Network News

X My Profile
View More Activity
Posted at 11:01 AM ET, 01/ 5/2011

The incumbent's advantage

By Ezra Klein

nissan-leaf_001.jpg

In theory, I'm the perfect customer for the Nissan Leaf. I don't drive frequently. I don't need a car with much space. I never need to go farther than 100 miles at a time.

But the Nissan Leaf wouldn't work for me at all, as I don't own a garage, and D.C's streets aren't outfitted with charging stations. Which gets to the difficulty these new technologies will have: We've sunk an enormous amount of money into the infrastructure that makes cars that run on refined oil products convenient to use as our primary modes of transportation. Garages, for instance. And gas stations. And roads. Some of these investments were public and some were private, but together, they amount to a huge and often invisible advantage to the incumbent technology. Even as other technologies come closer and closer to competing on cost, it's going to take a long time before they can compete on convenience.

This is why pricing carbon always made sense: There's so much money and habit and infrastructure and culture working on behalf of the energy status quo right now, while the alternatives don't even get to see their advantages -- low carbon emissions -- reflected in their price. We've passed some piecemeal subsidies and incentives for things like electric cars, but on a day-to-day level, the money society has spent and continues spending on the infrastructure supporting the status quo simply dwarfs anything that's been done, or will be done in the near future, for cleaner alternatives. Cars like the Leaf will have to compete not just with technologies that are already at scale, but with the total effect of decades of policy decisions meant to help those technologies.

Photo credit: Nissan-Leaf.com.

By Ezra Klein  | January 5, 2011; 11:01 AM ET
Categories:  Energy  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: A better world
Next: Has the U.S. government ever defaulted on its debt?

Comments

Just like every other new technology that has ever been introduced. If the new technology is a big enough improvement, it will succeed anyway.

Posted by: tl_houston | January 5, 2011 11:08 AM | Report abuse

When we were looking at houses in northern VA, I saw a lot of houses that didn't have garages, despite being located in the suburbs. I don't think that's the norm, so maybe Virginia will be a hold out in the electric car race.

People really ought to stop converting their garages into rec rooms.

Posted by: KathyF | January 5, 2011 11:14 AM | Report abuse

For all the talk of Detroit overcoming problems (as WSJ intends to say), there is not match to Nissan Leaf. It is an awesome car and Ezra buy it (park it on road).

Nissan is really way ahead here. Surprise is Ford does not have any good answer. GM at least has Volt, even though not best; Ford is bit empty there.

Posted by: umesh409 | January 5, 2011 11:16 AM | Report abuse

Unfortunately the way the public views adding the true hidden costs to the prices of products is not favorable.
This is precisely why liberals run into problems on both economic and social fronts; the privileged do not recognize their privilege, and even the not-so privileged have a little blindness toward that privilege.
It doesn't matter whether we're talking about racial equality or reducing barriers to entry for new products. Most people always assume the status quo is fair or natural.
That's why most progressive successes involve strong pushes to get things done anyway regardless of how much people whine. Within a short time they forget the old status quo.

Posted by: RCBII | January 5, 2011 11:25 AM | Report abuse

So in a 10% unemployment economy it makes sense to tax the 95% that is carbon based to support the 5% that is not? That is equally nonsensical with mandating that public utilities have a certain percentage of their output in "alternative energies", so that consumers can pay about 70% more than market-based for that portion of their energy.

On a personal level, no carbon tax would compensate dollar-wise for your decision to live and work in a place that is not car-friendly. It IS nice however that you blame the government for not supporting YOUR lifestyle choices at public expense!

Posted by: 54465446 | January 5, 2011 11:29 AM | Report abuse

@ tl_houston

Not always so. Lots of technologies got a boost from becoming the defacto standard before the market had a chance to sort it out. A simple example it the QWERTY keyboard. Originally it was designed to *slow* typing, as the original mechanical typewriters couldn't keep up with the very fast typing that other keyboards were able provide. Soon tho' everyone learned on the QWERTY keyboard, and faster, better alternatives never had a chance.

Nukes: The US had a truly civilian nuke program that focused on the thorium fuel cycle; it was cancelled in 1973 b/c there's no way to weaponize any product of this fuel cycle. It's, ah, too safe. So we're left with pressurized water reactors which were designed for the Navy. Maybe these make sense in the confines of a submarine, but there are strong arguments that they're not a good choice in civilian applications.

Tons of other examples where someone put their thumb on the scales.

Posted by: Lonepine | January 5, 2011 11:39 AM | Report abuse

"I don't drive frequently. I don't need a car with much space. I never need to go farther than 100 miles at a time."

