This article is about Electric Vehicles. For other articles, include the company with ticker EV, see EV (disambiguation).
Governments worldwide have adopted regulatory schemes meant to enable a transition to renewable energy sources that reduce the greenhouse gas emissions caused by the burning of fossil fuels. In response to the demand and government incentives for developing new fuel sources for cars, major automobile manufacturers have been developing "hybrid" vehicles that run on both gasoline and electricity. Before late 2008, when oil prices were above $100 per barrel, the major car makers began taking another look at electric vehicles. Then, with oil prices falling below $50 a barrel, R&D budgets got cut and priorities shifted. Still, interest remains.
A leading example is the Toyota Prius, a hybrid vehicle with an average fuel-efficiency of 46 miles per gallon and the ability to recharge the battery when braking. This model caught on so heavily in California that Valero complained about its impact on gasoline demand in its 4Q07 conference call.
Since 2007, car makers have been ramping up development of electric vehices (EVs) that can be plugged into a home electric socket and charged overnight. One, the Tesla Roadster, a $100,000 dollar sports car that can run 220 miles on one charge and go from 0 to 60 mph in 3.9 seconds, illustrates exactly how marketable these cars can be; within three weeks of its pre-sale in 2007, the company sold out its entire production for the year. The Prius and the Tesla paved the way for the big automakers to enter the market; Daimler, Renault, Toyota, General Motors, and Honda are all planning to release next-gen, plug-in electric vehicles by 2010, vehicles with the ability to run 10-40 miles before even touching the gas in their tanks and to go 600 miles without a single recharge. These cars have the potential to dramatically reduce both America's dependence on foreign oil and America's emissions of greenhouse gases. As of May 2008, the nation's existing power plants could run 73% of the nation's cars if they were replaced by EVs. This would cut American oil imports in half. Furthermore, if just 60% of American cars were replaced by EVs, carbon emissions would fall by 450 million metric tons per year - equivalent to taking 82 million light vehicles off the road. 
The American infatuation with the automobile, and the carbon emissions that cars produce, have been key players in the environmental crisis called "climate change." Although the scientific and political communities have yet to reach consensus on the issue, evidence abounds that popular opinion has shifted in favor of legislative and economic action to combat global warming. But demand for emissions-free vehicles did not begin with Gore's famous film. The Zero Emissions Vehicle Mandate, passed in California in 1990, required car makers to increase the number of zero-emissions vehicles sold in the state to 2% by 1998. This was the catalyst for the development of the first commercial electric vehicles (EVs). The General Motors EV1, released in 1997, was the best of these, with a maximum distance of 150 miles per charge and an electronically-limited top speed of 80 mph (a modified version could go up to 180 mph). But after six years of letting customers lease the cars (but not buy them), the company recalled and destroyed all the EV1 vehicles despite a waiting list of interested customers. In justifying the recall, GM stated that it could not sell enough of the cars to make production profitable.
After the release of Al Gore's An Inconvenient Truth, public sentiment has embraced the fight against climate change, and this is driving the development of a strong green tech sector. Though many conservatives claim that the science behind global warming is unfounded or incomplete, climate change fears are, in part, responsible for public support of electric cars - and for the government support that follows public opinion. 70% of Americans surveyed by WorldPublicOpinion.org said that they would support a government mandate requiring half of all new cars sold by 2010 to be hybrid-electric, while 77% said they supported the continuation of an existing hybrid-electric tax credit - all this in 2005, before the release of Gore's film. Replacing just 60% of American light vehicles with electric cars would only cause electricity consumption to rise 8%, and would decrease greenhouse gas emissions by the equivalent of 82 million cars; many studies have found that even if coal plants alone were used to produce all the electricity to power these vehicles, emissions would still fall because modern coal plants are more efficient than gasoline-burning automotives. As it were, state Renewable Portfolio Standards and a presidential election in which climate change is a major issue pretty much ensures that won't be the case. As public support for reduced-emissions products grows, though, demand for EVs will increase, as illustrated by the successes of both the Prius and the Tesla.
