Economic Impact of the national adoption of Electric and hybrid cars Essay Example for Free

Economic Impact of the national adoption of Electric and hybrid cars Essay The Unites States consumes 25 % of the oil produced in the world and roughly 70% of this is consumed by the demand for transportation. The demand for crude oil in US is primarily driven by the demand for transport fuels with the price elasticity ranging between -0. 12 and -0. 3, as calculated for short-run and long-run elasticity respectively for 2008. Faced with higher fuel prices and the associated environmental hazards, the consumers and the government’s focus is shifting towards development and adoption of technology for hybrid cars. The use of hybrid electric vehicles (HEVs) and Plug-in hybrid electric vehicles (PHEVs) would reduce the green house gas (GHG) emissions and improve the economics of electrical industry by reducing the US dependency on foreign oil (Scot, Kintner-Meyer, Elliott, Warwick, 2007). The hybrid electric cars are cost effective compared to the conventional vehicles when run on gasoline and are absolutely emission-free in electric-only mode, when their batteries are recharged just by regenerative braking (afdc. energy. gov. ). The potential customer base which is identified as ‘early majority group’, are motivated to buy electric cars by a desire to reduce oil imports and help protect the environment (LaMonica, 2010). A comprehensive environmental assessment of the key air quality parameters, conducted by Electric Power Research Institute (EPRI, 2007), considering the adoption of hybrid electric vehicles outlines the following societal benefits of electrifying transportation include the following: †¢ Reduction in petroleum consumption, leading to reduced dependence on imported oil †¢ Net reduction in GHG emissions †¢ Potential to improve air quality Investing in electric vehicles has been a central tenet of the US. The government plans to invest $2. 4 billion to spur the production of 50,000 batteries a year for plug-in hybrids by 2011. This initiative will not only reduce the US oil imports, it will also reduce the pollution while boosting the economy by generating thousands of jobs for the Americans (AP, 2010). The adoption of Hybrid Electric Vehicles by a larger customer base will be a boon for the environment as well as the economy of the nation. With higher demand for the hybrid vehicles in future, it is expected that the cost of production of such vehicles will also come down due to economies of scale. This would further make the hybrid vehicles popular and thus expand the benefits. .? References AP. (2010, July 15). Obama to Promote Electric Vehicles in Michigan. Cnbc. com. Retrieved from http://www. cnbc. com/id/38259732 Environmental Assessment of Plug-In Hybrid Vehicles. (July 2007). Electric Power Research Institute. Retrieved from http://mydocs. epri. com/docs/public/000000000001015325. pdf Hybrid Electric Vehicles. Alternative and Advanced Vehicles. US Department of Energy. Retrieved from http://www. afdc. energy. gov/afdc/vehicles/hybrid_electric_benefits. html Scott, M. J. ,Kintner-Meyer, M. , Elliott, D. B. , Warwick, W. M. (November, 2007). Impacts Assessment of Plug-in Hybrid vehicles on electric utilities and regional U. S power grids: Part2: Economic Assessment. Retrieved from http://energytech. pnl. gov/publications/pdf/PHEV_Economic_Analysis_Part2_Final. pdf