It sounds like a car-sharing service like zipcars would be a much better alternative for you. But I get the impression that "sharing" is regarded as a bit low-class.

I recognize that in an age of peak oil the electric car is the only feasible alternative to fossil fuels. But the battery technology for electric cars is just not there, and there is some feeling it will not be there in our lifetime. At some point, people are going to have start dealing with the reality that the days of the personal automobile are numbered.

The rest of the world is investing in the transportation alternatives. I used to think that the elites would not allow the US to go down the road of stagnation and decline due to stupidity, but recent comments in the Atlantic piece by Chrystia Freeland indicate that they just don't care.

Posted by: GeorgeTaylor1 | January 5, 2011 11:46 AM | Report abuse

@ 54465446

What part of the fossil fuel economy is "market based"? For every dollar of gasoline you buy from a BP station, how much of it goes to paying for the damages to the Gulf? How much goes to paying for the Navy in the Arabian gulf?

BTW, interested in an investment opportunity? Iinvest in a domestic natural gas company: you'll get 6% return AND a 40% tax write-off. Give a nod to the US taxpayer on your way to the bank.

Raise the price of gasoline, and there will be tons of new companies that will hire people to create alternatives.

As for lifestyles: my income taxes are used to pay for roads and zoning laws that create our car and fossil fuel dependent infrastructure. How much "choice" do most Americans really have when it comes to how their cities and towns are planned? Probably the only place in the US where going car-free is really viable is NYC. Great- that's 10M people. What about the other 290?

Posted by: Lonepine | January 5, 2011 11:47 AM | Report abuse

I would imagine occasionally renting a car would make a lot more sense for someone in your situation. Longterm, the obvious urban solution is more and better public transport. One thing I've noticed is the growing popularity of minivan taxis for the times when someone needs to move a big load of stuff. I can see something like the Leaf making tons of sense for millions of suburban commuters, who mostly have average commutes of 30-40 miles. Suburban homes can be easily adapted for charging. What we need is business incentives to support commuters who need charging capabilities in the workplace parking lot.

Posted by: AuthorEditor | January 5, 2011 11:53 AM | Report abuse

unmesh, Ford is expected to unveil an electric Focus at the Consumer Electronics Show, which is going all this week.

Posted by: MosBen | January 5, 2011 11:58 AM | Report abuse

Lonepine:

Your points are definitely valid. In a very real sense government always helps choose the "winners" in the same way that referees have an inevitable effect on the outcome of the game.

We might disagree though on the genesis of all the subsidization. It's not as though a superior system of power generation was thrown out for an inferior system with governmental support. Oil, regardless of the environmental effects, is the best power source ever devised for moving things any significant distance AND being itself easily transportable.

Everyone yelling about subsidies doesn't know the history of the automobile. Mass transit has been subsidized almost from day one, because of the large capital investment. However road building came as a RESULT of the large scale adoption of the automobile, not as a precursor. The roads of this nation were tremendously UNDERFUNDED compared to usage, right up until the 1950's.

BTW, natural gas ISN'T a good investment when compared to other commodities, but that's a result of years of governmental interference in the marketplace based on faulty assumptions, too esoteric to go into here.

Why raise the price of gasoline, so we can subisidze the loss of jobs to China? Most alternative energy jobs ultimately belong to the Chinese in one way or another. Not a terrific idea in the 10% situation.

Posted by: 54465446 | January 5, 2011 12:04 PM | Report abuse

Lonepine, I assume you understand the difference between a tax deferral and the outright credits given to ethanol, wind, solar, and so on.

With electric cars, you need to look at how much gas is really being saved compared to some of the more conventional alternatives. A Leaf will save maybe a couple of thousand gallons of gas over its lifetime compared to a Prius, without the infrastructure issues that are deterring Ezra.

The real potential savings come from getting rid of the Suburbans and Excursions. By my back of the envelope calculations, replacing a Suburban with a Subaru will save a lot more gas than switching from a Prius to a Leaf.

Posted by: tl_houston | January 5, 2011 12:07 PM | Report abuse

ford fusion goes 700 miles per tank. $28,000.

Leaf goes 100 miles per charge. $25,000? No long road trips on this baby.

Volt goes about 350 miles per charge/tank. $42,000 (perhaps with $7000 tax credit on NEXT year's taxes, and that does not mean REBATE).

I'd get the leaf if I had another car for longer trips. Otherwise, I'd get the fusion because the volt is overpriced.

