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Subsidies for the electric-car industry: Continue subsidies to shore up industry, economy

It would be very unwise to “pullsbj the plug” on electric-car subsidies at this time.

Without the subsidies, the auto industry would be forced by unavoidable regulation to sell electric vehicles at huge financial losses. One of the few bright spots in the current American economy, a thriving auto industry, would be thrown into turmoil.

That regulation presents a huge challenge to automakers: between now and 2025 the average fuel economy of a new car or light truck must increase from less than 30 miles per gallon to more than 50 miles per gallon while the share of “zero emission vehicles” — mostly electrics — in California and nine other states must rise from less than 1 percent to 15 percent of new vehicle fleets.

These regulations were adopted with laudable goals: reducing oil dependence, and thereby enhancing the security of the U.S. economy; and reducing smog and greenhouse gases.

One can argue that these policies are overly stringent or unrealistic but they are not scheduled for reconsideration by the federal government until 2017.

Recognizing the formidable challenge imposed on industry, the federal government and the states enacted generous subsidies for the nascent electric vehicle industry — the battery suppliers, vehicle manufacturers, recharging companies and consumers.

That is why, given the long lead times necessary to launch a new electric vehicle industry, this is the wrong time to do a policy U-turn although the temptation is understandable.


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