Sometimes Government Can Play a Positive Role in Market Development

March 1, 2019 admin

One of the interesting things that happened to me at my annual trek to the PGA Show in Orlando was a conversation with a successful golf car dealer from Southern California. His name is Brian Rott and he has now expanded into four dealerships, the latest in Burbank, a suburb of sorts in Los Angeles.

Aside from the fact his business is prosperous and growing, Brian has taken the lead in proposing and lobbying for legislation that could pave the way for major gains in what I call the small, task-oriented vehicle (STOV) market, including PTV-type vehicles. As a result of our conversation, some aspects of which are detailed below, it got me to thinking about the general issue of convergence between the private market and government regulation. The latter, which we in the private sector usually see as restrictive and burdensome (which indeed it is for the most part), can legitimately, at times, address issues that the private sector can’t or won’t.

Where government action could help

Take for example urban congestion. Urban congestion is caused by a multitude of individuals needing to get from point A to point B in a relatively constricted, or small geographic area. The demand for road space simply overwhelms the supply of such roadways. To compound the problem, once at point B there has to be a place to park. This is something like plaque in the arteries.

Does the private market act to decongest the urban environment; that is, raise the cost of urban travel and/or act in some way to increase the supply of roadway and parking space? The answer is, yes, to some extent. Afterall, if you need to travel to the city, you are likely to do a cost-benefit analysis, something like this: The benefit is I can get in my car and travel directly to my destination. The cost is that on a congested road I will have to leave quite early in order to get to my destination at the appointed time. The extra time involved in travel is lost productivity—and that usually has a cost.

Now if the costs of time lost in productive activities were sufficiently high, and affect enough people, there would be a demand side adjustment diminishing urban congestion. And on the supply side the market for public transportation would increase sufficiently to provide an alternative to driving by individuals. (Note: “Public” transportation does not mean publicly-owned. It means serving the public, and a private company could do this.)

All of the above, so far, does take place. Yet, the needs for individualized point-to-point transportation persist. An economist would say this demand is highly inelastic, meaning a percentage increase in cost, say 10%, results in a very small percentage decrease in traffic, say 1%.

Congestion fees and other proposed remedies—will they work?

If the private market is relatively ineffective is solving the issue of urban congestion, what are the alternatives? Here are some ideas with the strong likelihood of coming to pass:

Escape to a gated community;
Charge congestion fees;
Create new kinds of vehicles and vehicle controls.

Escaping to a gated community could be ideal, providing there were sufficient facilities available so travel needs remained inside the community. We see the market for such communities expanding, along with considerable expansion within already established communities.

Congestion fees are about to be put in place in New York City. Urban congestion there has provided fertile ground for a whole variety of point-to-point travel within the city from bicycles (some with electric motors, ore-bikes), to scooters, to horse drawn carriages, to human-powered rickshaw-type tricycles—and, of course, not to mention taxi cabs. Now congestion fees are in play. Given the inelastic demand just cited, these fees will have to be quite high to have any effect.

What about new kinds of vehicles? In the short-run such vehicles would apply mainly to intra-city travel. In this context, neighborhood electric vehicles (NEVs) might well play a role. An NEV is your everyday golf car-type vehicle, or PTV, equipped to meet LSV standards (turn signals, rear-facing, back up camera, automotive glass, etc.). Such vehicles could operate as privately-owned, but more likely as a public transportation service. Self-driving attributes, automatic satellite direction, and other features could drastically reduce the number of vehicles on urban streets while not hindering transportation needs.

New breed of crossover vehicle

“Crossover” is a popular connotation for vehicles that, typically, have a combination of stylistic appearances. Currently, the crossover between a full-sized SUV and a conventional sedan is a common sight on our roadways. I have in mind, however, as a crossover, a vehicle that is used within a gated community and the same vehicle suited for use outside the community. This new breed of crossover will add significant diversity of use (from golf course to public roadway) and is likely to be electric. The feasibility of electric power in a small, crossover vehicle, by the way, took a leap forward with E-Z-GO’s Elite models introduced last year at the PGA Show, and now Club Car’s Tempo fleet model and soon-to-be-announced lithium-powered Onward.

Legislative mandates will be required

Finally, circling back to my opening paragraphs and reference to Brian Rott. What sets Brian apart from many other dealers in the business, is that he has never stayed with the bounds of the traditional golf market. Ten or so years ago, when I first talked with Brian, and we were in the midst of the great recession, he was expanding. He had diversified his business by refurbishing vehicles, exploiting the rental market, and aggressively going after commercial accounts.

Brian revealed to me in our conversation at the PGA Show, his idea for legislative action that authorizes all municipalities in the County of San Diego (State of California) to study and enact a transportation plan involving NEVs. The specific language of the bill and its purpose are as follows:

It is the intent of the Legislature, in enacting this article, to authorize the County of San Diego or any city in the county to establish a neighborhood electric vehicle (NEV) transportation plan. The purpose of this NEV transportation plan is to further the San Diego region’s vision of facilitating the efficient movement of people and goods to support a sustainable and healthy region, a vibrant economy, and an outstanding quality of life for all.

(b) It is further the intent of the Legislature that if the County of San Diego or any city in the county adopts an NEV plan that this NEV transportation plan be designed and developed to provide flexible and economical travel options for residents, employees, and visitors, to best serve the functional travel needs of the plan area, to have the physical safety of the NEV driver or the passenger’s person and property as a major planning component, and to have the capacity to accommodate NEV drivers of every legal age and ability.

Note the language under paragraph (b): “It is further the intent of the Legislature…that this NEV transportation plan be designed…to provide flexible and economical travel options…”

Brian has been very active in lobbying for this legislation, and it could well set a pattern for NEV transportation plans not only for the rest of California, but for the nation as well. Stay tuned for updates.

Contact the Author: Steve Metzger at smetzger@smallvehicleresource.com. Or check out our website at www.smallvehicleresource.com, where you will find an extensive database of vehicle models and can make side-by-side comparisons of vehicles based on a full set of specifications.