I did not mean to suggest that Tesla is profitable. Indeed, it has taken bail out money. I meant that it is converting Lotus cars to EVs. I stand corrected.

Your comment about EV Porsche and scale is not correct. Economic scale is non-linear, so simply halving the cost of a performance conversion is not a right figure. EV Porsche is converting handfuls of cars per year, not the tens of thousands which I am suggesting. At tens of thousands of units, the cost would be far lower. As a point of fact, a DIY conversion kid for a Ranger pickup truck costs between $3,000 to $6,000, plus the batteries. This is probably a better order of magnitude for a large (but not massive) scale conversion. This cost would also, as you suggest, decline over the long-run.

Here in Germany, we receive just under 15% of our electrical generation from ‘renewable’ sources, wind, photovoltaic, biomass, etc.FN2 This figure has tripled over the past decade. Coal fired electricity is by no means ‘clean’, but a single coal plant can have advantages over thousands of internal combustion engines. First, it is easier to implement and upgrade environmental controls. Second, the combustion (and pollution) can take place outside of city centers, which would lead to increase air quality in population centers. Nuclear power is an effective solution, but comes with low-probability, high-consequence risk. Witness Chernobyl and Three Mile Island. And while they emit no greenhouse gasses, nuclear power plants do emit a significant amount of waste heat.

As for safety concerns, perhaps we should let the market chose whether consumers want to be electrocuted or incinerated in the event of a crash. Cars are simply dangerous. You make an excellent point here. However, every car on the road today has at least one battery. Batteries need to be hardened in order to protect in the event of a crash. There is no fluid which goes into an automobile which is not toxic. If you are going to man up, and ride around in a Saturn V-powered car, I suggest you first get one of these: http://en.wikipedia.org/wiki/Apollo_spacecraft#Launch_Escape_System_.28LES.29.

Finally, please no name calling on my blog, as it diminishes your arguments. You are free, however, to spell-out the word “fuck.”

FN1 http://www.elsbett.com/us/elsbett-conversion-technology/fundamentals.html
FN2 http://www.erneuerbare-energien.de/inhalt/42211/42210/

- Tesla is not profitable, a quick search will reveal the financial struggles and in-fighting going on at the firm. I just looked up the cost of an EVPorsche solution ($48k!); I stick by my statement that it is beyond cost-prohibitive. Even if scale brings the cost down in 1/2, no way I’d ever condone the government dropping $24k a pop to turn some suburban SUV into soccer mom’s dream green car for free.

- Electric is not carbon neutral, either. You have to make electricity, and for a large scale you have a choice of coal or nuclear (if you start talking about wind and solar, then I know you’ve been drinking too much beer over in Germany with the greenies). Coal is per se not carbon neutral. Nuclear is great, I own a ton of uranium mining company stocks (CCJ, RTP, BHP) that have enriched my account (pun intended!). I personally believe nuclear is the only way to go BUT you have to deal with enviro nutters who hate the concept of nuclear, silly treaties the US adheres to which prevents us from recycling nuclear waste like the Euros, etc. So, while I think nuclear will one day be the main source of electrical energy world wide (starting in China and moving from there), it’s not a viable, carbon-neutral solution in the US for the foreseeable future.

- Biofuels can be created w/ non-food stock. Used cooking oils allows for a local / regional scale way to do so. Algae is being developed as another.

- You’d rather be driving a car that can electrocute you in event of an accident and that is carrying hundreds of pounds of toxic chemicals? First responders have to take all sorts of additional precautions do deal with the risks created when hybrids get in accidents. Yes, hydrogen may present some problems, but from an operational perspective it’s a very elegant and high performance solution. If astronauts in the 60′s were willing to strap themselves on massive rockets filled with explosive material, all controlled by systems less powerful than my Citizen watch, then I’m willing to man the f*** up and drive a hydrogen powered car

To your point regarding scale, I simply find it not credible that “[i]t’s beyond cost prohibitive” to convert existing cars. There are any number of firms already doing this profitably at very small scales. (To name a few: EVPorsche.com; Zero Emissions Motorcar Co.; Ecotech Autoworks; and Electric Auto Conversions – oh and Tesla Motors). Further, I am not suggesting making a kit for every clunker. Rather, we should examine the possibility at there are enough of the same of certain models of cars coming in through the program to have this make sense from an engineering and business stand point. Above all, the numbers have to work out. Given that there is lots of idle industrial capacity and the conversion firm would be getting the vehicles essentially for free, the problem warrants a close look now. Granted, recycled, retrofitted electric cars are likely to cost more than an equivalent ICE-powered vehicle. However, the more expensive electric car might make economic sense because the more expensive vehicle has a faction of the operating cost and a 3- to 4-fold increase in useful life. This is a relatively simple CapEx versus OpEx trade-off. Tipping this trade-off with subsidies might be an excellent a way to help endogenize the cost of harmful greenhouse gasses. Pollution imposes a significant cost on all of us, but it only benefits any one of us slightly to stop. Thus, it makes sense to subsidize the cost of the vehicle with fewer negative externalities.

Your second point about industrial policy, begs the question whether the government should be picking a standard, i.e., electric, biofuel, or hydrogen. The answer to this question is a bit less obvious. I am prepared for the possibility that I am wrong about electric. Perhaps it makes sense to recycle the clunkers with biofuel or hydrogen motors. I chose electric, because to my informed-laymen’s perspective it makes the most sense. Biofuel is not carbon neutral and presents the moral dilemma of putting food and fuel production in direct competition. Second, I do not like the idea of driving around with a tank full of the most explosive gas known to man. It, however, does not make sense to sit around and wait for the technologies to mature. In network industries, a huge upfront, sunk investment in network infrastructure must be made and the network must achieve a critical mass of adoption before the network becomes self-sustaining. In these industries some form of external subsidy is need to get to the self-sustaining point. This subsidy can come in the form of government support, venture financing, or enthusiast/hobbyists’ efforts. This is especially true in the presence of high externalities and diffuse benefits of adoption. Supporting electric vehicles would simulate a significant amount of fixed capital investment the infrastructure necessary to support them. Here,. That said, such a program might have to limit the distribution of recycled vehicles to a particular city, such as San Francisco where the commercial ventures Better Place are building the infrastructure.

The Volts for Clunkers program presents the best possibility to extract the most benefit for society from a subsidy, given as you suggest, to a special interest group.