Electrical Vehicles in the United States - Assignment Example

Electrical Vehicles in the United States Abstract The rising petroleum prices and growing environmental concern has brought innovation not only in design but also in technology of the automobile industry. Recently a shift towards alternative fuel technology such as electric hybrid cars has been observed. A critical analysis of this shift revealed that this shift in technology is not only beneficial for the customers in terms of the fuel efficiency but it is also beneficial for the economy in terms of positive net impact on employment, trade balance and environment and health. These results are also backed by empirical evidence. Introduction With ever increasing growth of industrialization the need for transportation is also increasing rapidly. Automobile industry to match the escalating needs not only provided a wide variety of cars but came up with a broad range of innovative cars to pique the interest of the infatuated public. This resulted in concept cars such as hybrid cars and electric cars (Cleveland). Today’s market can be termed as in its early development stage of evolving technologies, designs and innovations to match the changing ever changing lifestyle of the twenty first century. Petroleum prices and economy of fuel has played an important role in the development of this technology. Recent volatility in petroleum prices has urged countries to look for self sufficiency in fuel. This need led to the emphasis on alternative fuel technology. In USA especially after the terrorist attack of 2011need for self sufficiency in fuel has aroused. This trend is depicted in the popularity of many SUV cars and other hybrid cars being manufactured by all major automobile manufacturers. This paper aims at studying the effects of electric cars on the US automotive industry. What impact it will have on the business of gas engine manufacturers, gas engine parts stores and the job of people who work on gas engines Review of related literature An electric car is not a new phenomenon. In fact the history of electric car dates back to 1890. The history of electric car can be divided into three phases. Firs the era 1890-1929 which can also be called the early years, second phase is 1895-1905 also called the golden era of dominance or the middle age and the third phase is the current years from 1990-to present. Current escalating fuel prices and growing concerns of environment has only sparked interest in the alternative fuels in recent times. The result is that today’s options of automobile include hybrid SUVs (Curtis Darrel Anderson). This recent resurgence and popularity of electric hybrid cars can be attributed to multitude of reasons. It includes environmental concerns such as harmful toxins released from internal combustion engine (ICE) of traditional cars, global warming, air pollution as well as more economical reasons such as depleting oil reserves and escalating petroleum prices. Gasoline composes 20% of the crude oil produced. Production of gasoline from crude oil requires two times of oil than any other fuel (Georgano). Gasoline is used in ICE of the cars used today. Hence it led to the need of finding more efficient use of the existing resources of the planet. A critical analysis of this electric hybrid car technology is required and the benefits of fuel efficiency should be weighed against its impact on the overall economy. These hybrid cars more expensive for the customers and the price difference called premium price is added to the cost to customers. In addition to that maintenance and replacement cost of batteries of hybrid cars is another issue. Hybrid car is not free of its faults including some engineering faults and safety concerns as well as the pollution caused through manufacturing of these batteries (Friedman). It is estimated that this trend for electric cars will grow in the future. It is believed that in addition to many cars that are built on alternative fuel technology by the end of the next decade the cars that are now build with ICE will also be converted to this technology. It will have its impact on the world economy (Givorkian). The impact of electric cars on the US economy is not just limited to fuel efficiency and prices of cars but they are very far reaching. Some of them are summarized here. According to a study conducted USA by the end of 2030 will be able to reduce its oil imports by a wide amount of 18-38 % because of this fuel efficient technology. This reduction in oil imports will decrease the trade deficit by US$ 90 billion and US$ 226 billion by the end of 2030. Net gain in employment would be somewhere between 130 000 and 350 000 jobs. Due to reduced air pollution healthcare cost savings would lie in the range of US$ 105 billion and US$ 210 billion. With these non polluting electric cars greenhouse gas emissions would be between 20% and 69% by the end of 2030 (Wells). Research Methodology As discussed above these electric hybrid cars have far reaching effects on various fundamental macroeconomic variables. Its impact on the employment sector of the US automobile industry is of particular interest. To measure or calculate its exact impact on the employment the methodology of forecasting is utilized. It will help us in determining the long term and short term impact of electric cars on employment in automobile industry. Electric car is a new technology and as it is true for all new technologies it will trade off employment in this new industry with losses in the traditional industry related with petroleum delivery, internal combustion engine maintenance, parts of gas manufacturers etc. but fortunately the net effect is significant job creation. In the initial phases or in the short run it may result in loss of jobs in gas manufacturers and parts manufacturers, service delivery etc but in the long run the net effect on employment is positive. The projections made in this research are based on certain assumptions. Firstly the share of domestically produced vehicles remains stable and manufacturing of electric cars does not directly affect employment in traditional automobile manufacturing. Domestic petroleum production continues to work at full capacity as determined by price of oil and regulation on extractions by federal. These assumptions are made to study only the impact of employment on traditional automobile by electric cars isolating all other variables. The table below shows the projection of gains and losses in US by the end of 2030. This statistics is based o (Becker)n the annual revenue of the industry and the revenue-to-employee ratios of the two industries. Revenue –to-employment ratio is taken from 2009Forbes survey of US corporations. industry Baseline scenario High price scenario Operator subsidized scenario Employment gains Charging infrastructure 178,163 411,579 472,778 Battery manufacturing 60,065 80,630 81,168 Total gains 238,229 492,209 553,946 Employment losses Gas station attendants -23,152 -37,353 -42,096 Parts manufacturers -39,287 -63,386 -72,809 mechanics -46,605 -75,192 -86,370 Total losses -109,043 -175,931 -202,085 Net employment impact 129,185 316,278 351,861 Result The adoption of electric cars will negatively affect some industries that supply and manufacture spare parts and services for petroleum based vehicles but this job loss will be offset by the new jobs created in the deployment, operation, management and manufacturing of public charge spots and battery manufacturers. Hence the net impact on employment will be positive as proved through our projection of the data. Conclusion The growing concern about environment and the recent volatility of petroleum prices has fueled the resurgence of alternative fuel vehicles such as electric hybrid cars. These cars are not fuel efficient but environment friendly as well. With critical analysis of the hybrid cars, the growing trend and its various impact on the global economy as well as US economy it is proved that electric car is the future technology which has positive results not only on the employment sector but also on the health and environment as well as on the economy with its fuel efficiency. With lesser reliance on petroleum it also improves trade balance. Through empirical evidence it is proved that its net impact on employment is positive. Bibliography Becker, Thomas A. Electrical Vehicles in the United States:A new model with forecast to 2030. Technical brief. Berkley: Centre for enterpreunership and technology, 2009. Cleveland, Cutler J. Concise Encyclopedia of the history of energy. USA: Elsevier, 2009. Curtis Darrel Anderson, Judy Anderson. Electric and hybrid cars:a history. North Carolina: McFarland , 2010. Friedman, Laura. "The emergence of hybrid electric cars:innovative path creation through co-evolution of supply and demand." Technological forecasting and social change (2010). Georgano, Nick. Electric Vehicles. Great Britain: CIT , 2008. Givorkian, Perter. Sustainable energy systems engineering. New York: McGraw hill, 2007. Wells, Peter E. The Automotive Industry in an Era of Eco-Austerity:creating an industry as if the planet mattered. Massachusettes: Edward Elgar, 2010. Read More