University of California Transportation Center

The litany of motor vehicle evils is well known. Cars account for one-fourth of greenhouse-gas emissions and half of urban air pollution; they consume more oil than the nation produces at home. Efforts to solve these problems by reducing the nation's dependence on cars have failed. Mass transit now carries a smaller proportion of travelers than ever -- only about 4 percent of total passenger-miles -- and carpooling accounts for only 13 percent of work trips, down from 20 percent in 1980. Instead, policymakers are once again turning to technological solutions creating cleaner, more efficient vehicles.

Over the past five years, electric vehicle (EV) technology has emerged as the most promising alternative to the internal combustion engine. A wave of innovation has begun to build momentum for the widespread commercialization of electric-drive vehicles. These will include not only battery-powered cars, whose ultimate role may be modest, but vehicles powered by electric fuel cells or by hybridized combinations of internal combustion engines (ICEs) and electric motors.

The potential profits from EV technology are substantial. Whoever pioneers large-scale production of electric-drive vehicles will find inviting markets around the world. EV transportation is particularly suited to countries in which pollution is severe and intractable, where petroleum imports are a burden or the fuel infrastructure needed for conventional cars is not in place, where excess electricity (usually hydropower) is available in off-peak hours, or where vehicle performance is secondary to reliability and low maintenance. Indeed, the Clinton administration has selected EV technology as one of 22 critical technologies for the nation's economic revitalization.

It is almost inevitable that EVs will eventually supplant most, if not all, conventional cars. The challenge for public policy is to guide this transition wisely. The barriers to a wholesale change in the nation's transportation system (not only economic and technical barriers but also institutional and structural ones) remain high. Only strong government action can level the playing field to give EV technologies a chance. At the same time, public policy must be flexible enough to permit midcourse corrections and let the market, rather than the government, pick the winners.