Replacing the Fleet

During my debate with Bernard Finel a while back I made a point about the practicality of replacing the whole U. S. vehicle fleet that I thought was worth revisiting. According to the Department of Transportation, the total number of licensed drivers back in 2006 was 202,810,438. According to this post from Calculated Risk the average number of vehicles per licensed driver is 1.2 and the turnover rate for the fleet has been hovering at around 15 years for more than a decade and it hasn’t dipped below 10 years for any protracted period for a quarter century. As I noted previously a decent rule of thumb for the cost of an electric car is $40,000 and according to the Department of Energy the average cost of a new car in 2006 was around $23,000.

Armed with that information we can calculate the incremental cost for replacing the entire fleet with electric cars over various different periods of time.

The total number of vehicles in the fleet is 202,810,438 X 1.2 or 243,372,526.

The total current cost of replacing the fleet is 243,372,526 X $23,000 or $5,597,568,098,000.

The total cost of replacing the fleet with electric vehicles would be $9,734,901,040,000.

Consequently, the incremental cost would be $4,137,332,942,000.

If the entire cost were borne in a single year (which would have to be the case if we were to completely avoid the consequences of an oil price shock on transport), the incremental cost would be more than $4 trillion or nearly a third of the entire GDP.

If the entire cost were borne over the period of 10 years, then the incremental cost would be more than $413 billion dollars per year, roughly our entire military budget again, over the period of ten years. Clearly, we’re not going to save our entire military budget by doing this, so we’re talking about some pretty considerable incremental costs.

Of course, there are other reasons why this isn’t that great a plan. One of the most serious is that there is currently no electrical vehicle being produced in quantity anywhere. I believe that the reason this is the case is that nobody knows how to make batteries in quantity cheaply enough. There’s nothing like impossibility to render a plan impractical.

Am I missing something?

9 comments… add one
  • Oh, Dave, in this new era what’s a few trillion dollars? Trillion is the new billion. As for millions, Uncle Sam doesn’t even bend down to pick up a million lying on the sidewalk any more. Million is the new penny.

  • Yeah… what you are missing is

    (1) that no one proposes doing it in a year.
    (2) that the cost of electric car would likely come down as production ramped up as is the case with ALL new technologies. How much would your new HDTV have cost 5 years ago?
    (3) that some of the cars might be replaced productively with hydrogen and/or natural gas vehicles.

    On the other hand, you didn’t include the other huge cost which is a massive increase in energy generation and a massive cost associated with dismantling the oil sector (millions of jobs there).

    It’s a hard issue… but look… we made a set of disaggregated decisions made in 1910 about a gasoline infrastructure and in the 1950s about roads ought not lock us in forever to one way of doing things.


  • Then do it over ten years. Over that ten years we’ll either be paying double what we’re paying now for defense (defense + cost of upgrading) or we’ll be taking the risk that an oil shock over the period of ten years will make the economic turndown we’re in now look like a walk in the park.

  • PD Shaw Link

    Dave, where do you get $40,000 as a “decent rule of thumb for the cost of an electric car”? Is that the price point where you believe such a vehicle would be marketable? The Tesla is selling at over $100,000, the imaginary Chevy Volt might have sold for $40,000.

    A lot of math here for imaginary vehicles with imaginary price points.

    Bernard, our new Secratary of Energy has cautioned that it’s not just the will that is needed to deal with our energy issues, there are also technological issues that need to be surmounted.

  • That’s the stated price for the imaginary Chevy Volt. I’ve got a link to support it somewhere around here.

    Note that I don’t believe that we’ll be able to produce 20 million electric cars a year for the foreseeable future. Or in my lifetime for that matter since I think the technological barriers are so high.

    There are a dozen technological breakthroughs that have been just around the corner over the period of the last forty years. I think that practical mass-produceable electric cars may be another.

    The real rub in the idea is that even if we could produce them we can’t power them with our current grid. That’s why I think that the pressing government infrastructure project isn’t roads or bridges but the backbone of a new electrical grid. Unfortunately, what’s in the stimulus package is barely a down payment.

  • PD Shaw Link

    Bernard, how about this for a more realistic alternative:

    Over the last twenty years are so, the average age of the US auto fleet has increased from around 6 to 9 years old. 41 percent of our cars are 11 years or older. That is a lot of cars designed and manufactured with older technology and lower CAFE standards. And if the cars have not been maintained properly, their fuel efficiency has probably deteriorated even further.

    You can obtain a lot of fuel efficiency benefits by simply destroying older vehicles (say over 15 years old) in exchange for vouchers to purchase new vehicles. There are corollary benefits in terms of increasing demand for new autos and cleaner emissions.

    That all said, I would like to see a gas tax instead.

  • The problem with that, PD, is that it doesn’t make us any less dependent on Middle Eastern oil. Since oil is fungible unless it’s not a crucial component of our society and economy, we’re still dependent.

  • Fletcher Christian Link

    Mr. Schuler, more fuel efficiency in the car fleet means less of a balance of payments problem. It also means less money going to people who are going to do some very unpleasant things with the stuff they will buy with it.

    I can think of quite a few ways of making automotive fuels that don’t involve oil; so can you, and I don’t include bio-ethanol unless one is talking about cellulosic ethanol derived as a byproduct of something else – as a way of disposing of cereal straw, for example – and this, although it will help a little, is nowhere near enough.

    Biodiesel has better prospects, if only because the best way of making it, given a rather small amount of money for development, is to grow high oil content single-celled algae in transparent small diameter tubing; which can be done in a manner that is essentially closed-cycle except for air (perhaps enriched with CO2 obtained from something like power plant exhaust) being mixed with the broth and losing its carbon to the oldest solar technology in the world, photosynthesis.

    Another advantage of this concept is that you can do it anywhere, including otherwise useless desert. In fact, deserts are more useful than better land for this purpose.

  • I like imaginary cars. They have lots of imaginary cup holders.

Leave a Comment