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TheStreet Open House

California's Mysterious War on Gasoline Cars

Stocks in this article: GMFTM

In California today, the people who are deciding what cars will be sold are no longer buyers and sellers on the free market, but government bureaucrats who dictate the sales mix.

The question nobody seems to be asking is the underlying logic of the government's plan to force people into buying cars they don't want. The California government says it is doing this to improve the air/climate/weather. But the air/climate/weather is where California excels! Basically, you don't need to fix a problem that doesn't exist to begin with.

If there were the slightest problem with the air/climate/weather in California that needed to be fixed, believe me, people would be long gone from this state. There sure isn't any other reason to live in California.

This is not to say that I in any way dislike electric cars. On the contrary, I'm probably one of the most ardent electric car fans in the world. There are plenty of good reasons to buy an electric car. For example:

1. Electric cars are quiet. This is an environmental benefit if I ever saw (heard) one. Noise pollution is real and obvious to everyone who isn't legally deaf.

2. Electric cars drive well. They are smoother, powerful and allow for mostly one-pedal driving. Basically, it's a premium drive experience.

3. Electric cars may have lower maintenance expense. Fewer moving parts mean less breakdowns and cost to service, as there are no timing belts, no spark plugs, no oil changes and so forth.

In other words, I highly recommend electric cars -- whether the pure ones, or the extended-range hybrids such as GM's (GM) Chevrolet Volt, Ford (F) C-Max Energi or Toyota (TM) Prius Plug-In. I think that with time, they are likely to take over the marketplace on the merits -- quiet, smooth and low maintenance performance.

However, pure electric cars also have a number of drawbacks causing many consumers to wait. Basically, the technology -- batteries -- is expensive in relation to the range and recharging time. People are also cautious with respect to performance in extreme temperatures and battery longevity.

The extended-range hybrids eliminate essentially all drawbacks except for cost. The added weight and the space the battery/electric components occupy also are minus points.

Therefore, my prediction is that in a free market the sale of pure EVs as well as plug-in hybrids will likely increase over time. New technology takes time, even if people like it. During its first year or two, the iPhone was not a raging success either -- and automobile technology typically takes much longer than computing technology to be adopted by consumers.

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