Oil Prices surpassed the feared $100 mark on January 2nd, 2008, and are well on their way to $200 a barrel, reaching $120 only five months later. These price hikes have, of course, not gone unnoticed at the gas pump; at the end of April, 2008, national gasoline prices averaged $3.60 per gallon, with California as high as $3.89. Fully electric and hybrid-electric plug-ins promise to push vehicular efficiency high enough that Americans can continue their love affair with the car without paying through the ear to fuel it; as gas prices rise, so too will demand for electric vehicles.
All this lead many to believe that the program was a sham from the start, with GM sabotaging the release of its own vehicle with the aid of the oil industry.
It makes sense that oil companies would want to prevent the adoption of electric cars. A decrease in gasoline demand would be catastrophic for the industry. It would not only decrease sales but also lead to a drop in prices, causing margins to be squeezed from both ends. A drop in gasoline demand would also be a bane to oil exploration and production companies, as transportation fuels made up 69% of U.S. oil consumption in 2006/2007
One notable exception is Exxon Mobil; the E&P giant is also a developer of petrochemicals, and since late 2007 has been developing film technologies that would let electric cars use lithium-ion batteries (like those used in cell phones). In March of 2008, the company announced that its new technology would be used in an EV being up out by Electrovaya Inc.
Electric utilities have the most to gain from the widespread adoption of EVs, as they will become "more important than the oil companies" once consumers need cheap electricity rather than cheap fuel. This makes them a powerful potential ally to EV producers because they have the ability to ease the transition from gas to electric cars by charging lower rates for electricity used to charge vehicles. Already, a number of utilities companies, including Sempra Energy, Southern California Edison, PG&E, and DTE Energy Company, are developing "smart meters" with which they will be able to monitor electricity use by purpose and time. At night, electricity usage is half that during the day, but base-load energy plants like nuclear and geothermal run all day, meaning that there is energy being produced at night that consumers simply don't use. Electric utilities have been struggling with this "waste" production problem for years, and electric cars offer a simple solution. By promoting a charging scheme where users plug-in their cars for the night and then forget about them, so that they're freshly charged and ready to use for the day's trips (much like most people do with their cell phones), electric utilities will be able to capture revenues for the energy that is usually wasted, increasing their overall efficiencies. This is the purpose of the "smart meters": by monitoring when and how power is used, electricity companies can set lower rates for charging EVs at night, thereby making the vehicles more cost-efficient for the consumers as well. Most electric utilities already have night-time pricing that is lower than day-time pricing, and Tesla estimates that by charging the Roadster at night, the overall cost is just $0.01 per mile, or $2.20 for a full charge; incentive pricing using the "smart meters" has the potential to bring consumer costs even lower.
For electric utilities to benefit from EVs, they'll have to be able to generate enough electricity to support millions of charging vehicles, plus the increasing amount of electricity being consumed by the ever-growing American populace. As of May, 2008, the nation's existing power plants could power only 73% of the nation's existing light vehicles if they were replaced by electric vehicles, meaning energy companies are going to have to install new generating stations to support the increased demand. The problem, however, is that new climate legislation is being passed every few months, and with the Republican presidential candidate (John McCain) supporting a carbon trading scheme while the two Democratic candidates (Hillary Clinton and Barack Obama) support reducing emissions by 80% below 1990 levels by 2050, it's going to be difficult to get approval for cheap (read: coal) power plants. Utilities companies will have to meet emissions restrictions, but electricity demand growth will actually lead to increased emissions from power plants (only slightly offsetting the decrease in automobile emissions). Though renewables are increasingly being used to thin out fossil fuels' shares of the energy mix, it will be a while before they are as cost-effective as coal plants. Many utilities are arguing that they should get higher emissions allowances for helping to offset automotive emissions (modern power plants burn coal more efficiently than cars burn gas), but so far there isn't any legislation to support their claims. This means utilities will have a love/hate relationship with EVs until lawmakers work out a solution to their complaints.
Let's face it: $100,000 for the Tesla is a steep price to pay, and it's hard to expect the average consumer to go out and replace their old gas-guzzler the moment mass-production EVs are released onto the market. High gasoline prices will certainly help, but those cost-savings will be measured over the span of years; American consumers are notorious for their desire for instant gratification. Without government aid for people who want to sell their old cars and buy a new EV, the widespread adoption of electric cars is unlikely. Some benefits already exist for hybrid and EV owners:
Future government aid to consumers considering an electric vehicle will be important in aiding the overall success of the emerging industry.