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Will government help hurt electric cars like the Chevy Volt?

Battery-powered cars like the Chevy Volt and Nissan Leaf are benefiting from major government support. And that’s what may end up depriving this important technology from crucial market-driven innovation.

By Martin B. Robins / August 6, 2010

Barrington Hills, Ill.

The electric plug-in vehicles Chevy Volt and Nissan Leaf will soon hit the market, spurring hopes that “green” cars are about to go mainstream.

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To the extent that consumers embrace them, they will reduce our need for foreign oil and involvement with anti-American regimes such as those in Iran, Libya, and Venezuela. However, based on our experience with other industries, most notably personal computers (PCs), there are serious concerns about whether we are taking the right steps to help these innovative autos succeed in the market.

Simply put, electric cars are not currently commercially viable for most Americans. To become viable, they must evolve quickly. But high levels of government support, while well-intentioned, may be thwarting this evolution.

Batteries need improvement

Problems are already evident.

In a test drive, Wall Street Journal reporter Joseph White found several issues with one new electric model, the Mitsubishi i-Miev. He was able to drive only about 12 miles before being advised by the car to recharge. The stated range is up to 100 miles on city streets, but his use of the air conditioner apparently drastically depressed actual range.

The Chevy Volt will go no more than 40 miles without recharging. A separate gas engine extends the range considerably further, albeit by burning gasoline.

The Nissan Leaf, meanwhile, has a range of only about 100 miles and no gas engine. The Volt carries a sticker price of $41,000; the Leaf costs $33,000.

Even with a generous $7,500 federal tax credit, these prices are out of reach for most consumers. And their limited ranges make them impractical for all except residents of densely populated urban areas who typically drive very short distances. There are always early adopters of the latest technologies, but to go mainstream, these cars must make vast improvements in battery technology – a point even Ford President Alan Mulallay acknowledges.

This challenge should not phase us; many of our most popular products, especially PCs, were introduced in exactly the same way and quickly evolved into the economic mainstream. Somewhere out there, in the proverbial garage, an inventor is working away to solve the problem – or is there?

There’s the rub: Circumstances surrounding electric cars are quite different from those that “fueled” the growth of the PC.