Posted by: lauren2010 | January 5, 2011 12:17 PM | Report abuse

"In theory, I'm the perfect customer for the Nissan Leaf. I don't drive frequently. I don't need a car with much space. I never need to go farther than 100 miles at a time."

The perfect customer would drive all the time, but never much at a given time. A pretty consistent 50 or 60 miles per day.

Why pay a premium ($25,000) for an infrequently used electric car when you can buy a new ($16,000) or few year old ($10,000) Honda Civic or equivalent?

You'd save a ton of money, you won't be spending that much on gas anyways, and it's not like there will be a huge difference if your driving-related carbon footprint.

It also wouldn't cost the taxpayers anything.

"This is why pricing carbon always made sense: There's so much money and habit and infrastructure and culture working on behalf of the energy status quo right now, while the alternatives don't even get to see their advantages -- low carbon emissions -- reflected in their price."

Ezra, the LEAF gets a $7,500 tax credit! It IS reflected in the price, and the vehicle is still an unattractive choice.

In addition, the alleged cost of carbon which a carbon tax would offset is pretty small - the economically efficient gas tax is probably roughly what it already is, or not much more. Even the incremental is unlikely to tip the scales in the LEAF's favor, at least the current generation LEAF anyway.

If Nissan can make a LEAF which costs $20,000, goes 200 miles without a recharge and can be recharged in 15 minutes, it will probably sell very well. The current model, not so much.

Posted by: justin84 | January 5, 2011 12:24 PM | Report abuse

MosBen - okay, so hopefully Ford brings its solution and then there are enough realistic choices for consumers. Thanks for the info.

Chances of anything meaningful happening here are only when market gets filled with realistic and affordable choices. Anything legislation based - forget about it. Who in the world would like to go any more progressive legislation in American Congress? Dems cannot even protect what they have achieved in last 2 years and next few years it is all going to pawning and dismantling whatever they did in first 2 years of Obama.

I just wish Oil keeps going up. That is good for America because then consumers and GOP would be forced to think about ways apart from Carbon based transportation. True, GOP's first reaction will be 'drill more' and with higher Oil price lot of expensive drilling in USA would restart. But as 'oil drum' blog says (quote Andew Sullivan), it is the question of what higher price of oil is afforded by Economy; it is not the question of supply. With higher oil prices, China and India will be also forced to go non-carbon.

Higher prices can be drag as higher inflation and stifle Economy. But that is the needle Obama has to thread - using non-carbon energy solutions how to insulate American Economy from another Oil shock.

Also it needs to be realized that what oil prices show is that - they will never go up linearly. It will be very volatile year over year making it hard to undertake hard nosed economic choices. Hopefully precisely for this reason American Public will eventually get tired off this 'now on now off' oil prices and start getting gravitated towards Nissan Leaf or Ford Electric Focus or GM Volt.

Posted by: umesh409 | January 5, 2011 12:45 PM | Report abuse

"The real potential savings come from getting rid of the Suburbans and Excursions. By my back of the envelope calculations, replacing a Suburban with a Subaru will save a lot more gas than switching from a Prius to a Leaf."

This is a very important point. Carbon emissions are reduced more if you get a person driving a 15mpg car into a 30mpg car than getting another person who currently drives a 30mpg car into even a 500mpg car, assuming the same miles driven each year.

15,000 miles a year, and gallons of gasoline equivalent used:

15,000 miles / 15 mpg = 1,000 gallons
15,000 miles / 30 mpg = 500 gallons (-500)
15,000 miles / 500 mpg = 30 gallons (-470)

Or, to compare actual cars:

15,000 miles / 48 mpg (Prius) = 312.5
15,000 miles / 99 mpg (LEAF) = 151.5 (-160)

15,000 miles / 18 mpg (Sienna) = 833.3
15,000 miles / 25 mpg (CR-V) = 600 (-233.3)

Finally, there might be some reason to doubt the EPA's mpg-equivalent numbers (see link):

http://blogs.forbes.com/warrenmeyer/2010/11/24/the-epas-electric-vehicle-mileage-fraud/

Posted by: justin84 | January 5, 2011 12:48 PM | Report abuse

Engadget had an interesting editorial about where electric cars could be within 5 years, or rather, where the editor would like them to be. Whether any of the major auto manufacturers make something like what he describes is another question.

Still, while the Leaf will suit most people's daily lives with its 100 mile range, an electric car with a 350+ mile range would cover pretty much everything you'd need to do except long road trips, and if we get charging stations at even semi-infrequent areas it should be fine.

http://www.engadget.com/2011/01/03/editorial-im-ready-for-my-car-of-the-future-and-it-doesnt-ev/

Posted by: MosBen | January 5, 2011 1:05 PM | Report abuse

I find it odd that people think they'd need 2 cars if one of their cars was a leaf. One car for "long trips" and one for shorter.

