) is not there neither we have a surplus of electricity to supply a budding electric car industry.
Further a new infrastructure of points of presence to charge the batteries is needed to be built too.
The infrastructure to generate electricity to supply a big fleet is needed before the industry commit to mass produce the cars.
If the mass production is not there, then the infrastructure will not be built. The countries with the biggest fleets are in for an economic downturn and do not have resources to build such infrastructure.
See article below: Big three is technicality bankrupt and does not have the money to engage in a full blown electric car industry.
The alternative ethanol is much more cost efective since it requires little changes to use the fuel. Not needing a new infrastruture of points of presence to fuel cars since it utilizes the existings gas stations. Brazil is waiting on the sidelines to get this market for us.
Besides that, with the crisis biting hard, greenism-environmentalism, which propelled costs of use of fossil fuel up, is on the wane and soon will disappear as people start thinking about survival.
Saving the Big Three (or Not)
By R.M. Schneiderman
The heads of America’s three major automotive corporations asked Congress today for $25 billion in financial help in hopes of staving off a collapse that many say would be catastrophic for the United States economy.
So what — if anything — should policymakers do?
That, of course, is largely a question of priorities — priorities that some say have become jumbled. Indeed, as The Times’s David Sanger writes:
Are we trying to save General Motors, Ford and Chrysler? Have Americans given up on the companies themselves, but want to preserve as many jobs as possible for their workers and suppliers? Or are we simply trying to forestall the shock of huge bankruptcies and layoffs at a moment when the economy cannot take another hit?
The latter argument appears to be the most compelling: Would some form of government intervention be good for workers and the general economy or not?
Writing a blank check or sitting back and doing nothing both appear to be less than ideal. Indeed, as Edward L. Glaeser, an economist at Harvard, points out in an entry on this blog, unconditionally supporting the embattled auto industry would be wasteful, yet allowing G.M. to fold would lead to millions of lost jobs.
He supports a third way: letting the automakers file for Chapter 11 and then allowing the government to intervene.
“The car companies can’t be fixed with a scalpel — they need major surgery,” he says. “Only then will it be possible to decide whether there is some role for limited government financial aid to avoid the costs of mass layoffs and defaults on pensions.”
For its part, G.M., the most troubled of all the auto companies in question, says that filing for Chapter 11 isn’t tenable. Writing in The New Republic, Jonathan Cohn agrees, pointing out that allowing General Motors to file for Chapter 11 might lead to the company’s dissolution, not its restructuring, because no one would be willing to loan the auto giant any money:
In order to seek so-called Chapter 11 status, a distressed company must find some way to operate while the bankruptcy court keeps creditors at bay. But G.M. can’t build cars without parts, and it can’t get parts without credit. Chapter 11 companies typically get that sort of credit from something called Debtor-in-Possession (DIP) loans. But the same Wall Street meltdown that has dragged down the economy and G.M. sales has also dried up the DIP money G.M. would need to operate.
And the ramifications of a Chapter 7 bankruptcy filing by G.M. or any of the other major automakers, which would mean a liquidation, appear catastrophic at worst and really, really bad at best.
“A study just published by the Michigan-based Center for Automotive Research (CAR) predicted that three million people would lose their jobs in the first year after such a Big Three meltdown, swelling the ranks of the unemployed by nearly one-third nationally and leading to hundreds of billions of dollars in lost income,” Mr. Cohn writes.
That’s the worst case. The best case, according to Mr. Cohn, is that only G.M. would go under and roughly half a million jobs would be lost. That estimate, Mr. Cohn says, is based on an interview with Susan Helper, a Case Western Reserve University economist who specializes in studying the auto industry. Her take on what would likely happen without government intervention for the three major auto companies: 1.5 million to 2 million lost jobs.
Assuming the government tries to help that many Americans with unemployment benefits, Medicaid and other social services, a $25 billion loan to the auto industry appears to be a pretty good deal for taxpayers, according to Mr. Cohn.
But what if the government’s intervention were structured like a bankruptcy filing? In his column in The Times on Tuesday, Andrew Ross Sorkin argues for just that. He says that a “government-sponsored bankruptcy” would allow G.M. to merge with Chrysler, kick out their ineffective management team, get rid of unprofitable brands and dealerships and gain leverage over the United Auto Workers.
“We may lose hundreds of thousands of jobs in this industry in the near term, but with the right kind of innovation, we should have millions of new jobs in the next 10 years,” he writes.
The goal, of course, wouldn’t be to liquidate the companies, but rather to restructure them — to set them on a path to better compete with the Hondas and Toyotas of the world in the near-future.
“The government should come in with what’s known as debtor-in-possession financing to help the company through the bankruptcy process,” Mr. Sorkin says. “Ideally, the government would be a ’seed investor’ and others would join it.”
Whether or not those investors would follow the government’s lead appears to be the crux of the issue. After all, if we’ve learned anything from this financial crisis, it’s that the real world often differs considerably from an ideal one. |
