The Great Pickup Stick-Up - Arizona goes nearly bankrupt on an alternative-fuel vehicle program

Reason, June, 2001 by Sean Paige

Arizona isn't alone. Governments great and small have been relentlessly pushing alternative-fuel and low-emissions vehicle programs on a reluctant public, trying to bring new technologies and new markets into being through sheer political willpower. Typically, there's far too little appreciation for the technical challenges and costs involved. California is likely headed for a crack-up of its own AFV program, which requires that automakers, beginning in 2003, sell a set quota of zero-emission vehicles (ZEVs) and extremely low-emission vehicles in the state, whether or not the cars actually catch on with the motoring public. (See "Suing for Relief," below.)

The idea was born at the 1990 Los Angeles Auto Show, when then--General Motors Chairman Roger Smith, in a moment of bravado his industry has come to regret, boasted that his company could and would mass-produce the futuristic, battery-powered concept car there on display.

It was a boast that environmentalists took to heart and California lawmakers took too seriously. The result is a law that tries to dictate the tempo of technological innovation. But the battery technology required to fuel California's ZEV revolution has evolved much more slowly, and been much more expensive, than the law writers anticipated, in spite of massive public- and private-sector investment in the research effort. (See "Electric Go-Karts," page 46.)

This has led to repeated rollbacks of the law's unrealistic deadlines and quotas--most recently, the 2003 sales quota target for ZEVs has been reduced from 10 percent to 2 percent, though automakers will now be required to sell an additional 8 percent of extremely low-emission vehicles that same year. Those requirements, though an improvement over earlier mandates, have nonetheless brought a lawsuit from GM, which argues that the law imposes an unreasonable burden on industry to achieve a negligible improvement in air quality.

However, technological limitations aren't the only hurdle blocking the government's alternative-fuel fantasies. Despite continuous predictions that the era of "green" vehicles is upon us, alternative-fuel cars have consistently failed to catch on with the general public, for some stubbornly practical reasons. The vehicles might not exist at all were it not for heavy government mandates and costly taxpayer subsidies.

Buyers of cutting-edge low-emission cars tend to be novelty-seekers, gizmo geeks, or affluent environmental activists--Ed Begley Jr. types, for instance--willing to pay far more for a car that can do considerably less, usually in order to prove some larger point. "It's not easy selling someone a vehicle that costs twice the price and has half the utility," says one auto industry insider. "When you drive an electric car, all you're thinking about is how you're going to get there, where you will refuel when you do, and whether or not you'll make it back," he says. "And all for $20,000 to $30,000 more than a conventional car."

General Motors might have been able to fulfill Roger Smith's auto show boast were it the only company in the zero-emissions game, but California's across-the-board mandate, applying as it does to all automakers, means that every large manufacturer is after a major share of a tiny market, making it highly unlikely that any one of them will ever meet the state's mandates. "Political correctness has overtaken common sense," says one official at GM, "and no one wants to admit to the environmental community that this is a dead end road."