Why not rent a gasoline car for the longer trips? Doesn't that make more sense than paying for the maintenance, storage, depreciation, financing, of a car that you only actually need 10 or 15 (or fewer) times a year?

And there's more flexibility with rentals--you could rent a big car if you were taking a lot of people and stuff (and split the cost!), or a little car if it were just you.

I actually think the right Volt customer isn't a city person without a parking spot who only occasionally drives--that person should probably be renting something (which could be a volt) or doing a car share when he needs wheels. The right customer is probably a daily car user, a person who lives in a suburban subdivision and needs a car to get a quart of milk or go to work.

All taxis and livery cars should be electric, though. Would do wonders for the noise and pollution problems in big cities. And it would be no biggie to have municipally financed high voltage rapid charging stations at certain points in a city.

Posted by: theorajones1 | January 5, 2011 1:21 PM | Report abuse

theorajones wrote:

"And it would be no biggie to have municipally financed high voltage rapid charging stations at certain points in a city."

To be kind, you may not have looked into the disastrous state of municipal balance sheets recently. Give it a whirl!

Posted by: 54465446 | January 5, 2011 1:37 PM | Report abuse

umesh wrote:

"I just wish Oil keeps going up. That is good for America because then consumers and GOP would be forced to think about ways apart from Carbon based transportation. True, GOP's first reaction will be 'drill more' and with higher Oil price lot of expensive drilling in USA would restart. But as 'oil drum' blog says (quote Andew Sullivan), it is the question of what higher price of oil is afforded by Economy; it is not the question of supply. With higher oil prices, China and India will be also forced to go non-carbon.

Higher prices can be drag as higher inflation and stifle Economy. But that is the needle Obama has to thread - using non-carbon energy solutions how to insulate American Economy from another Oil shock."

It's amazing that nearly every single thing you wrote is wrong. I checked twice and only one accurate statement, about higher prices stifling the economy. Congrats.

Posted by: 54465446 | January 5, 2011 1:41 PM | Report abuse

Theora

Me and my SO each have a normal car now.

Next time we buy it may be something like a leaf.

That way we'd use the leaf for local use, and the other car for longer trips.

Then later, when it is time to trade in the gas guzzler, perhaps there will be better choices out there. And yes, your rental idea is worth evaluating when the time to buy arrives.

Posted by: lauren2010 | January 5, 2011 1:46 PM | Report abuse

Actually, a major advantage of EVs and PHEVs is that they bypass the "chicken and egg" problem. Even if they don't work for folks like Ezra, there are more than enough potential customers who can charge at their homes (or at trend-setter workplaces) using the existing grid to support the first phase of deployment. Then, as we get to larger number of these vehicles on the road, more robust infrastructure including free-standing charging stations, beefed up residential grids with smart-grid tech, etc., gets deployed in this second phase to serve demand that is already there.

Compare this to other alternatives, such as CNG and hydrogen, where you can't sell cars in any kind of numbers without putting in a completely new fuel distribution infrastructure, and you can't financially support putting in that infrastructure in the absence of sufficient vehicles to use that infrastructure.

Posted by: JM_Abq | January 5, 2011 1:52 PM | Report abuse

JM:

Exactly right. The only problem is that some people are counting on these vehicles to replace the existing fleet, when in reality they will be a niche product that will fit nicely into the mix.

Posted by: 54465446 | January 5, 2011 2:01 PM | Report abuse

54465446, they'll replace the fleet eventually. Maybe it'll take a while, but the point will come when EVs overtake the sales of gas cars in the US. It'll take a bit longter for them to overtake gas vehicle sales worldwide, and a good long time to become the majority of cars on the road, but it'll happen.

Posted by: MosBen | January 5, 2011 2:24 PM | Report abuse

EV's won't be more than a niche vehicle until some adequate replacement for lithium batteries is found. You think oil supply is a problem? Check out the world's supply of lithium.

Posted by: tl_houston | January 5, 2011 2:38 PM | Report abuse

mosben:

Not unless/until someone creates a different battery technology.

There isn't anything close to the known necessary mineral resources in the world, for even a 25% takeover.

Posted by: 54465446 | January 5, 2011 2:50 PM | Report abuse

The ideal customer for a Leaf is not Ezra but rather someone who is married and has a relatively short-to-medium-length commute to work which requires a car. And Nissan knows this.

