Republican energy committee chief Sen. Lisa Murkowski wants a vehicle policy that doesn’t pick winners and losers, but is driven by the market and consumer choice, underscoring the potential flaws in President Obama’s electric car goals.
“Instead of picking one favorite technology and plowing most, or all, of our limited federal research dollars into it, I am convinced that the better path is to support research in a wider range of possible winners and to let the markets and the consumers determine what is best,” the Alaska Republican said at a Senate Energy and Natural Resources Committee hearing Thursday.
Her comments allude to the Obama administration making battery-powered electric vehicles a priority, with the president setting the goal of one million vehicles on the road by 2015, which didn’t happen.
The auto industry has had relatively significant sales of the vehicles in recent years, cresting at about 300,000 last year. But further gains are likely to face challenges in 2016.
Low gasoline prices and competition by more efficient gasoline-powered cars will ensure that the one-million car goal is not achieved by the time the president leaves office, according to a senior auto-industry representative who testified at the hearing.
“Going electric is a worthy goal, but there is a market challenge there,” said Mitch Bainwol, president and CEO of the Alliance of Automobile Manufacturers, the lead trade group for the automotive industry in Washington.
Bainwol drove home that point by foregoing his prepared remarks and presenting Murkowski and other senators at the hearing with a slide presentation of the situation the auto industry faces with alternative-powered vehicles.
“If you look at the line over the last 2 1/2 years, you see the hybrid [electric car] number falling, drifting down, and you see the gas number rising,” Bainwol said. “That’s counterintuitive … when we’re offering more hybrid and electric models” than ever before, he said. “What’s happened is we’ve made progress with the internal combustion [gasoline] engine that is so profound that when a consumer goes into a showroom they’ve discovered that their new car is getting roughly 25 percent more fuel efficiency than their old car.”
“The success of the conventional engine is making it harder to justify the delta of going electric,” he said. “That’s a challenge for us.” One of the reasons it is a challenge is because automakers over the last few years have quadrupled the number of electric and hybrid cars being offered in showrooms across the United States and have invested heavily in marketing and selling those cars.
Bainwol said automakers had about 20 electric or alternative-powered cars for sale in 2012. Now it’s up to 80 models. But when you look at sales of alternative powertrains in 2015 “there’s been a dip,” which he attributed to both low gasoline prices and the success of the conventional gasoline-powered engine.
He said they see “a direct linear relationship between gas prices and the sale of hybrids.”
Murkowski also brought up the increased stringency of federal regulations on the automotive industry. Bainwol said the rules, many of which favor electric cars, is making it harder for the industry because of the growing preference for pure gasoline-powered vehicles.
“The complication comes from the nature of the regulatory regime,” he said. Bainwol explained that the Department of Transportation has regulations that demand more miles per gallon, the Environmental Protection Agency wants lower greenhouse gas emissions to combat climate change, and the Calfornia Air Resources Board has its own zero-emission vehicle program that is “not technology neutral” and favors electric vehicles.
Bainwol says the patchwork of regulations “creates friction” in a “low price” environment in which consumers are moving to smaller gasoline-powered cars, not electric vehicles.
Thursday’s hearing was held to examine innovation in the automotive industry, underscoring the strong vehicle component of a comprehensive energy bill that Murkowski wants voted on soon by the full Senate. The bill was passed out of the committee last year by a 18-4 bipartisan vote.
