The last seven presidents, starting with Gerald Ford, have decried our dependence on foreign oil. Americans clearly recognize the danger of being dependent on petroleum that comes from areas of the world that are unstable and/or hostile to American interests. But, the dependence of our transportation sector on foreign oil is now more than a national security concern; it provides a robust economic opportunity and has created a fierce global race that we could lose if we don't innovate.
Ninety-four percent of all our cars, trucks, ships and planes are dependent on oil. America spends $1 billion each and every day from our economy to pay for foreign petroleumsome of it to regimes hostile to American interests.
Furthermore, the U.S. military secures access to energy resources around the globe at a cost of between $67.5 billion and $83 billion annually, according to a 2009 report from the Rand Corporation. If we are to kick our oil habit, then there is no doubt that we must tackle the transportation sector.
Luckily, this area is poised for major transformation, with huge potential benefits for American manufacturing. Chevrolet and Nissan have introduced plug-in hybrids or all-electric vehicles with great success. Chevrolet has announced it will double production of the Volt, and the first production of Nissan's Leaf is sold out. Several other car companies have also announced plans to introduce electric or plug-in hybrids in 2011 or 2012.
Globally, countries are investing in cleaner transportation and infrastructure that are highly efficient, use domestic forms of energy and are mostly immune to the rising cost of oil. China has identified electric automobiles as one of its seven "strategic emerging industries" for the coming years. China and the United States, along with France, Germany, Japan, South Africa, Spain and Sweden have joined with the International Energy Agency to launch the Electric Vehicles Initiative that serves as a platform for global cooperation on the development and deployment of electric automobiles.
But it isn't just the vehicle. Companies are fiercely competing to advance battery technology. Experts predict the advanced battery industry could grow to $100 billion a year by 2030approximating the size of the current global pharmaceutical sector. The race to innovate, manufacture and deploy advanced batteries will generate a half-trillion-dollar global industry.
President Obama has set a goal of having one million electric vehicles on the road by 2015. Congress should follow the president's lead and put policies in place that sustain or expand market incentives to buy plug-in hybrids and electric cars in the U.S. and support the necessary charging infrastructure to service a whole new generation of electric automobiles on a larger scale than is happening now.
Bipartisan endorsement is evident in the U.S. Senate, where Minority Leader Mitch McConnell has indicated that electric vehicle deployment and nuclear power represent two issues of common ground for Senate Republicans and the administration. In the last Congress, six bills proposing incentives for the purchase of electric vehicles and plug-in hybrids were authored by Democrats and Republicans. In the current Congress, already two proposals have been suggestedturning the present tax credit into a rebate at the time of purchase for electric cars and plug-in hybrids and expanding the cap on the number of vehicles per manufacturer that can receive the $7,500 credit to 500,000 vehicles, up from 200,000.
Policymakers can create a win-win for American consumers and businesses. Consumers will have the option to buy highly efficient, domestically fueled cars that are better for the environment and aren't subject to oil price swings. And businessesfrom automakers to battery supplierswill contribute to the U.S. economy, create jobs and enhance American competitiveness in the emerging trillion dollar global market for electric vehicles and plug-in hybrids. And the U.S. will be a cleaner, safer and more prosperous nation. Too good to be true? We don't think so.
This post originally appeared as a contribution to the National Journal's Energy Expert Blog discussion on: "Can Electric Vehicles Change the Game?" (February 22, 2011).