Bureaucracy Stalls Green Cars

The blogger network Green Options published an article "Upstart Chinese Car Company BYD Releases Plug-In Hybrid.  See What You Can Do With No Regulations?"  The article started:

China-based BYD has introduced a plug-in hybrid that can be plugged into a regular electrical outlet, and achieve sixty miles on one charge.

The car can charge the battery about half-way in ten minutes.  By avoiding the problem of storing and distributing hydrogen, this represents a significant step toward powering automobiles from nuclear energy, a development which we've advocated for a long time.

The Chevy Volt, a prototype GM electric vehicle which has generated a great deal of buzz, is supposed to get only 40 miles per charge.  The Volt has been under development for years if not decades longer than BYD's car and GM has spent a hundred times more money than BYD.

Why the differences?  GM has spent a lot more money over a longer time, their car still isn't ready for the road, and their offering will get only 40 miles per charge as opposed to 60 miles for the Chinese hybrid.  Why?  Are the GM engineers incompetent? Are Chinese that much smarter than Americans?

The answer is given later in the Green Options article:

The F3DM will sell for approximately 149,800 yuan (the equivalent of about $22,000) according to the article.  The vehicle faces stiff regulatory hurdles in the U.S market, which is probably the reason that GM, if it's still around, might have a chance to beat the F3DM to the market with its own plug-in, the Chevy Volt. [emphasis added]

This article reports an interview with Tony Posawatz, Vehicle Line Director for GM's Chevy Volt.  In explaining why the Volt could not have an earlier release date, Mr. Poswatz said, "The two major factors holding back the Volt's release are extensive testing requirements and lithium ion battery technology." [emphasis added]

GM states that emerging battery technology has played a part in holding back the Volt's release - fair enough - but they also mention regulatory requirements first.  We've discussed the regulatory obstacles to Americans buying low cost cars.  Now we see that regulations make it harder to introduce new green technology as well as keeping prices higher than necessary.

It's relatively rare that we can see just how much our regulations actually cost.  BYD is small for an automobile company - Warren Buffett's MidAmerican Energy Holdings Co. bought 9.9 percent of BYD for HK$1.8 billion ($232 million), which valued BYD at about two billion dollars.  GM is a much larger, more troubled company - it loses about half of BYD's market cap per month.

Mr. Buffet would not have invested in BYD if he had any questions about their engineering capabilities.  The fact that they've already got three gasoline-powered cars on the road and plan to add five new models next year shows that their design department is on the ball.  "But," you ask, "how can such a small company put out so many different car models so fast?"

The answer is that Chinese automobile manufacturers don't face anything like the regulatory hurdles American manufacturers face.  Back in the day when they had larger market share, American regulations protected Detroit from foreign competition - it took the Japanese and Koreans quite a while to figure out how to get their cars past the regulators so that they could be sold.  Now, those same regulations have turned around to bite the Detroit Three: Japanese manufacturers, being more nimble, are better able to navigate the thicket of rules than native American companies, now that they understand them as thoroughly and have equal political connections.

Although their car is street-legal in China right now, BYD estimates that it will take more than two years to get it approved for US sale; we won't see the BYD until 2011 whereas GM plans to put the Volt on sale late in 2010.

GM isn't selling the Volt anywhere else; the cost of that two-year delay will be paid for out of GM's cash flow from other cars and from the taxpayers.  BYD, in contrast, can pay the cost of getting their car approved out of sales in China.  Thus, instead of being an advantage, our regulations now help foreign makers compete with our domestic manufacturers.

In addition to making automobiles, BYD is China's largest manufacturer of rechargeable batteries.  That experience seems to have overcome the problems GM had with battery reliability.

It is truly sad that our thicket of regulations is the only factor which might permit GM to get an electric car on the road before the Chinese.  How much gasoline and money will we waste in the meantime?  Why isn't Al Gore demanding a relaxation of regulations to allow us to enjoy environmental best-practice from other countries?  After all, Mother Earth doesn't care where the technology came from or who does the polluting, does she?