While touring our local Blockbuster the other day, Sarah and I came across the recent release, "Who Killed The Electric Car?" Now, like a typical North American male who has been subject to a lifetime's worth of targeted car advertising, I felt confident in my general knowledge of the automotive marketplace. A viable electric car? I must have seen it before. Wrong.

We watched the movie and became indignant. Why hadn't we ever heard of a car this remarkable - and good looking? It turns out that the car companies wanted it to fail.
In fact, the story is a case study in Machiavelian self-interest. The car companies refused to sell the cars. They were available for lease only. That way GM could take them back when the lease expired and do what every green-thinking company would do - crush them and turn the recycled metals into something really useful. Maybe into a Hummer.

The car was not without some problems. When first released its lead-acid batteries were prone to failure. That problem was fixed. The battery technology of the day allowed for trips of about 60 miles before recharging. It turns out that most people drive about 25 miles per day. OK. No issue there: Zip around all day, plug in at night when electricity is cheaper, then back to work again. Still, consumers wanted a car with about a 300 mile range.

New, more efficient batteries with a longer range were developed in the state that Ford and GM built - Michigan. Turns out that a local inventor in Michael Moore's home town of Flint, Michigan had a patent on a great new battery storage technology that could change the world. GM bought a controlling interest in the company. Then they did something that seems counter-intuitive: they sold that interest to Texaco. You don't have to be a business game-theorists to figure out what comes next. The owners of the efficient-battery patent who are the world's biggest supplier of gasoline sue any auto company who uses their technology to build long-range, electric cars.

This is where our economic system fails the needs of the many. Call it the tragedy of the commons or just an inefficient use of non-renewable resources. However it is described, when a private company can suppress a technology that can benefit the well-being of the many then the system is failing. (There is an informed paper on the macro-economic underpinnings of this issue here)

A few years ago Toronto suffered through 50 smog crisis days. 50. That air pollution was caused by cars and by coal-fired power generation. Would the availability of electric cars change the quality of our air? You bet it would.

The problem that prevents us from achieving clean air is a regulatory one. If our government decrees that 10% of cars sold in Canada have to be electric by 2015, then the auto market will respond. However, do you think a our current federal government will create such a policy? WIll any?

Ultimately, this is a consumer issue. If enough people demand environmentally responsible cars then we will get them. Waiting for the auto industries to do what is right won't work. Waiting for government to make the policy changes needed to protect our health in the log-term won't happen unless consumers (also known as voters) make it happen.

The last word in today's post goes to the film's producers and PBS:

BRANCACCIO: So, your film actually renders judgment in some of these cases. You -- you stamp on your screen, "Guilty." When it comes to -- the car companies, they would argue with that. You stamp on the screen, "Guilty" when it comes to the oil industry, they would argue about that. But, what about you and me -- us, the consumer? I mean, we may not have run out initially. I lived in California at the time, I didn't think to get an EV1, maybe I'm partly guilty in this story.

PAINE: This is why we -- took on the consumer as part of the suspects for this -- for our story.

BRANCACCIO: But, ultimately, you don't lay blame on the consumer?

PAINE: Well, no, ultimately we do.

BRANCACCIO: Really?

PAINE: We -- we -- in fact, when we first showed this to some of our producers, they're like, "I'm not sure you want to make the consumer guilty. I mean, after all they're -- they're your audience for your movie."

BRANCACCIO: People who pay money to get in to see this movie.

PAINE: Yeah, it's like --

BRANCACCIO: But you do have a guy in the film who, about the consumer, says this, when we hear energy efficiency -- I'm paraphrasing.

PAINE: Yeah.

BRANCACCIO: When we, the consumer hear energy efficiency, he says, we think smaller cars. We think cold houses. We think living like Europeans.

PAINE: Right, right. Well, it's really true isn't it? I mean, ultimately we, as consumers, are -- have a lot of herd mentality. And, whatever's hot, we go, we buy. And -- clearly when the electric car came out in the 90s everybody was buying SUVs.

This story first posted at http://www.corporateknightsforum.com