California's Plan to Electrocute the Automobile Industry

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Just when you think the People's State of California couldn't possibly inflict more damage on its own economy, out comes a regulatory proposal so astonishing you have to wonder whether the destruction of an entire industry is its actual intent.

So-called zero emissions vehicles, which could more accurately be labeled coal burning cars given the source of most of our nation's electricity, are part of a troika of green fetishes that have captured the fevered imaginations of central planners. Not content with the incentives provided by a $7,500 federal tax rebate attached to cars like Government Motors' Chevy Volt, California is proposing a rule that would fine auto makers $5,000 per vehicle if at least 5.5% of the new cars they sell in the state are not electric. The new rule, which would start siphoning money from the economy in 2018, would hike the green sales quota to 14% by 2025.

Nevermind that the charging infrastructure to support that many electric cars doesn't exist and can only be conjured up with massive taxpayer subsidies. Nevermind that California's own Clean Vehicle Rebate Project designed to transfer an additional five thousand taxpayer dollars into the pockets of electric car buyers goes broke in July. Nevermind that the only way switching to an electric fleet could reduce carbon emissions would be by ripping out every fossil fuel power plant in the state while covering the countryside with taxpayer subsidized windmills and solar plants - presumably the next stage of some master plan. Nevermind that the resulting leap in electricity rates would both impoverish consumers and drive away even more businesses, further collapsing state tax revenues. Left coast politicians and the kumbaya cuckoos that elect them will be able to feel good about themselves by actualizing their heartfelt concern over the plight of paddling polar bears.

It would be inaccurate to claim that this program and others like it are driven by the governing philosophy that the ends justify the means. Legislating desired macroeconomic outcomes with abject disregard for the microeconomics of how the world is supposed to get there from here is the hallmark of an even more quixotic intentions justify the means mentality. This has done as much to bankrupt the Golden State as lavish public employee benefits and runaway entitlements. Yet even as water rises in the hold of California's sinking ship, policy makers continue to compete with each other to blow more holes in the hull.

One look at the anemic sales of electric vehicles immediately tells you why mandating more is a recipe for madness. The most recent reports show that combined sales of Chevy Volts and Nissan Leafs in the first six months of their launch add up to less than 4,000 units. Compare this to the laughingstock vehicle of all time, the notorious Ford Edsel, which sold 68,000 units the year it was introduced.

Even supposing your own brain is on permanent vacation a quick glance at Consumer Reports reveals the irredeemable impracticality of plug-dependent cars. Yet if Californians don't line up to buy a hundred thousand of these overpriced lemons every car buyer in the state is going to have to fork over an extra $5,000 tax to buy cars that they do want. Sounds like 2018 will be a great year to set up a car laundering service across the border in Nevada.

This daffy new regulation is scheduled to be announced in September, about the time that California general obligation bonds start doing the Greek. In a statement that reveals the extent to which this whole program has been thought through the chief deputy executive officer of the California Air Resources Board, Tom Cackette, gave the following answer when asked how feasible this program will be. "That is a question we'll only find out by trying."

Is this what the campaign to save the world from global warming has come to? After prostrating ourselves before ineffably complex computer models purportedly telling us what the climate will be 100 years from now, global warming alarmists are going to whack the economy with a tire iron with results that we can "only find out by trying."

Nevermind that scientists have seen no discernable temperature rise in the last decade, a result these apocalyptic models cannot explain. Nevermind that even if California succeeds in forcibly electrifying its citizens while tearing up power plants, impoverishing themselves in the process, the net impact on atmospheric carbon dioxide emissions wouldn't amount to more than a few days of business-as-usual in China.

When Supreme Court Justice Louis Brandeis called states "laboratories of democracy" do you suppose he had mad scientists in mind? Let's hope the rest of the country doesn't get singed when California succeeds in blowing itself up.

Bill Frezza is a fellow at the Competitive Enterprise Institute, and a Boston-based venture capitalist. You can find all of his columns, TV, and radio interviews here.  If you would like to have his weekly columns delivered to you by e-mail, click here or follow him on Twitter @BillFrezza.

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