When I was in college, I took part in a much-publicized project to develop a hybrid car. A group of us involved in varying departments in my school came together to oversee, or take direct part in, the conversion of a helpless Saturn automobile into a hybrid-electric vehicle. The purpose was simple enough: to demonstrate that such technology can work, and work well. The car would run on both gasoline and electricity, with the systems switching off as needed to produce, in theory, a car that uses less fossil fuel but provides the same power, acceleration and range.
That was 15 years ago.
Venture Beat‘s Chris Morrison cautioned readers Tuesday not to believe the hype about electric vehicles, which the auto industry promises will be the next generation of transportation. Morrison declared the electric cars touted at the recent Detroit Auto Show as a spectacle “intended to sway the opinion of consumers and legislators in the short term … but in the near term, we’ll see little motion in the industry.”
Morrison cites the failures of electric car manufacturers Tesla Motors and Norway’s Think, which “went to great lengths to brand [themselves] the savior of the green car revolution” only to fall short. With oil over four dollars per gallon not too long ago, it looked very much as if the era of the SUV was behind us. But as Morrison points out, “some environmentalists attempted to hide their smug satisfaction when oil prices shot up … [but] you won’t hear much from those environmentalists now.” The drop in oil prices has helped SUV sales to increase again, though of course the recession has dampened the auto industry’s sales figures across the board.
Interest in hybrid vehicles continues to rise, for good reason: They’re actually possible in the short term. The technology of electric cars hinges on the batteries. Developing batteries that are small enough, light enough and carry enough charge to give an electric car sufficient range to serve you as an automobile (for anything other than short-range urban commutes) is relatively difficult and the reason electric cars have not become more popular sooner. But why have hybrid-electric vehicles not become more popular, if I and my fellow college students were playing around with the technology in a university shop more than 15 years ago?
The answer is that you simply cannot force people to buy what they don’t want.
Interest in energy-efficient vehicles rises when gas prices do. It wanes when gas prices fall. The cheaper gasoline is for the consumer, the bigger the vehicle the average consumer drives. This is simple logic. It is also basic economics – the intersection of supply and demand curves. While technology is a wonderful thing, and the technology of automobiles continues to advance (the increasing computerization of cars is a good example of this trend), the one thing no amount of scientific development or government intervention can accomplish is altering consumer behavior. The people who buy cars buy what they want. You can’t hector them into buying something they think is undesirable, uncool, inconvenient or insufficient to meet their needs.
Ask the average childless couple (who perhaps have always owned cars or pick-up trucks) what their priorities for their vehicles might be – and then ask them again once they have a baby or two to cart around, complete with car seats, car seat bases, strollers, diaper bags, and the myriad accessories that seem to accumulate around babies and toddlers. Suddenly that couple wants an SUV or a minivan – not necessarily because that vehicle is cool, and regardless of that vehicle’s fuel efficiency. It is the size and convenience offered by that larger car, truck or minivan that makes it desirable to the consumer. Customer demand drives purchases and always will. While that demand responds to external pressures, such as the price of fuel, it remains driven by the customer’s internal needs and wants. It is not created from whole cloth, nor altered completely, by government dictates.
The Democrats have already expressed their desire to tell the automobile industry what kind of cars to make. With a Democrat majority in Congress and a Democrat president with delusions of Godhead about to ascend his white marble throne, the chances are good that we will see government attempting to do just what it cannot: dictate consumer demand through legislative fiat. Such a plan is designed to fail, because it attempts to accomplish through force of law exactly what can never be done. No amount of legal pressure will ever make a family of four or five believe that a miniature smart car can accommodate them. No amount of government hand-wringing can force the automotive industry to develop a technology that hasn’t been refined sufficiently, or in some cases even invented yet.
The Soviet Union, a centralized command bureaucracy, was famous during the Brezhnev years for its overproduction of steel. Consumer goods suffered accordingly, which was why the Soviet people stood in line for toilet paper in the 1970s. Through legislative fiat and by threat of force, the Soviet Union was capable of generating a great deal of activity – yet it seemed perpetually incapable of producing goods that its people actually wanted. This is the failure of government intervention in the free market. As always, the solution is to take bureaucrats out of the equation and let supply and demand curves yield the best possible outcome for consumers.
Automobile technology will eventually advance to the point at which electric cars and hybrid vehicles become desirable and even preferable to consumers. The Toyota Prius is an excellent example of just such a car, which is selling well without government bullying. If the Prius can take market share on its merits, other hybrids and electric cars can, too. We should, therefore, stop trying to force the outcome. Wishful thinking, even wishful thinking by politicians and those in power, doesn’t change reality.