Indiana University

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Wednesday, July 17, 2013

Last modified: Wednesday, July 17, 2013

Economy edges out environment for governments plugging electric vehicles

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July 17, 2013

BLOOMINGTON, Ind. -- Contrary to common belief, many of the world's most powerful nations promote the manufacture and sale of electric vehicles primarily for reasons of economic development -- notably job creation -- not because of their potential to improve the environment through decreased air pollution and oil consumption.

This is among the main findings of a study by researchers at the Indiana University Bloomington School of Public and Environmental Affairs and the University of Kansas that analyzed policies related to electric vehicles in California, China, the European Union, 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:

"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.

"Given the extent of industrial policy we uncovered, we urge scholars of competition law and trade to look carefully at these policies," said co-author Bradley Lane, an assistant professor in the School of Public Affairs and Administration at the University of Kansas. "Any semblance of commitment to trade liberalization seems to be lost when governments offer direct financial assistance to producers of batteries and electric vehicles, inducing an 'arms race' of public subsidies of products sold in a global marketplace."

"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.

SPEA graduate students Natalie Messer-Betts and Devin Hartmann contributed to the research, as did Rachel Krause, who is joining the University of Kansas faculty.

About Indiana University School of Public and Environmental Affairs

SPEA was founded in 1972 and is a world leader in public and environmental affairs and is the largest school of public administration and public policy in the United States. In the 2012 "Best Graduate Schools" by U.S. News & World Report, SPEA ranks second and is the nation's highest-ranked professional graduate program in public affairs at a public institution. Four of its specialty programs are ranked in the top-five listings. SPEA's doctoral programs in public affairs and public policy are also ranked by the National Academy of Science as among the nation's best.

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