Press Releases

Shifting Gears: Transcending Conventional Economic Doctrines to Develop Better Electric Vehicle Batteries

WASHINGTON (October 11, 2012) Today ITIF released a new report titled Shifting Gears: Transcending Conventional Economic Doctrines to Develop Better Electric Vehicle Batteries. The report explores the challenges confronting today's electric vehicle industry and provides recommendations for overcoming them.

Policies aimed at the past and present development of the electric vehicles (EV) industry have primarily been informed by dueling neoclassical and neo-Keynesian economic doctrines. This has resulted in vehicle subsidies and carbon taxes being the leading EV policies both at home and abroad. Such policies, however, have failed to adequately drive the development of EVs. Ultimately, EVs have serious cost and performance obstacles to overcome before they will be able to compete with conventional gas cars, making it important to shift focus to battery innovation.

"It's important to recognize that robust battery innovation holds the promise that "all-electric," or battery electric vehicles (BEVs), can one day be the default car of choice for consumers around the world. But realizing this promise requires throwing aside ineffective policy choices based on faulty economic doctrines and implementing innovation policies that help break through the core technology barriers impeding their widespread market deployment," said Clifton Yin, the report's chief author.

The report proposes three steps policymakers should take to advance the development of breakthrough electric vehicle batteries:

  1. More aggressively fund battery innovation, possibly by diverting funds used for the EV tax credit to instead support key battery innovation programs, like the Advanced Research Projects Agency-Energy's (ARPA-E) Batteries for Electrical Energy Storage in Transportation (BEEST) program.
  2. Foster greater collaboration between the Department of Defense (DOD) and the Department of Energy (DOE) on battery development.
  3. Support a "BatteryShot Initiative" akin to DOE's SunShot Initiative. BatteryShot could coordinate government battery RD&D with the goal of producing a battery with a total system cost of less than $250/kWh and a range of at least 300 miles per charge.

Those who subscribe to the neoclassical economic doctrine tend to see climate change as a relatively straightforward problem caused by failing to charge polluters of greenhouse gases. By contrast, those informed by neo-Keynesian perspectives favor a more direct response, such as subsidizing renewable energy or requiring its use. Finally, those supporting the innovation economics doctrine argue that price signals, regulation and subsidies are insufficient to drive clean energy transformation. Instead, as ITIF argues, innovation policies, such as investments in research and the development and commercialization of next-generation alternatives, are the best soluti