According to a new study by researchers at the Indiana University Bloomington School of Public and Environmental Affairs and the University of Kansas, contrary to common belief, many country’s promote the manufacture and sale of electric vehicles (EVs) for reasons of economic development, notably job creation, not because of their environmental benefits. The study looked at policies related to EVs in California, China, the European Union (EU), France, Germany and the United States, political jurisdictions with significant automotive industries and markets for EVs.

“Billions of dollars are being invested despite doubts that some express about the viability of electricity as a propulsion system,” said John D. Graham, SPEA dean and co-author of the study. “The objective of many of these national and sub-national governments is to establish a significant position — or even dominance — in the global marketplace for these emerging, innovative new technologies.”

Examining each jurisdiction’s use of risk-management policies (e.g., those designed to reduce environmental and security risks due to oil dependence) or industrial policies (e.g., designed to boost fortunes of a specific technology or sector and increase market competitiveness) indicated the entire lifecycle of making and using EVs is viewed by policy makers mainly as an economic development opportunity. Specific findings include:

• China: No carbon price has been established in China, where electricity is generated by high-carbon sources and fuel prices are relatively low; thus, its EV policies are geared toward establishing a competitive position in an emerging global EV industry.
• Germany: The least committed to EVs of the jurisdictions studied, Germany is nonetheless engaging in an industrial policy of hedging to protect the market share and viability of its premium car industry should electric propulsion gain a foothold in the worldwide premium car market.
• The European Union: The only entity studied that acts as a supranational regulatory state, the EU is also the only one where pure risk management related to EVs occurs. The EU appears to have a technology-neutral approach and has made some investments in research and development support for industry innovation.
• California and France: California is the largest market for motor vehicles in North America. In addition, its considerable pollution problems, created largely from the automobiles in the 1960s and ’70s and particularly acute relative to other U.S. locations, make it an ideal market for EVs. Thus, it is motivated to promote EVs by a substantial blend of industrial policy and risk management — the same approach taken by France. Both California and France have made significant advancements in risk management policies, having the strongest voices among their peers for mitigating the effects of economic and industrial development that lead to urban air pollution, congestion and climate change.

“The economic development potential largely lies in creating jobs and establishing an international foothold in a relatively young industry,” said co-author Sanya Carley, a SPEA professor and specialist in energy policy. “Plus, going green for green’s sake has always been a tough sell politically, which contributes to the focus on economic development in these policies.”

The researchers didn’t include two major players in the EV industry — Japan and South Korea — because of their well-known history in using national industrial policies to establish a dominant position in battery-technology, conventional hybrid engines and EVs.

“Government Promotion of the Electric Car: Risk Management or Industrial Policy?,” an article about this research, appears in the current edition of the European Journal of Risk Regulation.