Bob Lutz: Bumpy Road Ahead for Electric Cars Without a Gas Tax Hike

Bob Lutz, former General Motors (s GM) Vice Chairman and Chevy Volt frontman is not usually one to hedge, and he’s true to form in his expectations for how consumers will greet the upcoming extended-range electric Chevy Volt. According to an article from Reuters today, he told reporters at the Los Angeles Auto Show, “I’m absolutely sure that demand will not be a limiting factor,” for the success of the Volt. That is, if the price comes down.

But when it comes to strategies for making plug-in vehicles more competitive on the mass market — where GM expects its Volt to be priced on the high end, at around $40,000 — Lutz told Reuters that gas prices will need to be hiked up through taxes in order for most prospective car buyers in the U.S. to cough up the extra dough for an electric car. Then he hedged: “We’re not advocating that but if it doesn’t happen it’s going to be very difficult for these technologies.” By 2015, Lutz said he expects the total market for rechargeable vehicles to reach only 250,000-300,000 units annually.

It’s tempting to view a gas tax as a silver bullet to spur widespread adoption of fuel sippers and zero-emission vehicles. But as David Roberts explained over on Grist last winter, fuel makes up a relatively small portion of the total cost of ownership for personal vehicles. Other mechanisms, he writes, could do more than a gas tax hike to change driving behavior, boost sales of more efficient vehicles and drive development of advanced technology for greener cars. The range of alternatives includes “feebate” programs (offering rebates to buyers of fuel misers while putting a surcharge on gas guzzlers), pay-by-the-mile auto insurance, investments in public transportation, stricter fuel economy standards and direct funding for R&D.

Politically, gas taxes are a touchy subject. Yet Lutz isn’t the only auto executive pointing to a gas tax hike as a solution. At the Fortune Brainstorm Green conference earlier this year, Ford Executive Chairman Bill Ford described increasing gas taxes as a way to help car companies minimize their risk in the high-efficiency and alternative-fuel vehicle market, by sustaining demand for high-MPG vehicles long term.

According to Secretary of Energy Steven Chu, however, automakers don’t need higher gas taxes to have certainty that the price of oil will go up. “I don’t know what it will do next year or in the next two years,” Chu said at an event in San Francisco this summer, but “the price of oil will go up in 10 or 20 years.”

Photo courtesy of General Motors