Posted by: constans | January 5, 2011 2:57 PM | Report abuse

Actually, the ideal car for Ezra is a cheap old beater that he can leave on the street and not worry about it getting dinged and dented. Gas mileage is irrelevant for the few miles he drives. Total cost of ownership would be peanuts (lower insurance, sales tax, no charging station, etc.), and it would avoid the significant environmental cost created each time a Leaf is built.

Posted by: AuthorEditor | January 5, 2011 3:42 PM | Report abuse

As others have said, why would you buy and own a car when you don't drive very much? If anything, wouldn't that increase your net energy usage? Unless you just want an expensive toy to show off how PC you are.

Also, you should do a piece on how the EPA MPG figures for electric cars are totally bogus.

Posted by: theo2709 | January 5, 2011 3:59 PM | Report abuse

I think people are taking Ezra's statement that he's the ideal customer for Leaf a bit too literally. He didn't say he'd buy one but for his lack of his garage. I'm sure that like any reasonable person he'd take all the options mentioned here into consideration if he were car shopping. I think Ezra was just pointing out that someone like him, that doesn't do a lot of driving, might be inclined to buy a Leaf but would not be able to if they didn't have a convenient way to charge it.

That said, while owning an older car may make sense based on certain criteria, deciding that you want to own a new car is a valid option even if it's not the most economical.

Posted by: MosBen | January 5, 2011 4:22 PM | Report abuse

Assuming he had a good patent lawyer, this guy is going to make all the money (especially with the inevitable tax credits).

"What if you didn't have to ditch your gas-guzzler to enviro-cize it? Dr. Charles Perry may have solved that conundrum with his plug-in hybrid retrofit kit, a device that turns your gasoline car into a hybrid with minimal intervention, effectively doubling your gas mileage in the process...

"'This is just powerful enough to propel you around town,' he says, adding that, for someone like his daughter driving a Honda minivan, her current 16 or 17 mpg could turn into 30 mpg...

"The plug-in hybrid's patent —which Perry spent two years developing and writing — is still pending, but Perry expects manufacturing to begin in September 2011.
But what about the price? Consumers can expect to shell out around $3,000 — a recoupable investment for any car with at least five years of life left in her."
http://www.nashvillescene.com/nashville/eleven-trailblazing-ideas-prove-middle-tennesseans-are-breeding-ingenuity/Content?oid=1715295

Posted by: beowulf_ | January 5, 2011 4:27 PM | Report abuse

Perhaps Mr. Klein should consider a taxi on those few occasion when he needs a car. Oh, right, he'd rather that taxpayers subsidize his choices so he can feel good.

Posted by: jchb | January 5, 2011 7:09 PM | Report abuse

"I think people are taking Ezra's statement that he's the ideal customer for Leaf a bit too literally."

MosBen,

How else are we supposed to interpret what he wrote?

"In theory, I'm the perfect customer for the Nissan Leaf. I don't drive frequently."

I understand the point he is trying to make over the whole article, but this part is just flat out wrong. It's akin to saying "In theory, I'm the perfect customer for season tickets for the local baseball team. I usually go to one or two games per year" and then going on to complain that the train transportation near my home doesn't stop at the stadium or something along those lines.

It doesn't make any economic or even much environmental sense to pay a huge premium for an electric car, in order to save on fuel costs when one doesn't do much driving.

Buying an electric car generally doesn't make sense economically when compared to a comparably equipped gasoline powered subcompact, but the economic deficit is reduced as one drives more (though if one drives too much, they'll be replacing the expensive battery pretty quickly).

On the environmental front, if you don't drive much, it probably doesn't matter whether you own a Nissan Altima or a Nissan LEAF. Depending on how little he drives, the difference over a year might well be less than the amount of carbon Ezra emitted on his way to El Bulli (which is a perfectly fine thing to do if you aren't obsessing over carbon emissions).

In addition, if you check out my earlier link, electricity might not be quite as "environmentally" efficient as their MPGe would suggest, as there is some loss in producing and transmitting electricity - much of it produced via fossil fuels - which isn't taken into account. Here is another link to the DoE, which suggests that over a 100 mile trip, an all-electric car will produce 72% of the CO2 generated by a conventional sedan, and that conventional sedan only gets 26.7 mpg, easily bested by many subcompacts.

http://www.afdc.energy.gov/afdc/vehicles/electric_emissions.html#wheel

Posted by: justin84 | January 5, 2011 7:17 PM | Report abuse

Post a Comment

We encourage users to analyze, comment on and even challenge washingtonpost.com's articles, blogs, reviews and multimedia features.

User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions.




characters remaining

 
 

© 2011 The Washington Post Company