Emissions standards support alternative fuel development, but at what cost?

Is there an irony in the fact that “green energy” companies keep failing while government keeps mandating stricter emissions standards for automakers?

Today, VehicleServicePros reports that Ecotality, a maker of electric charging and storing systems that borrowed $100 million from the Department of Energy (DOE), has filed for bankruptcy. VehicleServicePros also reports today that the DOE will auction a loan it made to electric carmaker Fisker Automotive, which defaulted on a multi-million-dollar loan in April and hired a bankruptcy firm.

Meanwhile, automakers face pressure to increase electric or hybrid vehicles so they can meet increasingly strict emissions standards. According to The Wall Street Journal, California Gov. Jerry Brown has ordered that 1.5 million zero-emission vehicles be on California roads by 2025, which compels carmakers to increase electric fleets to meet this mandate. California offers a $2,500 rebate on top of the federal $7,500 tax credit and additional funds for retiring gas vehicles.

Even those of us who have the luxury of spending much of their day reading industry news are having a hard time grasping the future of alternative fuel vehicles.

The government uses taxpayer-funded rebates and taxpayer funded grants to support the development of alternative fuel vehicles. These rebates and subsidies help drive electric and hybrid car sales, which sustains manufacturer interest in this market. Last week, VehicleServicePros reported such vehicles dominated the intros announced at the Frankfurt Auto Show, which runs through Sept. 22.

Those of us in the automotive aftermarket know that emissions standards have driven the development of emissions detection tools that aftermarket shops have found helpful in servicing emissions compliance. And I have it on good authority that even more emission detection tools will be introduced at the upcoming AAPEX show in Las Vegas.

This is all fine and good. But how long will federal and state governments continue to subsidize alternative fuel development? California-based Tesla Motors, held up as an electric car manufacturer success story, has promoted government incentives to potential car buyers and encouraged visitors to its website to get involved in encouraging more incentives at the state and local levels.

As more electric and hybrid cars enter the market, aftermarket shops have to invest in new tools and training to service the vehicles. As shops and technicians invest in these areas, they do so with an uncertainty hanging over their heads: will the alternative fuels market continue to grow once government stops subsidizing it?

Some, if not most of the tools being developed to help cars meet stricter emissions standards can be used for more than just alternative fuel vehicles.

In the meantime, the automotive aftermarket faces a big challenge trying to determine how large the alternative vehicle market will become and how long it will last. Businesses cannot depend on government support indefinitely.